Case Law Details

Case Name : N D Timbers Vs Union of India (Gujarat High Court)
Appeal Number : Special Civil Application No. 16280 of 2021
Date of Judgement/Order : 28/06/2022
Related Assessment Year :

N D Timbers Vs Union of India (Gujarat High Court)

The core question of law which falls for consideration by this Court is whether the levy of five time fees in the form of penalty upon the petitioners on import of timber after granting them relaxation for such import will violate the provisions of Article 19(1)(g) of the Constitution of India, and can such levy satisfy the test of reasonableness of restriction on free trade as prescribed in clause(6) of Article.

Article 19(1)(g) of the Constitution of India guarantees right to practice any profession, occupation or trade or business. However, the freedom is not unrestricted or uncontrolled in view of clause (6) of the article which authorizes the legislation to (a) impose reasonable restrictions on this right in the interest of general public, (b) prescribes technical or professional qualifications necessary for carrying on any profession, trade or business; and (c) enables the state to carry on any trade or business to the exclusion of the private citizens, wholly or partially. The expression ‘in the interest of general public’ is of wide import comprehending public order, public health, public security, morals, economic welfare of the community and the objects, mentioned in Part-IV of the Constitution. (vide Municipal Corporation Of The City Of Ahmedabad vs. Jan Mohammed Usmanbhal, 1986 (3) S.C.C. 20). Such expression will encompass the bio-security of the Country which has the direct impact on the environment and public health.

While imposing reasonable restrictions, the nature of the business or trade is the necessary element in deciding the reasonable restrictions. The petitioners are dealing in a trade which uses a chemical harmful to the ozone. Methyl Bromide is listed as Ozone Depleting Substance (ODS) under the Montreal Protocol of United Nations. The Union of India is a signatory member since 19.06.1992. As per the said protocol the developing countries will have to phase out use of Methyl Bromide from the fumigation treatment. It is also an undisputed fact that as on today there is no other alternative treatment of fumigation declared by the Indian Government, and it appears that efforts are being made to find an alternate to Mehtyl Bromide and the same is in nascent stage. The developed counties like United States, Canada, European Union have objected to India being WTO member for insistence on Methyl Bromide as fumigation agent. In such scenario, the respondent authorities are though giving relaxations in insistence upon the Methyl Bromide as fumigation agent, but are simultaneously levying the penal fees under the PQ Order, 2003. It is also not denied by the respondents that import of other plant products such as chickpeas and pulses shipped from USA that are fumigated by Methyl Bromide are allowed at the port of arrival in India with one time inspection fees. The petitioners cannot equate the fumigation of timber/wood with the plant products like chickpeas or pulses since the proportion of Methyl Bromide used for each of them is different. Timber/wood needs highly penetration under the bark for neutralizing the pests. Thus, the impugned OMs and the provision of Regulation 14(2) of PQ Order cannot be set aside on the ground of unreasonable classification. The sole discretion lies with the authorities to classify such goods who are expert in the field, and this Court cannot set in the shoes of such experts and impose its wisdom on the subject unless it is shown that the procedure so followed is absolutely illegal and against the rules and regulations. However, at the same time the petitioners cannot be subjected to penal fees for the inaction of the exporting countries.

So far as use of Methyl Bromide is concerned, it is not denied by the respondents that the Ministry of Agricultural and Farmers Welfare Government of India has framed guidelines for usage of Methyl Bromide for fumigation on various products as per Montreal Protocol. Such fumigated products by Methyl Bromide are being exported by India after framing of necessary guidelines being Quarantine Treatment and Application Procedures of Methyl Bromide Fumigation. Thus, the concern of the Indian Government with regard to the affecting of bio-security appears to be well founded, however in wake of no other alternative as on today, the imposition of penalty on the petitioners appear to be harsh. The respondents cannot approbate and reprobate on usage of same chemical by taking shelter under bio-security of country. It is also an undisputed fact that as on today no rules or guidelines or regulations are framed by the Government of India mandating the use of any other chemical except Methyl Bromide for fumigation process.

Article 19(1)(g) of the Constitution of India guarantees that all citizens have the right to practise any profession or to carry on any occupation or trade or business and Clause (6) of the article authorises legislation which imposes reasonable restrictions on this right in the interests of the general public. It is not disputed that in order to determine the reasonableness of the restriction regard must be had to the nature of the business and the conditions prevailing in that trade. It is obvious that these factors must differ from trade-to-trade and no absolute or conclusive rules concerning all trades can be prescribed. It can not be denied that the State has the power to prohibit trades which are illegal or immoral or injurious to the health and welfare of the public. It is well settled that the test of reasonableness, wherever prescribed, should be applied to each individual statute, and each case has to be examined on its own facts and generalised standards cannot be adopted. The Court, while examining the purpose of restrictions imposed has to evaluate the extent of evil which is sought to be remedied by imposing such restrictions. The Apex Court has emphasised that phrase “reasonable restriction” connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word “reasonable” implies intelligent care and deliberation, that is, the choice of a course which reason dictates. It is held that legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by clause (6) of Article 19, it must be held to be wanting in that quality. This Court fails to understand that by imposing penalty, what type of evil is sought to be remedied, whether the respondents want to restrict the use of Methyl Bromide (which is being already used for exports) and imports or after granting approval and relaxation to the petitioners for import, the respondents want to restrict such import after their consignment is fumigated both off-shore and on-shore.

As mentioned hereinabove, the action of the respondents conflates two different scenario. On one hand relaxation is granted to import timber with phytosanitory certificate and on the other hand, they are being penalised for obtaining such certificates. Similarly, the use of Methyl Bromide is considered to be harmful for environment, and on the other hand such chemical is being used for exports and imports. The petitioners are penalised for importing consignments of timber, which is subjected to fumigation by different chemical equivalent to Methyl Bromide or by Methyl Bromide on payment of necessary charge. Simultaneously, a penalty is being imposed upon them for importing the timber which is fumigated by the exporting countries as per their standards. There cannot be any scintilla of doubt that the respondents have all the power and authority to regulate, classify and impose reasonable restrictions on the trade on the articles or goods which are imported in India keeping in mind the principles, as mentioned by the Apex Court, but concurrently in wake of the actual scenario which is prevailing as on today and in absence of any other alternative to the petitioners coupled with the fact that relaxation is granted to them to import timber; the levy of penalty on imports is intrinsically prejudicial to their trade and business. Either the respondents should not grant any relaxation of import of such timber or if they are allowing the same no penalty should be imposed. Thus, the action of the respondents in levying fine or penalty will amount to reasonable restrictions having direct impact on their right guaranteed under Article 19(1)(g) of the Constitution of India, since the petitioners cannot carry on with their trade unless they pay such fine or penalty. The respondents before imposing fine or penalty should have deliberated on the issue and the adversity faced by the petitioners, since the issuance of phytosanitory certificate is beyond their sphere or ambit. They cannot insist the exporting country to issue phytosanitory certificate as per the requirement of Indian parameters. Without resolving the issue at the ends of NPPOs of each country, the petitioners are being penalised. Thus, such an action of the respondents is arbitrary and invades their right to trade, hence the same calls for interference.

Since this Court has held the action of the respondents in levying fine or penalty as arbitrary and violates the fundamental rights, the cardinal question of law which necessitates to be addressed is “whether this Court, while exercising its powers conferred under Article 226 of the Constitution, set aside the impugned Regulation and subsequent OMs which are in form of delegated legislation.

It is in the absolute realm of the executive to take a policy decision, and such policy decision can only be interfered with if it is ultimately found that the policy suffers from the vice of mobo fide, unreasonableness, arbitrariness and unfairness, in addition to violation of fundamental rights or exercise of power beyond the legal limits. It is the solemn and constitutional obligation of the Court to examine that in framing of policy no law is violated and people’s fundamental rights are not transgressed upon except to the extent permissible under the Constitution. Unquestionably, in the present case, the impugned Regulation and the subsequent OMs do not satisfy the principles of rationality and they infract the fundamental rights of the petitioners guaranteed under Article 19(g) of the Constitution of India, hence this Court, in exercise of powers conferred under Article 226, has the explicit authority to set aside the same.

On the substratum of the aforementioned reasoning and analysis, the impugned Regulation 14(2) of the Plant Quarantine (Regulation to Import into India) Order, 2003 of Chapter-VI is declared as arbitrary and unreasonable and in violation of fundamental rights guaranteed under Article 19(g) of the Constitution of India to the extent it stipulates charging of fees of five times of normal rates. The same is quashed and set aside to the said extent only. As a sequel the subsequent impugned Office Memorandums, which reiterate such imposition of penal fees are also quashed and set aside to such extent only.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. Since the captioned writ petitions are premised on common facts and the issue involved is also common, they are heard and decided analogously by this common judgment and order .

FACTS:

2. All the petitioners are dealing with the import of timber wood and have to treat such wood with fumigation process for pest control. The petitioners are constrained to file the present petitions against the action of demand of additional fine/ charge/ penalty 5 times of regular fees by the respondents from the petitioners purportedly under Clause 14 (2) of Chapter VI of the Plant Quarantine Order (Regulation of Import into India), 2003 (hereinafter referred to as ‘the PQ Order, 2003). The petitioners also seek to challenge the condition/s imposed by the respondents by way of Office Memorandum No.8-131/2016-PP.II dated 28.06.2017 and Office Memorandum No.8-131/2016-PP II dated 27.12.2018, thereby demanding the above referred penalty/ additional charges.

3. All the aforementioned OMs refer to the fumigation process undertaken for the imports of timber by using Methyl Bromide (with 48 g/ m3 for 24 hours at 21 degree Celsius). It is an admitted fact that all the petitioners have the requisite certificate of fumigation issued by the officials of the exporting country, but the respondent authority treat the same as invalid for the reason that they do not meet with the standards or parameters as prescribed by India. Hence, the petitioners are asked again to treat the timber with fumigation by Methyl Bromide as per the Indian standards, and accordingly are issued such certificates. In view of such objection, the petitioners are asked to pay the charge of fumigation and the penalty also.

SUBMISSIONS OF THE PETITIONERS:

4. Learned Advocate Mr.Bharat Raichandani appearing for learned advocates Mr.Sharma and Mr.Patel has submitted that, the respondent authorities are granting relaxations in insistence upon the Methyl Bromide as fumigation chemical agent, but levying the penal fees of 5 times than the normal charges for inspection fees under the provisions of Regulation 14 (2) of the PQ Order, 2003, which is illegal and unconstitutional. It is further urged that as per Regulation 9 itself, when the treatment with equivalent fumigation chemical agent is permissible, then the insistence to demand fumigation by Methyl Bromide or otherwise to impose fine is in violation of PQ Order 2003 itself.

5. It is submitted that the respondent No.1 gave permission to import the agricultural commodities without Methyl Bromide fumigation from those countries who certify discontinuation of this chemical for Phytosanitary Measure by way of Office Memorandum dated 02.01.2017. It is also submitted that the action of the respondents is discriminatory since by virtue of office memorandum/ order dated 25.04.2018, the respondent no.1 authority has permitted to import the consignment of chickpeas and pulses shipped from USA that are duly covered by phytosanitary certificates on basis of fumigation by Methyl Bromide at the port of arrival in India, with one time inspection fee. Reliance is placed in this regard on the judgment of the Apex Court in case of Union Of India vs N.S.Rathnam & Sons, 2015 (10) S.C.C. 681.

6. It is also contended by learned advocate Mr.Raichandani that the respondent no.1 has also issued two office memorandums dated 28.06.2017 and 27.12.2018. It is stated that as per impugned Office Memorandums, the fumigation treatment with Methyl Bromide is given go-bye if the exporting countries have discontinued use of the same for phytosanitary measures. However, the condition no.3 of the impugned Office Memorandum refers that penal fees in respect of those consignments will be charged as prescribed in PQ Order, 2003.

7. While placing reliance on the Regulation 14(2) of PQ Order, 2003, it is contended that the same is in contradistinction with Regulation 9 since the said Regulation 9 permits fumigation with any other equivalent chemical and relaxation is also conferred vide Memorandum 28.06.2017 for import of commodities from such countries which certify discontinuance of use of Methyl Bromide. It is submitted that the petitioners are issued phytosanitory certificates by exporting countries which undertake fumigation by any other equivalent agent to Methyl Bromide, hence the petitioners cannot be faulted for exporting timber fumigated with other chemical. It is submitted that the Government cannot give by one hand and take away from another. It is submitted that right to be engaged in the trade/business of importing timber is protected by virtue of the fundamental rights guaranteed under Article 19(1)(g) of the Constitution of India and such freedom can be restricted only by valid law made by the Legislature and cannot be curtailed by an executive fiat in the nature of the impugned memorandum. Therefore, it is submitted that Regulation 14 (2) is ultra vires and needs to be read down / struck down in the interest of justice.

8. It is submitted that as per Regulation 9(1)(ii), the fumigation treatment which is equivalent to the fumigation treatment with Methyl Bromide (in particular atmosphere) is permissible. It is submitted that, unless and until the respondents no.2 and 3 come to the conclusion that the fumigation treatment with any other fumigation agent is not equivalent as above, there cannot have any breach of conditions of Regulation 9 hence, no fine or charges can be levied from the members of petitioner association under Regulation 14 (2) of PQ Order, 2003.

9. It is asserted by the petitioners that all other conditions under Regulation 9 are satisfied by the petitioners and the phytosanitary certificate issued by the Exporting Country is otherwise satisfying all the requirements under the Regulations. Further, it is submitted that the timber is fumigated with ALP or such other equivalent chemical which is accepted as good alternative and equivalent fumigation agent worldwide and even used in the chemical industries. Further, it is submitted that there is no material to suggest that the same is not equivalent as above.

10. It is also submitted that India is allowing export of goods which are fumigated by Methyl Bromide, hence for the goods of the petitioners, no penalty can be levied on the ground that usage of such chemical is adverse to bio-diversity of the nation. Under these circumstances, the impugned action may be declared illegal, arbitrary and shall be quashed and set aside.

11. In the alternative it is submitted that the condition no.3 stated in the Office Memorandums may be quashed and set aside by this Court, as prayed for. Also, Regulation 14 (2) of the PQ Order, 2003, being in contradistinction of Regulation 9 and contravention of Montreal Protocol (UNEP report) must be struck down.

12. Learned Advocate Mr.Tolia appearing for some of the petitioners has submitted that the impugned action of the respondents is violative of Article 51 (c) and 253 of the Constitution of India. It is submitted that it is an international obligation not to create any technical barriers which affect free trade. It is submitted that the International Plant Protection Convention, 1997 was executed by the member countries of the World Trade Organization for the purpose of providing common and effective action to prevent the spread and introduction of pests of plants and products. It is submitted that though it was decided by all of the countries of UN to phase out Methyl Bromide in UNEP (United Nations Environmental Program), the respondents, under the guise of Regulation 14 of PQ Order, permitted local fumigation by Mehtyl Bromide but with a penalty/fine of five times inception charges which is arbitrary and unreasonable.

SUBMISSIONS OF RESPONDENTS:

13. In response, learned Advocate Mr.Bhatt appearing on behalf of the respondent authority has vehemently opposed the writ petition. It is submitted that the Montreal Protocol on Substances that Deplete the Ozone Layer is a global agreement to protect the Earth’s ozone layer by phasing out the chemicals that deplete. It is submitted that as per Montreal Protocol, the use of Methyl Bromide is allowed worldwide for Quarantine and Pre-Shipment (QPS) purpose. It is submitted that, however, a few countries unilaterally phased out/discontinued the use of Methyl Bromide.

14. Reliance is placed by Mr.Bhatt on Chapter-II Clause 9 (ii) of PQ Order, 2003 which mentions that the timber/wood with or without bark and bamboo shall be fumigated prior to export with Methyl Bromide at 48 g/m3 for 24 hrs. at 210C or above or equivalent thereof or any other treatment duly approved by the Plant Protection Adviser and the treatment shall be endorsed on the Phytosanitary Certificate issued thereof at the country of export or re-export. It is submitted that if the above requirements are not fulfilled by the importer regarding offshore fumigation, the same shall be fumigated onshore Point of entry and the consignment released after charging the fee for plant quarantine inspection at five times of normal rates to discourage the import without fulfilling import requirements into India and for violation of import regulation. Thus, it is submitted that due to fumigation with Methyl Bromide in India, our environment is also being depleted/polluted. It is submitted that the PQ Order, 2003 is introduced by the Central Government in pursuance to the powers conferred by Section 3(1) of Destructive Insects and Pests Act, 1914 (for short ‘DIP Act). The PQ Order, 2003 regulates the import of bio-control agent, cotton, fruit, grains, germplasm, plant, plant product, seeds, soil, timber, tissue cultured plant, and such other articles, as prescribed therein.

15. Learned advocate Mr.Bhatt has submitted that the impugned OMs speak of the process to be followed for according relaxations under the provisions enshrined in Chapter-VI Clause 14 of the PQ Order, 2003 for all agriculture materials. Learned Advocate Mr.Bhatt has submitted that the rationale behind the PQ Order, 2003 and the object of the Destructive Insects and Pest Act, 1914 is to prevent the introduction and spread of exotic pests that are destructive to the country and has got nothing to do with the business potentiality of the petitioners. It is also reiterated that there is a strong possibility that the imported timber may carry certain harmful pests which may cause a serious threat to the bio-security of India and, therefore, is mandatorily required to be regulated as per Plant Quarantine Order, 2003. It is submitted that the relaxation fee at five times the normal inspection fee is collected as penalty to discourage the violation of the conditions stipulated in the Plant Quarantine Order and hence the impugned OMs have been passed in order to create a deterrent by enhancing the penalties in import of the commodities in violation of PQ Order.

16. It is submitted that in absence of an order relaxing the condition in Clause-9, the petitioners cannot claim any relaxation in respect of import without fulfilling the stipulated conditions. Hence, it is submitted that the writ petitioners have got no legal right to approach this Court seeking to alter the terms of import and the permit and order, on terms more favorable to them.

17. Learned advocate Mr.Bhatt has submitted that as per PQ Order, 2003, when any consignment of timber / wood is imported in India, the same is inspected by the Plant Protection Officer at Port. If the Timber is fumigated with Methyl Bromide at exporting port, the officer will examine whether again fumigation is required or not, and if it is not required then no charges are required to be paid for fumigation. However, in case fumigation is required in India under following circumstances i.e. (1) Fumigation is done at exporting country with Methyl Bromide but still it is required for any reason; (2) Fumigation is not done at all at exporting country; or (3) Fumigation is done with any other equivalent chemical at exporting country, the below referred charges are levelled:

a. Per Bill of Entry, the inspection fees shall be charged @ Rs.3,500/-for first CBM or Tone, whichever is higher, and for rest of the quantity, @ Rs.200/- per CBM or Tone whichever is higher.

b. However, 4 times penalty shall be imposed on both the above charges
i.e. for first unit and for rest of the quantity:

18. It is submitted that the PQ Order 2003 provides Methyl Bromide or equivalent chemical or any other treatment duly approved by Plant Protection Advisor for the fumigation treatment in respect of agricultural/plant products including timber. It is submitted that Methyl Bromide is a deep penetrating chemical having lethal effect on the targeted pest and for alternative of MBr the replacement fumigant should have broad spectrum effect, good penetration power and efficacy to all stages of pest. It is submitted that alternative chemical ALP has some drawback in it is not effective as ovicidal, and is easy to develop resistance, and also require long exposure period

19. Learned Advocate Mr.Bhatt has also placed reliance on the International Standard for Phytosanitory Measure (ISPM) issued by the International Plant Protection Convention (IPPC). He has placed reliance on the following ISPM’s.

ISPM: 12

“Outline of requirements Phytosanitary certification is used to attest that consignments meet phytosanitary import requirements and is undertaken by an NPPO. A phytosanitary certificate for export or for re-export can be issued only by a public officer who is technically qualified and duly authorized by an NPPO. A phytosanitary certificate for export is usually issued by the NPPO of the country where the plants, plant products or other regulated articles were grown or processed. A phytosanitary certificate for re-export is issued by the NPPO of the country of re-export (a country where the commodity has not been grown or processed to change its nature) when the consignment has not been subjected to the risk of infestation or contamination by pests regulated by the country of destination and meets the phytosanitary import requirements of that country, and the original phytosanitary certificate or a certified copy of the phytosanitary certificate (hereafter referred to as a “certified copy”) is available. NPPOs shall use the model phytosanitary certificates of the IPPC.

A) ISPM-1

2.13 Dispute settlement Contracting parties should be open to consultation regarding their phytosanitary measures, when requested by other contracting parties. If there is a dispute regarding the interpretation or application of the IPPC or its ISPMs, or if a contracting party considers that an action by another contracting party is in conflict with the obligations of the IPPC or guidance provided in its ISPMs, “the contracting parties concerned shall consult among themselves as soon as possible with a view to resolving the dispute.” (Article XIII.1) If the dispute cannot be resolved in this way, then the provisions of Article XIII relating to the settlement of disputes or other means of dispute settlement may be applied.

I.14 Avoidance of undue delays When a contracting party requests another contracting party to establish, modify or remove phytosanitary measures, when conditions have changed or new facts have become available, this request should be considered without undue delay. Associated procedures, which include, but are not limited to, pest risk analysis, recognition of pest free areas or recognition of equivalence, should also be performed promptly.

ISPM : 20:

“4.6 Legal authority for the NPPO In order that the NPPO can discharge its responsibilities (Article IV of the IPPC), legal authority (powers) should be provided to enable the officers of the NPPO and other authorized persons to:

– enter premises, conveyances, and other places where imported commodities, regulated pests or other regulated articles may be present

– inspect or test imported commodities and other regulated articles – take and remove samples from imported commodities or other regulated articles, or from places where regulated pests may be present (including for analysis which may result in the destruction of the sample)

– detain imported consignments or other regulated articles

– treat or require treatment of imported consignments, or other regulated articles including conveyances, or places or commodities in which a regulated pest may be present

– refuse entry of consignments, order their reshipment or destruction – take emergency action

– set and collect fees for import-related activities or associated with penalties (optional).

20. It is submitted by learned Advocate Mr.Bhatt that as per the aforementioned measures, the National Plant Protection Organisation (NPPO) of the exporting country has to issue necessary phytosanitory certificate and all the standards of the parameters set out by the importing country has to be respected and followed. He has submitted that since the phytosanitory certificates issued by the NPPO of the exporting country to the petitioners are not in conformity with the parameters prescribed by India, the petitioners are appropriately levied penalty for importing such timber from the countries which do not follow the norms of India. It is submitted that aforesaid ISPMs also stipulate of imposing penalties in such cases, hence the action of the respondent authority is in consonance of the policy of the country and also with the international measures declared by the IPPC. Hence, it is submitted that the writ petitions may be dismissed.

CONCLUSION:

21. Succinctly stated the following facts are established from the pleadings:

a) All the petitioners are importing timber from the countries after obtaining valid license/permissions from the authorities.

b) The petitioners are importing the same with a phytosanitary certificates issued by National Plant Protection Organisation (NPPO) of the exporting country. Such certificates are issued after undertaking necessary fumigation by other equivalent chemical to Methyl Bromide or by Methyl Bromide.

c) On arrival of such timber, the respondent authorities after granting relaxation for such import do not accept the phytosanitary certificates issued by the exporting country for the reason that the timber is not fumigated as per the Indian standards.

d) They are allowed to import and collect the consignment after the timber is fumigated again as per Indian standards.

e) The petitioners pay regular charge for such fumigation, but at the same time they are asked to pay five times fine or penalty as a deterrent measure for importing timber from such countries which do not issue phytosanitary certificates as per the Indian standards.

f) The petitioners are paying all the necessary charges for fumigation.

22. The aforementioned facts indicate that the petitioners have to process their timber twice, once in the exporting country and again in India. The first process is undertaken by the exporting country and accordingly a phytosanitory certificate is issued. Regulation 9(1) (ii) of Plant Quarantine (Regulation of Import into India) order, 2003 provides that the consignment of import of wood and timber shall be fumigated as stated therein. The same reads as under:

“9. Requirement of import of Wood and Timber :-

(1) No consignment of timber and wood/ bamboo products shall be brought into India unless such consignment fulfils the following conditions, namely: (S.O.2286(E), dated O4.06.2018)-

(i)………..

(ii) the timber/wood with or without bark and bamboo shall be fumigated prior to export with Methy Bromide at 48g/ m3 or 24 hrs at 21 degree C or above or equivalent thereof or any other treatment duly approved by the Plant Protection Advisor and treatment shall be endorsed on the Phytosanitary Certificate issued thereof at the country export or re-export :

23. The genesis of the issue raised in the writ petition lies in Clause(2) of Regulation 14 of Chapter VI of the Plant Quarantine (Regulation of Import into India) Order, 2003 issued in exercise of powers conferred under sub-section (1) of Section 3 of the Destructive Insects and Pests Act, 1914 and the OMs issued pursuant to such provision. Chapter-VI refers to the “Power of Relaxation”. The relevant regulation 14(2) reads as under:

“14. Relaxation conditions of Import Permit and Phytosanitary Certificate in certain cases —

(1) The Central Government may, in public interest, relax any of the conditions of this Order relating to the import of any consignment. The Joint Secretary in-charge of Plant Protection in the Department of Agriculture & Cooperation shall be the competent authority for according the relaxation. Further the powers of relaxation has been delegated (vide DAC It. No. 8-5/2004-PPI(pt) dated 2% February 2005) to officers in charge of the Plant Quarantine Stations for-relaxing the conditions of Import permit and phytosanitary certificate required as per Plant Quarantine (Regulation of Import into India) Order, 2003 as a one-time exception in favour of a single party and not for repeated violations by that party. All second or subsequent cases of violation of requirement of Import Permit and Phytosanitary certificate by any party shall be forwarded to Joint Secretary (Plant Protection), Department of Agriculture & Cooperaton.

(2) In the event of grant of relaxation by competent authority, the consignment shall be released after charging the fee for import permit and fee for plant quarantine inspection at five times of normal rates.”

24. Pursuant to the aforesaid Plant Quarantine Order (PQ), the respondent authority has issued the OMs dated 28.07.2017, 27.12.2018 and 19.6.2020. These OM’s are issued with regard to levy of penalties as prescribed in the PQ Order, 2003.

25. The entire case of the respondent authorities hinges on two aspects (a) in order deter the petitioners from importing timber from such countries which do not meet with the parameters of fumigation as per Indian standards; and (b) for restricted use of Methyl Bromide in India which is a threat to environment of the country.

26. It is the case of the petitioners, that imposition of penalty will amount to restricting their trade and is in violation of Article 19(1)(g) of the Constitution of India, hence the provision, which enables the authority to levy penalty may be quashed.

27. The petitioners are being penalised for the act of the exporting countries in issuing phytosantory certificates which are not in rhyme with the Indian standards. Vide OM dated 28.06.2018 particularly clause(ii), it is declared that,

“If fumigation treatment with Methyl Bromide is stipulated for that commodity in the PQ Order, 2003, it will be allowed without offshore Methyl Bromide fumigation from those countries, which certify discontinuance of this chemical for phytosanitory measure”.

In clause (iii) it is stipulated that (iii) Penal fee in respect of those consignments will be charged, as prescribed in the PQ Order, 2003.

Thus, after granting relaxation of imports from those countries who have discontinued the use of Methyl Bromide as a fumigation chemical, the petitioners on getting the timber fumigated by equivalent chemical are being imposed penal fees in respect of such consignment. It is not the case of the respondents that the petitioners import the goods without any phytosanitory certificates. The petitioners are also paying the charge and if not they are ready and willing to pay the charges for fumigation as per the Indian parameters. After undertaking all the exercise and obtaining permission and relaxation, the are being levied penalty in the form of five times of the charges of fumigation. The entire action of imposing the penalty stems out of the phytosanitory certificates issued by the exporting country. The petitioners are being penalised for the action of the officials of the NPPO of the exporting country who are fumigating the timber as per their standards. Regulation 9 of the PQ, 2003 deals with the fumigation of timber/wood by Methyl Bromide or by “any equivalent” chemical treatment duly approved by the Plant Protection Adviser which shall be endorsed on the Phytosanitory Certificates issued thereof at the country of export or re­export. Thus, the Regulation itself stipulates of an “equivalent chemical” to be used for fumigation of timber. The respondents have not yet decided or prescribed under any regulation directing any use of “equivalent chemical” to Methyl Bromide. Thus, the action of the respondents of levy of penal fees in these circumstances appears to be arbitrary.

28. At this stage it would be apposite to refer to the relevant articles of ISPM-12: The requirement of PHYTOSANITARY CERTIFICATION is prescribed in Article 1 of the ISPM-12 which reads as under:

“1. Phytosanitary certificates

1.1 Purpose of phytosanitary certificates

Phytosanitary certificates are issued to attest that plants, plant products or other regulated articles meet the phytosanitary import requirements of importing countries and are in conformity with the certifying statement. Phytosanitary certificates may also be issued to support re-export certification to other countries. Phytosanitary certificates should be issued only for these purposes.

1.2 Types and forms of phytosanitary certificates

In the Annex to the IPPC, there are two types of certificates: a “phytosanitary certificate” (see Annex 1 of this standard) for export purposes and a “phytosanitary certificate for re-export” (see Annex 2 of this standard) for re­export purposes.3 A phytosanitary certificate for export is usually issued by the NPPO of the country of origin. A phytosanitary certificate for export describes the consignment and, through a certifying statement, additional declarations and treatment records, declares that the consignment meets phytosanitary import requirements. A phytosanitary certificate for export may also be issued in certain re-export situations for plants, plant products and other regulated articles originating in countries other than the country of re­export if compliance with the phytosanitary import requirements can be attested by the country of re-export (e.g. by inspection).

3. Considerations for importing countries and NPPOs issuing phytosanitary certificates :

NPPOs of importing countries may require phytosanitary certificates for regulated articles only. These are usually plants and plant products but may include articles such as empty containers, vehicles and organisms other than plants where phytosanitary measures are technically justified. NPPOs of the importing countries should not require phytosanitary certificates for plant products that have been processed to the point where they have no potential for introducing regulated pests, or for other articles that do not require phytosanitary measures (see IPPC Article VI.2 and ISPM 32 (Categorization of commodities according to their pest risk)). NPPOs should consult bilaterally when there are differences between their views regarding the technical justification for requiring phytosanitary certificates. Requirements for phytosanitary certificates should respect the principles of transparency, non-discrimination, necessity and technical justification (see ISPM 1 (Phytosanitary principles for the protection of plants and the application of phytosanitary measures in international trade)).

3.1 Unacceptable phytosanitary certificates:

NPPOs of importing countries should not accept phytosanitary certificates that they determine to be invalid or fraudulent. The NPPO of the declared country of issuance should be notified as soon as possible regarding unacceptable or suspect phytosanitary certificates as described in ISPM 13 (Guidelines for the notification of non-compliance and emergency action). Where the NPPO of the importing country suspects that phytosanitary certificates may be unacceptable, it may require the prompt cooperation of the NPPO of the exporting or re-exporting country in determining the validity or non-validity of the phytosanitary certificates. The NPPO of the exporting or re-exporting country should take corrective action where necessary and review systems for the issuance of phytosanitary certificates so as to ensure that a high level of confidence is associated with its phytosanitary certificates.”

29. A plain and simple reading of the aforesaid Articles of the ISPM-12, will clarify that a phytosanitory certificate is required to be issued by the NPPO of the country of origin. As per Article 3 the NPPOs of importing countries may require phytosanitory certificates for regulated articles. In the present cases, timber is recognised as a regulated article. It is also prescribed that for certain plant produces the importing countries should not require such certificate if the products are processed to the point where they have no potential for introducing regulated pest. Article 3 further clarifies that “NPPOs should consult bilaterally when there are differences between their views regarding the technical justification for requiring phytosanitory certificates, and requirement for such certificates should respect the principles of transparency, non-discrimination, necessity and technical justification”. Article 3.1 prohibits the acceptance of phytosanitory certificate, if the importing countries determine them as invalid or fraudulent and the NPPO of the declaring country should be notified at the earliest regarding unacceptability or suspect phytosanitory certificates. The Article further cautions that if the NPPO of the importing country suspects that phytosanitary certificates may be unacceptable, it may require the prompt cooperation of the NPPO of the exporting or re-exporting country in determining the validity or non-validity of the phytosanitary certificates.

The NPPO of the exporting or re-exporting country should take corrective action where necessary and review systems for the issuance of phytosanitary certificates so as to ensure that a high level of confidence is associated with its phytosanitary certificates.

30. Nothing is brought on record to remotely suggest that whether the respondent authority has followed the procedure prescribed in ISPM-12. It is the case of the respondents that the phytosanitory certificate issued to the petitioners by the NPPOs of exporting country is invalid. In this background, the respondents are required to intimate the NPPOs of the exporting country, who are issuing such certificate. They should have resolved the entire issue with regard to technical requirements by bilateral consultation. Nothing is pointed out to this Court, that the respondents have notified the NPPO of the declaring country which has issued the certificates. Article 3.1 prescribes of prompt action with the exporting country to determine the validity or non-validity of such certificates. Instead of following such procedure, the petitioners are being imposed the penalty for the phytosanitory certificates issued by the country of origin. Such action of the respondent defies logic and is difficult to fathom.

31. On the backdrop of the aforementioned facts and analysis, the core question of law which falls for consideration by this Court is whether the levy of five time fees in the form of penalty upon the petitioners on import of timber after granting them relaxation for such import will violate the provisions of Article 19(1)(g) of the Constitution of India, and can such levy satisfy the test of reasonableness of restriction on free trade as prescribed in clause(6) of Article.

32. Article 19(1)(g) of the Constitution of India guarantees right to practice any profession, occupation or trade or business. However, the freedom is not unrestricted or uncontrolled in view of clause (6) of the article which authorizes the legislation to (a) impose reasonable restrictions on this right in the interest of general public, (b) prescribes technical or professional qualifications necessary for carrying on any profession, trade or business; and (c) enables the state to carry on any trade or business to the exclusion of the private citizens, wholly or partially. The expression ‘in the interest of general public’ is of wide import comprehending public order, public health, public security, morals, economic welfare of the community and the objects, mentioned in Part-IV of the Constitution. (vide Municipal Corporation Of The City Of Ahmedabad vs. Jan Mohammed Usmanbhal, 1986 (3) S.C.C. 20). Such expression will encompass the bio-security of the Country which has the direct impact on the environment and public health.

33. While imposing reasonable restrictions, the nature of the business or trade is the necessary element in deciding the reasonable restrictions. The petitioners are dealing in a trade which uses a chemical harmful to the ozone. Methyl Bromide is listed as Ozone Depleting Substance (ODS) under the Montreal Protocol of United Nations. The Union of India is a signatory member since 19.06.1992. As per the said protocol the developing countries will have to phase out use of Methyl Bromide from the fumigation treatment. It is also an undisputed fact that as on today there is no other alternative treatment of fumigation declared by the Indian Government, and it appears that efforts are being made to find an alternate to Mehtyl Bromide and the same is in nascent stage. The developed counties like United States, Canada, European Union have objected to India being WTO member for insistence on Methyl Bromide as fumigation agent. In such scenario, the respondent authorities are though giving relaxations in insistence upon the Methyl Bromide as fumigation agent, but are simultaneously levying the penal fees under the PQ Order, 2003. It is also not denied by the respondents that import of other plant products such as chickpeas and pulses shipped from USA that are fumigated by Methyl Bromide are allowed at the port of arrival in India with one time inspection fees. The petitioners cannot equate the fumigation of timber/wood with the plant products like chickpeas or pulses since the proportion of Methyl Bromide used for each of them is different. Timber/wood needs highly penetration under the bark for neutralizing the pests. Thus, the impugned OMs and the provision of Regulation 14(2) of PQ Order cannot be set aside on the ground of unreasonable classification. The sole discretion lies with the authorities to classify such goods who are expert in the field, and this Court cannot set in the shoes of such experts and impose its wisdom on the subject unless it is shown that the procedure so followed is absolutely illegal and against the rules and regulations. However, at the same time the petitioners cannot be subjected to penal fees for the inaction of the exporting countries.

34. So far as use of Methyl Bromide is concerned, it is not denied by the respondents that the Ministry of Agricultural and Farmers Welfare Government of India has framed guidelines for usage of Methyl Bromide for fumigation on various products as per Montreal Protocol. Such fumigated products by Methyl Bromide are being exported by India after framing of necessary guidelines being Quarantine Treatment and Application Procedures of Methyl Bromide Fumigation. Thus, the concern of the Indian Government with regard to the affecting of bio-security appears to be well founded, however in wake of no other alternative as on today, the imposition of penalty on the petitioners appear to be harsh. The respondents cannot approbate and reprobate on usage of same chemical by taking shelter under bio-security of country. It is also an undisputed fact that as on today no rules or guidelines or regulations are framed by the Government of India mandating the use of any other chemical except Methyl Bromide for fumigation process.

35. At this stage, I may with profit refer to the few observations made by the Constitution Bench of the Apex Court which will facilitate in understanding the expression “reasonable restrictions.” In the case of Cooverjee B.Bharucha vs. Excise Commissioner And The Chief Commissioner, Ajmer , AIR 1954 SC 220 has held thus:

“Laws prohibiting trades in noxious or dangerous goods or trafficking in women cannot beheld to be illegal as enacting a prohibition and not a mere regulation. The nature of the business is, therefore, an important element in deciding the reasonableness of the restrictions. The right of every citizen to pursue any lawful trade or business is obviously subject to such reasonable conditions as may be deemed by the governing authority of the country essential to the safety, health, peace, order and morals of the community. Some occupations by the noise made in their pursuit, some by the odours they engender, and some by the dangers accompanying them, require regulations as to the locality in which they may be conducted. Some, by the dangerous character of the articles used, manufactured or sold, Require also special qualifications in the parties permitted to use, manufacture or sell them.”

36. In case of Narendra Kumar vs. Union Of India, AIR 1960 SC 430, the Supreme Court, while examining the provision of Articles 13 and 19(1) of the Constitution of India has has held thus:

“19 In applying the test of reasonableness, the Court has to consider the question in the background of the facts and circumstances under which the order was made, taking into account the nature of the evil that was sought to be remedied by such law, the ratio of the harm caused to individual citizens by the proposed remedy, to the beneficial effect reasonably expected to result to the general public. It will also be necessary to consider in that connection whether the restraint caused by the law is more than was necessary in the interests of the general public.”

37. In case of Chintaman Rao vs. State of M.P, AIR 1951 SC 118, the Apex Court has held thus:

“6.The phrase “reasonable restriction” connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word “reasonable” implies intelligent care and deliberation, that is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by clause (6) of Article 19, it must be held to be wanting in that quality.”

Article 19(1)(g) of the Constitution of India guarantees that all citizens have the right to practise any profession or to carry on any occupation or trade or business and Clause (6) of the article authorises legislation which imposes reasonable restrictions on this right in the interests of the general public. It is not disputed that in order to determine the reasonableness of the restriction regard must be had to the nature of the business and the conditions prevailing in that trade. It is obvious that these factors must differ from trade-to-trade and no absolute or conclusive rules concerning all trades can be prescribed. It can not be denied that the State has the power to prohibit trades which are illegal or immoral or injurious to the health and welfare of the public. It is well settled that the test of reasonableness, wherever prescribed, should be applied to each individual statute, and each case has to be examined on its own facts and generalised standards cannot be adopted. The Court, while examining the purpose of restrictions imposed has to evaluate the extent of evil which is sought to be remedied by imposing such restrictions. The Apex Court has emphasised that phrase “reasonable restriction” connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word “reasonable” implies intelligent care and deliberation, that is, the choice of a course which reason dictates. It is held that legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by clause (6) of Article 19, it must be held to be wanting in that quality. This Court fails to understand that by imposing penalty, what type of evil is sought to be remedied, whether the respondents want to restrict the use of Methyl Bromide (which is being already used for exports) and imports or after granting approval and relaxation to the petitioners for import, the respondents want to restrict such import after their consignment is fumigated both off-shore and on-shore.

38. As mentioned hereinabove, the action of the respondents conflates two different scenario. On one hand relaxation is granted to import timber with phytosanitory certificate and on the other hand, they are being penalised for obtaining such certificates. Similarly, the use of Methyl Bromide is considered to be harmful for environment, and on the other hand such chemical is being used for exports and imports. The petitioners are penalised for importing consignments of timber, which is subjected to fumigation by different chemical equivalent to Methyl Bromide or by Methyl Bromide on payment of necessary charge. Simultaneously, a penalty is being imposed upon them for importing the timber which is fumigated by the exporting countries as per their standards. There cannot be any scintilla of doubt that the respondents have all the power and authority to regulate, classify and impose reasonable restrictions on the trade on the articles or goods which are imported in India keeping in mind the principles, as mentioned by the Apex Court, but concurrently in wake of the actual scenario which is prevailing as on today and in absence of any other alternative to the petitioners coupled with the fact that relaxation is granted to them to import timber; the levy of penalty on imports is intrinsically prejudicial to their trade and business. Either the respondents should not grant any relaxation of import of such timber or if they are allowing the same no penalty should be imposed. Thus, the action of the respondents in levying fine or penalty will amount to reasonable restrictions having direct impact on their right guaranteed under Article 19(1)(g) of the Constitution of India, since the petitioners cannot carry on with their trade unless they pay such fine or penalty. The respondents before imposing fine or penalty should have deliberated on the issue and the adversity faced by the petitioners, since the issuance of phytosanitory certificate is beyond their sphere or ambit. They cannot insist the exporting country to issue phytosanitory certificate as per the requirement of Indian parameters. Without resolving the issue at the ends of NPPOs of each country, the petitioners are being penalised. Thus, such an action of the respondents is arbitrary and invades their right to trade, hence the same calls for interference.

38. Since this Court has held the action of the respondents in levying fine or penalty as arbitrary and violates the fundamental rights, the cardinal question of law which necessitates to be addressed is “whether this Court, while exercising its powers conferred under Article 226 of the Constitution, set aside the impugned Regulation and subsequent OMs which are in form of delegated legislation. In this regard, it may be apposite to refer to pertinent observations of the Supreme Court made in recent decision :

In case of Rachna vs. Union Of India, 2021 (5) SCC 638, the Apex Court has held thus:

“Judicial review of a policy decision and to issue mandamus to frame policy in a particular manner are absolutely different. It is within the realm of the executive to take a policy decision based on the prevailing circumstances for better administration and in meeting out the exigencies but at the same time, it is not within the domain of the Courts to legislate. The Courts do interpret the laws and in such an interpretation, certain creative process is involved. The Courts have the jurisdiction to declare the law as unconstitutional. That too, where it is called for. The Court is called upon to consider the validity of a policy decision only when a challenge is made that such policy decision infringes fundamental rights guaranteed by the Constitution or any other statutory right.”

In case of Franklin Templeton Trustee Services Private Limited vs Amruta Garg, 2021 (9) S.C.C. 606, the Apex court has held thus :

“Policy decisions can only be faulted on the grounds of mala fides, unreasonableness, arbitrariness and unfairness, in addition to violation of fundamental rights or exercise of power beyond the legal limits. The principle of manifest arbitrariness requires something to be done in exercise in the form of delegated legislation which is capricious, irrational or without adequate determining principle. Delegated legislations that are forbiddingly excessive or disproportionate can also be manifestly arbitrary.”

It can be distinctly inferred from the aforementioned observations that it is in the absolute realm of the executive to take a policy decision, and such policy decision can only be interfered with if it is ultimately found that the policy suffers from the vice of mobo fide, unreasonableness, arbitrariness and unfairness, in addition to violation of fundamental rights or exercise of power beyond the legal limits. It is the solemn and constitutional obligation of the Court to examine that in framing of policy no law is violated and people’s fundamental rights are not transgressed upon except to the extent permissible under the Constitution. Unquestionably, in the present case, the impugned Regulation and the subsequent OMs do not satisfy the principles of rationality and they infract the fundamental rights of the petitioners guaranteed under Article 19(g) of the Constitution of India, hence this Court, in exercise of powers conferred under Article 226, has the explicit authority to set aside the same.

39. On the substratum of the aforementioned reasoning and analysis, the impugned Regulation 14(2) of the Plant Quarantine (Regulation to Import into India) Order, 2003 of Chapter-VI is declared as arbitrary and unreasonable and in violation of fundamental rights guaranteed under Article 19(g) of the Constitution of India to the extent it stipulates charging of fees of five times of normal rates. The same is quashed and set aside to the said extent only. As a sequel the subsequent impugned Office Memorandums, which reiterate such imposition of penal fees are also quashed and set aside to such extent only.

40. The writ petitions are allowed. Rule made absolute accordingly.

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