LI Network
Published on: October 22, 2023 at 11:20 IST
The Delhi High Court has invalidated a trade notice issued by the Directorate General of Foreign Trade (DGFT), which restricted eligibility for securing an allocation of the export quota for broken rice to exporters who had previously exported to Senegal, Gambia, and Indonesia during the three financial years preceding the prohibition.
A division bench consisting of Justice Vibhu Bakhru and Justice Amit Mahajan held that the Union Government failed to provide any evidence establishing a rational connection between limiting the export quota to rice exporters with a recent export history and the objective of ensuring capacity and quality.
The court declared, “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 trade notice, issued by the DGFT on June 20, allowed limited quantities of broken rice exports to Senegal, Gambia, and Indonesia due to humanitarian considerations and to address food security concerns in those nations.
The court granted the petitions submitted by several traders with a proven track record in rice export. They argued that the export restriction on broken rice violated Article 14 and Article 19(1)(g) of the Indian Constitution.
While they did not dispute the quantitative export restrictions on broken rice, they contended that excluding experienced rice exporters from applying for a quota to export to the concerned countries amounted to discrimination.
The court noted that the Union Government’s response did not contain any evidence suggesting that rice exporters with a history of exporting to a particular country would be better equipped to fulfill export orders from that country compared to other exporters with established track records.
“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 stated.
The court also emphasized that there was no material to suggest that individuals who had previously exported broken rice to the respective countries had a higher capacity to export rice or that the quality of broken rice they would export would be superior to that of 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.
Case Title: ASFIVE AGRO PRIVATE LIMITED & ORS v. UNION OF INDIA AND ORS. and other connected matters
