Delhi High Court Quashes Trade Notice Over Eligibility Restriction For Allocation Of Quota For Export Of Broken Rice, Asks Centre To Reevaluate Criteria

The Delhi High Court has quashed a trade notice issued by the Directorate General of Foreign Trade restricting the eligibility for securing allocation of quota for export of broken rice only to those exporters who had exported it to Senegal, Gambia and Indonesia in the three preceding financial years.

A division bench of Justice Vibhu Bakhru and Justice Amit Mahajan said that the Union Government failed to produce any material to establish any rational nexus between restricting the export quota to rice exporters that had exported it during the three financial years preceding the prohibition and the object of ensuring capacity and quality.

“In the given circumstances, we set aside the impugned trade notice. The respondents may re-evaluate the criteria for allocation of quota for export of broken rice,” the court said.

The trade notice was issued by the DGFT on June 20. Export of broken rice, which is otherwise proscribed, has been permitted to Senegal, Gambia and Indonesia in limited quantities on humanitarian grounds and to address the food security concerns of the said nations.

The bench allowed the petitions moved by various traders having a verifiable track record of exporting rice. They were aggrieved by the restriction of export on broken rice contending that it violates Article 14 and Article 19(1)(g) of the Constitution of India.

Whilst they did not challenge the quantitative restriction imposed for the export of broken rice, it was their case that excluding all rice exporters with established track record from applying for a quota to export to the countries in question is discriminatory.

The court observed that the Union Government’s counter affidavit did not set out any material to suggest that the rice exporters having a past experience of exporting rice in a particular country would be better placed to service the export orders from that country in comparison with other exporters with established track record.

“It is important to note that the objective of the policy was to ensure capacity and quality. We are unable to find that the given classification has any nexus to the said objective,” the court said.

It added that there was no material on record to even remotely suggest that persons who have exported broken rice to the respective countries would have a higher capacity to export rice or the quality of broken rice to be exported by them would be superior than that which may be exported by those who had exported to other countries in the past.

“There is also no material to indicate that the channels of export to the countries in question are different from the channels of export to other countries. The underlying assumption of the classification is that the rice exporters who had exported rice to the countries in question in part have comparatively assured capacity to export broken rice and to ensure their quality. This assumption is not founded on any material or rational basis,” the bench observed.

Counsel for Petitioners: Mr Ashish Batra, Advocate.

Counsel for Respondents: Mr George Pothan Poothicote, Ms Sindhu Acharya and Mr Arprit Mallick, Advoates for R-1. Mr Kirtiman Singh, CGSC with Mr Waize Ali Noor, Ms Shreya V. Mehra, Mr Taha Yasin, Mr Varun Rajwat and Mr Madhav Bajaj, Advocates of R-2.

Title: ASFIVE AGRO PRIVATE LIMITED & ORS v. UNION OF INDIA AND ORS. and other connected matters

Citation: 2023 LiveLaw (Del) 1012

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