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Supreme Court upholds Government of India Notification banning Import of Palm Oil through Kerala Ports

The Supreme Court has upheld a 2007 Central Government notification prohibiting the import of palm oil through all the ports of Kerala. The Supreme Court bench comprising of Justices A.K. Sikri and Rohinton Fali Nariman held that there is a sufficient public good sought to be achieved by laying down the exception banning the imports of crude palm oil through ports in Kerala. Dismissing the appeal, court said, “A citizen of India has a fundamental right to carry out the business of export, subject, of course to the reasonable restrictions which may be imposed by law. Such a reasonable restriction was imposed in terms of the 1992 Act”. The court added that the policy of the Government can change its policy in regard to export and  according to the requirements of the country.

The appellants who are engaged in refining and manufacture of edible oils, vanaspathi main, uses crude palm oil as raw material. Before the issuance of the aforesaid Notifications, this import was through the ports of Kerala. The central government notifications prohibiting the import have prevented them from importing and they filed a writ petition before Kerala High Court, which dismissed it. The appeal was also dismissed by the Division bench.

The notification under challenge

The central Government notification prohibited import of palm oil through ports of Kerala. The appellants are challenging its vires on two grounds, viz. 1. Central Government is not empowered by  Section 3(2) of The Foreign Trade (Development and Regulation) Act,  to prohibit the import 2. Imposition of selective restriction and confining the prohibition of import of crude palm oil to the ports in Kerala is violative of Article 14.

Section 3(2) reads “The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology

Government empowered to issue notification prohibiting import through Kerala ports

The court held that sub-section (2) of Section 3, can be made “subject to such exceptions, if any, as may be made by or under the Order”. These words are of wide amplitude giving necessary powers to make such exceptions as the Central Government deems fit while issuing the Notifications or the Order in prohibiting, restricting or regulating import or export of goods etc, the court observed. It said “In the process, it can restrict the import of particular goods through particular ports or disallow the import through specified ports- Of course, such an action cannot be arbitrary or irrational and should be backed sound reasons.” The court added “there is a sufficient public good sought to be achieved by laying down the exception banning the imports of crude palm oil through ports in Kerala”

Prohibition of Palm oil import not violative of Article 14

Addressing the contention that the import ban violated Article 14, the court said “the respondents have been able to demonstrate intelligible basis for issuing the impugned Notifications having rational nexus with the objectives sought to be achieved. We, thus, reject the arguments based on Article 14 of the Constitution.”  It added “The correctness of the reasons which prompted the Government in decision-making taking one course of action instead of another is not a matter of concern in judicial review and the Court is not the appropriate forum for such investigation.” The Government had submitted that they had only two options before it, either to increase the custom duty i.e. duty on the import of crude oil or to prohibit the import through Kerala ports. It said“Enhancing the import duty would have all India ramification, whereas the problem was Kerala specific. Therefore, instant step was taken. When a particular decision is taken in the interest of the said farmers which are marginalized section of the society, more so for their survival, this policy decision of the Central Government provides a complete rational in support of the decision having nexus with the objective sought to be achieved.”

Read the Judgment here.

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