Glass Chatons Importers and Users vs Union of India

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Writ Petition No. 65 of 1959

Decision Date: 10 April 1961

Coram: K.C. Das Gupta, P.B. Gajendragadkar, A.K. Sarkar, K.N. Wanchoo, N. Rajagopala Ayyangar

In the matter titled Glass Chatons Importers & Users versus Union of India, the Supreme Court of India issued its judgment on 10 April 1961. The judgment was authored by Justice K.C. Das Gupta, and the bench comprised Justices K.C. Das Gupta, P.B. Gajendragadkar, A.K. Sarkar, K.N. Wanchoo and N. Rajagopala Ayyangar. The petitioner was the Glass Chatons Importers & Users’ Association and the respondent was the Union of India. The case was recorded as Writ Petition No. 65 of 1959, filed under Article 32 of the Constitution for the enforcement of fundamental rights. The citation for the decision appears as 1961 AIR 1514 and 1962 SCR (1) 862, with additional citator references listed. The relevant statutory framework involved the Import and Export Control Act, 1947 (Act XVII of 1947), specifically section 3, and the Imports (Control) Order, 1955, paragraph 6(h). The constitutional provisions examined were Articles 14, 19(1)(f), 19(1)(g) and 31 of the Constitution of India.

The appellants were importers and users of glass chatons, a material required for manufacturing glass bangles and similar articles. Under the Import and Export Control Act and the Imports (Control) Order, the import of glass chatons was prohibited except by a licence issued by the licensing authorities. For a period the import was completely banned, but subsequently it was permitted under an Export Promotion Scheme and a licence was granted to the State Trading Corporation. The appellants, who had not applied for such a licence, contended that paragraph 6(h) of the Imports (Control) Order, which authorises the Central Government or the Chief Controller of Imports and Exports to refuse a licence or to direct a licensing authority not to grant a licence when the authority intends to canalise imports through special or specialised agencies or channels, imposed unreasonable restrictions on the right to carry on trade and on the right to acquire property. They argued that these restrictions violated Articles 14, 19(1)(f), 19(1)(g) and 31 of the Constitution.

The Court held that the decision to canalise the import of a particular commodity through a selected channel or through selected agencies constituted a reasonable restriction in the interest of the general public. Accordingly, the Court found the provisions of paragraph 6(h) of the Imports (Control) Order, 1955, and section 3 of the Import and Export Control Act, 1947, to be constitutionally valid. The Court further concluded that these provisions did not infringe Articles 14, 19(1)(f) and 19(1)(g), and that they did not contravene Article 31 because the refusal to grant a licence did not amount to the acquisition of any right. The judgment noted that the original jurisdiction lay in Writ Petition No. 65 of 1959 and that the petition was presented by counsel for the petitioners, while counsel for the respondents included the Additional Solicitor‑General of India and other advocates. The judgment was delivered by Justice Das Gupta, and the application was described as being filed under Article 32 for the protection of the fundamental rights set out in Articles 19(1)(f), 19(1)(g), 31 and 14 of the Constitution.

The petitioners claimed that the actions of the Union and the Chief Controller of Imports violated their fundamental rights under Articles 19(1)(f), 19(1)(g), 31 and 14 of the Constitution. The second and third respondents were merchants who had historically imported substantial quantities of glass chatons up to the year 1957. The first respondent was an association of merchants, some of whom engaged in importing glass chatons while others were the ultimate consumers of those materials. Import of glass chatons, which constitute an essential raw material for manufacturing glass bangles and similar wearable articles, was permitted only on licences issued by the authorised licensing authorities. Since 1955 the import of such goods has been governed by the Imports (Control) Order, 1955, promulgated by the Central Government under the powers granted by sections 3 and 4‑A of the Import and Export Control Act, 1947. That order prohibited the import of a large number of articles, including glass chatons, except when a licence was obtained by an applicant in accordance with the provisions of the Act. From time to time the Government of India issued policy statements that clarified the criteria for granting import licences. For the period from January 1957 to the end of March 1958 the policy declared a total prohibition on the import of glass chatons. Beginning in April 1958 the policy was altered so that imports were allowed only under the Export Promotion Scheme. In view of that policy, the second and third respondents, as well as other merchants belonging to the association, did not submit any applications for licences for glass chatons in 1957 or thereafter, and consequently no licences were issued to them. Licences, however, were granted to the State Trading Corporation for the import of glass chatons valued at five lakh rupees for the period April to September 1958 and again for a value of one lakh twenty‑five thousand rupees for the period October 1958 to March 1959. The present petition was filed on 27 April 1959 seeking several orders against the Union and the Chief Controller. The relief prayed for included an instruction that the respondents refrain from giving the State Trading Corporation any preference over the petitioners in granting permits, that no monopoly be created in favour of the corporation, and that the import permits already issued to the corporation be cancelled. The petition also asked that the State Trading Corporation be barred from importing on the basis of the licences that had already been granted. It was noted that the periods of the licences referred to in the petition had already expired, rendering the two latter prayers impossible to grant. Because the second and third respondents, as well as the merchants forming the association, had never applied for any import licences, there was no basis for granting any of the reliefs claimed.

In the present application, the Court observed that there was no indication that the respondents designated as number one and number two had been accorded any preferential treatment over the petitioners in the issuance of import permits. Moreover, the Court found that, as far as could be discerned from the record, there existed no scheme for the grant of fresh licences in favour of the State Trading Corporation; consequently, apart from the licences that had already been issued, no further action could be said to “create a monopoly in favour of the State Trading Corporation.” On that basis, the Court concluded that the petitioners were not entitled to any relief on the present application. Counsel for the petitioners, however, submitted that while paragraph six sub‑paragraph (h) of the Imports (Control) Order of 1955 remained in force, it would be futile for his clients to make any application for licences. Paragraph six, he explained, enumerated a series of grounds on which the Central Government or the Chief Controller of Imports and Exports could refuse to grant a licence or could direct any other licensing authority not to grant a licence. The specific ground set out in sub‑paragraph (h) was that a licence could be refused “if the licensing authority decides to canalise imports and the distribution thereof through special or specialised agencies or channels.” Counsel argued that this provision was void because it contravened article nineteen‑one‑f and article nineteen‑one‑g of the Constitution, as well as article thirty‑one. He further urged that, to the extent that section three of the Imports and Exports Control Act of 1947 empowered the Central Government to make an order such as paragraph six sub‑paragraph (h), section three itself was invalid. In response to these contentions, the Court allowed counsel to press his challenge to the validity of paragraph six sub‑paragraph (h) of the 1955 Order and also to make a limited attack on the validity of section three of the 1947 Act. Counsel acknowledged that the statutory requirement that certain goods could be imported only pursuant to a licence constituted a restriction on the right to carry on trade in those goods and also a restriction on the right to acquire property. Nevertheless, he did not contend that the requirement of section three, taken by itself, was an unreasonable restriction. His objection was directed solely at the additional restriction imposed by sub‑paragraph (h) of paragraph six, which empowered the Central Government or the Chief Controller to refuse a licence “if the licensing authority decides to canalise imports and the distribution thereof through special or specialised agencies or channels.” The argument advanced was that this further restriction on the freedom to trade and to acquire property was wholly unreasonable. Counsel pointed out that, once a decision had been taken that imports should be conducted through particular agencies or channels, granting a licence to an applicant outside those agencies would defeat the purpose of that decision. Accordingly, if the canalisation of imports served the general public interest, the refusal to grant licences to applicants outside the designated agencies or channels was justified.

The Court observed that any decision to canalise imports through particular agencies or channels must itself be justified as serving the general public interest. It noted that the policy governing imports forms an essential component of a nation’s overall economic strategy, which must take into account not only the impact on domestic and international trade but also considerations of monetary policy, agricultural and industrial development, and even political relationships such as friendship, neutrality or hostility toward other states. The Court acknowledged that a judicial forum may often lack the comprehensive material required to determine definitively whether a specific import policy, after weighing all relevant factors, advances the public interest. Even if such material were available, the Court recognized that multiple viewpoints could be reasonably advanced regarding whether a particular import regime—whether it imposes heavy customs duties, imposes a total prohibition, or entrusts importation to selected agencies or channels—is in the public interest. Consequently, the Court held that the burden of proof lies heavily on any party challenging the Government’s assessment of the public interest implications of an import policy. When the Government elects that a given commodity shall be imported only through a chosen channel or agency, the Court will, absent clear evidence to the contrary, presume that the decision advances the general public interest. Accordingly, the Court was unable to accept the submission that a decision to canalise imports is, by its very nature, an unreasonable restriction on the public interest. The Court clarified, however, that while the mere decision to canalise the import of a particular commodity may be difficult to contest, the specific choice of the channel or agency implementing that canalisation can be subjected to scrutiny on the ground that it violates Article 14 of the Constitution or other fundamental rights. In the present proceedings, no question of such a violation was raised. Therefore, the Court concluded that the challenge to paragraph 6(h) of the Imports Control Order, 1955, fails. Similarly, the contention that Section 3 of the Imports and Exports Control Act, 1947, is invalid to the extent that it enables the Government to issue an order like paragraph 6(h) also fails. The Court further rejected the argument that paragraph 6(h) contravenes Article 31, observing that even if the right to carry on trade were treated as property, there is no acquisition of that right in the present circumstances.

In this case, the Court explained that when a licence is denied to an applicant under paragraph 6(h), the applicant loses the ability to engage in trade of the specified goods. Conversely, when a licence is issued to the agencies or channels that have been selected for the canalisation of imports, those agencies or channels are permitted to carry on trade, but this permission does not arise from an acquisition of the trade right that the unsuccessful applicants formerly possessed. Accordingly, the Court held that Article 31 of the Constitution, which deals with acquisition of property, does not apply to the situation. The Court also considered the argument that granting licences to the third respondent, the State Trading Corporation of India, while none were granted to the second and third petitioners, violated the guarantee of equal protection of the laws under Article 14. The Court observed that if the petitioners had applied for licences under the Export Promotion Scheme and the State Trading Corporation had still been preferred, the Court would have needed to examine whether the preference was based on reasonable and rational grounds. However, the Court noted that the petitioners, although they were free to apply for licences under the Export Promotion Scheme, did not make any such application. Consequently, there was no basis for a claim of discrimination. Finally, the Court concluded that the petitioners were not entitled to any relief under Article 32 of the Constitution. The petition was therefore dismissed with costs, and the Court ordered that the petition be dismissed.