S. Muralidhar, J.— Having heard learned counsel for the parties and for the reasons stated therein, the application is allowed. The petition is restored to its original number.
2. The application is disposed of.
W.P(C) 5093/1998 & CM APPL 10101/1998, 10199/99, 1698/02
3. The prayer in this writ petition is for a direction to restrain the Apparels Export Promotion Council (‘AEPC’), Respondent No. 2 herein from making any distinction between the ‘registered’ exporters and ‘member’ exporters by conferring certain important rights and privileges only on the member exporters. The Petitioner seeks the quashing of the relevant Articles of Associations (‘AOA’) and Rules and Regulations of AEPC that bring about such classification. Consequently, the further prayer is made for a direction to the Union of India (‘UOI’) through Ministry of Textiles (‘MoT’), Respondent No. 1 herein to ensure that the election to the Executive Committee (‘EC’) of the AEPC is held again after rectification of the electoral register of the AEPC by permitting all registered exporters to cast their votes in the elections to the EC. The other prayers are for declaring elections to the EC of the AEPC for the year 1998-99 to be invalid.
Position of membership of the AEPC under the Exim Policy
4. The Petitioner No. 1 in the writ petition is the All India Garment Exporters Common Cause Guild. The Petitioner No. 2 is the President of Petitioner No. 1 and Petitioner No. 3 is an exporter registered with the AEPC.
5. The AEPC was incorporated on 22nd February 1978 under Section 25 of the Companies Act, 1956 (‘CA’) It was registered as a company limited by guarantee and is sponsored by the MoT. The object of the AEPC is to promote and develop export of all types of ready-made garments and to allocate and distribute quotas/entitlements for exports and to, inter alia, implement the government policy with regard to exports of garments and textiles. For this purpose, the AEPC receives grants from the Central Government. One of the officers of the Central Government is nominated as the Director General (‘DG’) of the AEPC. The DG, AEPC is also a nominee of the Central Government to the EC of the AEPC.
6. The AEPC derives its status as such in terms of Chapter 13 of the Export and Import (‘Exim’) Policy effective from 1st April 1997 up to 31 March 2002. The basic objective of the AEPC is set out in Para 13.1 of the said Exim Policy. A list of Export Promotion Councils (‘EPCs’) which shall be regarded as such is given in Appendix 31 of the Handbook of Procedure 1997-2002 (‘HBP 1997-2002’). Admittedly, the AEPC features in Appendix 31 of the HBP 1997-2002. Under Chapter 13.4 of the Exim Policy, the EPCs are described as non-profit organizations which would be registered under the CA or the Societies Registration Act, as the case may be.
7. In para 13.5 of the Exim Policy, the EPC is expected to be an autonomous body, which shall regulate its own affairs. The EPC is not required to obtain the approval of the Central Government for participation in trade fairs, exhibitions etc. and for sending sales teams/delegations abroad. However, the Ministry of Textiles/Ministry of Commerce of the Government of India, as the case may be, would interact with the Managing Committee of the EPC concerned, twice a year, once for approving their annual plans and budget and again for a mid-year appraisal and review of their performance. Para 13.7 of the Exim Policy, which talks of support from the Central Government, reads as under:
“13.7 Government Support
The EPCs may be supported by financial assistance from the Central Government. The support given to the EPCs by the Government, financial or otherwise, would depend upon
(a) effective discharge of functions assigned to them;
(b) democratization of the membership of the EPCs;
(c) democratic elections of office bearers of the EPCs on a regular basis;
(d) timely audit of the accounts of the EPCs.”
8. As regards the Registration-cum-Membership Certificate (‘RCMC’), para 13.8 of the Exim policy is relevant and reads as under:
“13.8 Registration-cum-Membership
An exporter may, on application, register and become a member of an EPC. On being admitted to membership, the applicant shall be granted forthwith Registration-cum-Membership Certificate (RCMC) of the EPC concerned, subject to such terms and conditions as may be specified in this behalf.”
9. Volume 1 of the HBP 1997-2002 sets out, inter alia, the procedure for obtaining the RCMC. Para 13.2 of the HBP reads as under:
“13.2 Authorities issuing RCMC
An exporter desiring to obtain a Registration-cum-Membership Certificate (RCMC) shall declare his main line of business in the application which shall be made to the Export Promotion Council (EPC) relating to that line of business. However, an exporter who holds Export Hours/Trading house/Star Trading House/Super Star Trading House Certificate has the option to obtain RCMC from Federation of Indian Exporters Organization (FIEO).
In addition, an exporter may obtain an RCMC from FIEO or any other EPC, if the products exported by him relate to those EPC's. If the export product is such that it is not covered by any EPC, RCMC in respect thereof may be issued by the regional licensing authority concerned. In case of units in EHTP/STP, RCMC may be obtained from the concerned Administrative authorities of such units.”
10. The HBP 1997-2002 specifies the procedure for issuance of the RCMC and the manner in which an exporter can register himself with the registering authority. In terms of Para 13.8 of the HBP 1997-2002, a person aggrieved by the decision of the registering authority in respect of any matter connected with the issuance of RCMC, can appeal to the Director General of Foreign Trade (‘DGFT’) within 60 days of the said decision. Para 13.9 specifies the directions that can be issued by the DGFT in such an appeal. In the application form for issuance of RCMC, which is set out in Appendix 3-A to the HBP 1997-2002, the applicant is expected to declare in para 10 that he will abide by the terms of the registration certificate granted and also any code of conduct that may be prescribed. The applicant is also expected to enclose with the application form a self certified copy of the Importer-Exporter Code (IEC) Number issued by the licencing authority concerned.
11. It must be noticed at this stage that under Para 4.9 of the Exim Policy, no export or import can be made by any person without an IEC number unless specifically exempted. Under para 4.12, every exporter or importer has a mandate to comply with the provisions of the Foreign Trade (Development and Regulation) Act, 1992 (‘FTDR Act’) and the rules and orders made thereunder.
12. It is stated by the Petitioners that since its incorporation, the AEPC has been conferred a monopoly status by the Central Government to channelise and regulate the export of garments from India in accordance with the Exim Policy of the Government from time to time. Every exporter is bound to export garments to the quota countries through the AEPC. While applying for quotas for making necessary exports, the exporter is required to give an earnest money deposit or a bank guarantee and/or a letter of undertaking to the AEPC to ensure the fulfilment of the quota obligations as allotted to such exporter.
Clauses of the Articles of Association concerning membership
13. It is stated that no exporter can make any export of garments without getting itself registered with the AEPC. The AOA of the AEPC defines a member in Clause 1(a) as a member whose name for the time being is entered in the Register of the AEPC. Clause 4 (a) of the AOA prescribes no number limit on the number of members. Under Clause 5 (a) of the AOA, any person who is an exporter of garments or is otherwise interested in the actual interest of export is eligible to become a member subject to complying with the requirements of the Act, Articles and Bye-laws and/or Regulations. Under Article 6(a), an admission fee of Rs. 1,000/- has to be paid apart from the annual subscription by every member of the AEPC. Article 19 of the AOA provides for holding of Annual General Meeting by the AEPC. Article 24 provides for the appointment of the Chairman of the EC from amongst its members. Under Article 42 (a), the EC shall consist of not more than 30 members including the Chairman and Vice-Chairman, excluding the government nominees. It further provides that there shall be four government nominees on the EC. Article 44 of the AOA provides for the eligibility to contest the election to the EC. Article 48 provides that only such members who have paid subscription for the year in which the elections are held and remain so on the day of election, shall be eligible to stand for election to the EC and/or propose and/or second and/or vote for such election. The EC is given powers to administer the affairs of the AEPC. Under Article 100, no change, alteration or modification in any of the articles of the AOA can be made without the prior approval of the Central Government and Article 101 empowers the Central Government to give directions to the AEPC as to the exercise and performance of certain functions, call for reports, returns and other information, approve the Budget and agreement involving foreign collaboration.
14. The Petitioners state that prior to 1981, the AOA of the AEPC provided for four classes of members, namely (i) ordinary members, (ii) associate members, (iii) government nominees, and (iv) institutional members. An exporter of garments, whether manufacturer, exporter or merchant exporter, whether an individual, association or society shall be eligible to become an ordinary member provided the export performance of garment in the sum of Rs. 2 lakhs or more in any of the previous three years prior to the joining. Any person or company not meeting the said criteria was eligible to become an associate member but the said associate member was not entitled to vote on the meeting of the AEPC nor was eligible to be elected to any office or to any committee set up by or within the AEPC. The position as regards the institutional members was the same.
15. Therefore, there was a practice of two separate categories of members, as created by the AEPC in its AOA. The first category was a member who was entitled to vote and the second category included associate members and institutional members who were not entitled to vote.
16. A challenge was raised by certain exporters by filing a Suit no. 873 of 1981 in this Court. The suit was decreed by a judgment dated 19th May 1983 in Pramod Chopra v. Apparels Export Promotion Council ILR (1984) I Del Delhi 718 holding the Rules of Election of the Members of the EC of the AEPC to be void to the extent that they debarred the associate members and the institutional members from voting rights.
Impugned Regulations of AEPC concerning membership
17. It is stated that even after the aforementioned judgment AEPC persisted with two classes of exporters i.e (a) member exporter and (b) registered exporter. In the Regulations framed by the AEPC on Registration, a separate conditionality has been prescribed for an applicant exporter to be recognised as a registered exporter. It is stated in Regulation 1(ii) that the applicant shall not be entitled to be registered as a ‘registered exporter’ if:
“(a) he is not a citizen of India;
(b) he is less than 18 years of age;
(c) he has been adjudicated insolvent by a competent court of law;
(d) he has been convicted of an offence involving misconduct of moral turpitude.”
18. Further, under Regulation 1(iii)(b), the AEPC will have the right to register an applicant if:
“(i) he has done minimum export/local turnover of Rs. 50 lakhs at the time of submitting the application
(ii) if the party is Member/Registered Exporter of AEPC/Any other EP Council for more than 2 years.
(iii) if Member/Registered Exporter has been recognized as Export House/Trading House by the Government of India”
19. A separate set of Regulations have been framed as regards the Membership. Under Regulation 1 of the Regulations of Membership, an applicant is not entitled to become a member of the AEPC if:
“(a) he is not a citizen of India;
(b) he is less than 21 years of age;
(c) he has been registered with the Council as a Registered Exporter for less than three years;
(d) his export performance of garments during any of the three previous years or in the year he applied to become Member of the Council is less than Rs. 20 lacs. An applicant desirous of becoming a Member of the Council will be required to submit a Certificate to the effect by a Chartered Accountant or the Applicant's Bankers;
(e) he has been adjudicated insolvent by a competent court of law;
(f) he has been convicted of an offence involving misconduct or moral turpitude;
(g) his name has been removed from the Register of Members for non-payment of any fee or dues, unless, a period of one year has elapsed since the date of such removal.”
20. As a result of the above Regulations concerning membership, only registered exporters can become members. Under Regulation 1(d) above, only those registered exporters who, during any of the three previous years, have exported over Rs. 20 lakhs are eligible to become members of the AEPC.
21. The Petitioners stated that they have not been entered in the register of members of the AEPC, since they did not fulfil the above criteria under Regulation 1(d). It must be mentioned that the present petition was heard along with connected petitions Writ Petition (Civil) Nos. 5400 of 2001, 5779 of 2000 and 5899 of 2000. The interim applications in all these petitions seeking stay of the above Regulation 1(d) of the Regulations of Membership of the AEPC was rejected by this Court by its order dated 12 September 2001. It was, however, clarified that the 950 registered exporters who did not fulfil the criteria and Regulation 1 (d) would be permitted to vote, but such votes would not be counted until further orders of this Court and that the declaration of the results of the election would be subject to further orders of this Court.
Submissions of Counsel
22. Mr. Suhail Dutt, learned counsel appearing for the Petitioners focussed the challenge to the validity of the Membership Regulations of the AEPC. He submitted that the very existence of the AEPC was owed to Chapter 13 of the Exim Policy and in particular, para 13.1 thereof. Under para 13.8, every exporter was entitled to be registered as such with the AEPC subject to such exporter possessing an IEC Number and the RCMC issued by the EPC would be subject to such terms and conditions, as may be specified in this behalf. It is stated that at the bottom of the RCMC issued by the AEPC a clarification was issued that the RCMC did not confer “any membership rights as per the provisions of the Companies Act, 1956 and the Articles of Association of the Council.” It is submitted that the artificial distinction between the two classes of members of the AEPC into voting and non-voting members was struck down by this Court in Pramod Chopra v. Apparels Export Promotion Council. It cannot, therefore, be allowed to be reintroduced by the Membership Regulations, in particular Regulation 1 (d), by mandating that in order to become a member of the AEPC a registered exporter has to have an export performance of not less than Rs. 20 lakhs in any of the previous three years. Mr. Dutt pointed out that in the counter-affidavit filed on behalf of the AEPC, it is acknowledged that the number of members of the EC of the AEPC was increased on account of the larger number of exporters. It was further acknowledged that the number of member exporters however came down from 10,000 in 1984 to 3,771 in 1998. In other words, a majority of the registered exporters were kept out of the electorate for choosing members to be on the EC of the AEPC. It is submitted that apart from being contrary to the ratio of the decision of this Court in ramod Chopra, Regulation 1 (d) is ultra vires the Exim Policy under which the AEPC is functioning. It is submitted that since there was no such restriction on the membership of the AEPC in para 13.8 of the Exim Policy, no such restriction can be introduced by way of a Membership Regulation of the AEPC. It is further submitted that para 13.8 of the Exim Policy creates a right in an exporter to be registered with the AEPC as a member and that right cannot be diluted through regulations made by the AEPC. It is submitted that the Membership Regulations of the AEPC is in violation of Articles 14 and 19(1)(g) of the Constitution.
23. Appearing for the AEPC, Mr. G.L Rawal, learned Senior counsel first raised the preliminary objection as to the maintainability of the present writ petition under Article 226 of the Constitution. In his submission, the AEPC was not a ‘State’ within the meaning of Article 12 of the Constitution and, therefore, no writ petition under Article 226 was maintainable against it. He placed reliance on the judgment of the Supreme Court in Zee Telefilms Limited v. Union of India, (2005) 4 SCC 649. Mr. Rawal then submitted that if the Petitioners were aggrieved by their names not being included in the list of members of the AEPC, which was a company incorporated by guarantee under Section 25 of the CA, then their remedy was under Section 111 of the CA by filing a petition before the Company Law Board (CLB) and not by way of the present writ petition. He sought to make a distinction between becoming a member of the company and being a member of the AEPC in the capacity of a registered exporter, which was for the limited purpose of being issued an RCMC. Reliance was placed on the decisions of the Supreme Court in Balkrishan Gupta v. Swadeshi Polytex Limited, (1985) 58 CC 563 and Clariant International Limited v. Securities and Exchange Board of India, (2004) 8 SCC 524 : AIR 2004 SC 4236 as well as of this Court in K.P Jain… v. S.K Gupta & Others…S [1978] 48 CC 774 (Del).
24. It was then submitted that rights of a member are purely contractual and unless name of an exporter is entered in the register of members of the AEPC, in accordance with the procedure outlined in the AOA and the Membership Regulations framed thereunder, the exporter cannot exercise rights as such member. Thirdly, it was submitted that the proforma of the application in Appendix 3-A of the HBP 1997-2002 showed that there was no automatic right of RCMC holder to become a member of the AEPC. The relationship with the AEPC was contractual and the exporter who was an applicant for the grant of an RCMC agreed to abide by the Regulations framed by the AEPC. Fourthly, it was submitted that the classification of exporters, registered with the AEPC, for the purposes of eligibility to become members of the AEPC was based on an intelligible differentia and meant to ensure that only those exporters with a proven track record of performance would become members of AEPC with voting rights. It is submitted that this was neither arbitrary nor irrational. Fifthly, Mr. Rawal submitted that the Petitioners were misreading the ratio of the decision in Pramod Chopra and that case did not deal with the validity of Regulation 1(d) of the Membership Regulations at all.
Is AEPC amenable to the jurisdiction under Article 226 of the Constitution?
25. The preliminary objection as to the maintainability of the writ petition against the AEPC is without merit in view of the observations of the Supreme Court in Zee Telefilms Limited. The question before the Supreme Court in the said case was whether the Board of Control for Cricket in India (BCCI) was amenable to the jurisdiction of the Supreme Court in a petition under Article 32 of the Constitution. While answering the question in the negative, the Supreme Court nevertheless acknowledged that the BCCI was discharging public functions, which was in the nature of a public duty or a ‘state function’. The relevant observations of the said decision read as under (SCC @ pp. 682-83):
“31. Be that as it may, it cannot be denied that the Board does discharge some duties like the selection of an Indian cricket team controlling the activities of the players and others involved in the game of cricket. These activities can be said to be akin to public duties or State functions and if there is any violation of any constitutional or statutory obligation or rights of other citizens, the aggrieved party may not have a relief by way of a petition under Article 32. But that does not mean that the violator of such right would go scot-free merely because it or he is not a State. Under the Indian jurisprudence there is always a just remedy for the violation of a right of a citizen. Though the remedy under Article 32 is not available, an aggrieved party can always seek a remedy under the ordinary course of law or by way of a writ petition under Article 226 of the Constitution, which is much wider than Article 32.
33. This Court in the case of Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R Rudani, (1989) 2 SCC 691 has held: (SCC @ pp. 692-93)
“Article 226 confers wide powers on the High Courts to issue writs in the nature of prerogative writs. This is a striking departure from the English law. Under Article 226, writs can be issued to ‘any person or authority’. The term ‘authority’ used in the context, must receive a liberal meaning unlike the term in Article 12 which is relevant only for the purpose of enforcement of fundamental rights under Article 32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words ‘any person or authority’ used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party, no matter by what means, the duty is imposed. If a positive obligation exists mandamus cannot be denied.”
26. As far as the AEPC is concerned, even if it were presumed that it is not a State within the meaning of Article 12 of the Constitution, as long as AEPC exercises public functions, it is amenable to the jurisdiction of the High Court under Article 226 of the Constitution. This is evident from the following observations in Zee Telefilms (SCC@ pp. 682-83):
“33. Thus, it is clear that when a private body exercises its public functions even if it is not a State, the aggrieved person has a remedy not only under the ordinary law but also under the Constitution, by way of a writ petition under Article 226.”
27. Applying the ratio of the judgment in Zee Telefilms to the present case, it is apparent that the AEPC exercises an important public function of ensuring the implementation of the Exim Policy. Further in terms of Chapter 13 of the Exim Policy, which is a statutory document made in terms of section 5 of the ftdr act, the aepc is a monopolistic body through whom every exporter is bound to export garments to the quota countries. Thus AEPC virtually controls the export of garments and its decisions affect the rights and interests of garment exporters. This is apart from the fact that it is a statutory body that receives support from the central government “financially or otherwise.” There can be no manner of doubt that AEPC exercises public functions and is therefore amenable to the jurisdiction of this Court under Article 226 of the Constitution. Accordingly, the preliminary objection raised by the Respondent No. 2 that the present writ petition is not maintainable against it is overruled.
Relief sought cannot be granted in a petition under Section 111 CA
28. The second preliminary objection is that if the Petitioners are aggrieved by their names not being entered in the list of members of the AEPC, they should approach the Company Law Board with the petition under Section 111 CA. This objection is also without any merit. A reading of the petition itself shows that the Petitioners are in fact challenging the validity of the Regulations of Membership of the AEPC that creates two different classes of registered exporters. Obviously, the challenge to the validity of the Membership Regulations cannot be raised before the CLB in a petition before the CLB under Section 111 of the CA. The scope of such a petition is restricted to challenging the decision on an application for transfer of shares in terms of AOA of the AEPC. The reliefs sought in the present petition cannot be granted by the CLB. Consequently, the second preliminary objection is also negatived.
Validity of the Regulations making a distinction between ‘Registered’ Exporters and ‘Member’
29. The central issue in this petition is whether the AEPC can possibly make a Regulation that further classifies exporters registered with it into two categories: - (1) those that been given right to participate in the election to the EC on the basis of the export performance in the past three years; and (2) those that have been denied such rights. The contention of the Petitioners is that the Exim Policy does not permit such sub-classification of exporters registered with the EPCs. The further contention is that even the AOA of the AEPC do not recognise such classification and that the AOA has in any event to be in conformity with the Exim Policy. In order to appreciate these contentions, the relevant clauses of the AOA are required to be referred to.
30. Clause 5 (a) of the AOA defines eligibility as under:
“5. Eligibility. (a) Any person who is an exporter of garments whether manufacturer exporter or merchant exporter or otherwise interested in the actual export of garments shall be eligible to become Member provided, such person, otherwise comply with other requirements in terms of the Act, the Articles and the bye-laws and/or regulations.”
31. It is on the strength of the above clause that the AEPC has made regulations defining the eligibility for an exporter to become its member. The Membership Regulations, which are the bone of contention, have already been extracted hereinbefore.
32. In the view of this Court, although the AEPC is a company limited by guarantee incorporated under Section 25 CA, it is not merely that. The AEPC owes its very existence to the Exim Policy. The AEPC has to mandatorily be registered in terms of para 13.4 of the Exim Policy either under the CA or the Societies Registration Act. The AEPC is expected to strictly abide by the Exim Policy. Its very name, i.e “Export Promotion Council”, suggests that it is an entity formed in terms of the Exim Policy for a specific purpose. Under para 13.7, an EPC which receives support from the Central Government, either ‘financial or otherwise’, has to ensure ‘democratisation’ of its membership. Para 13.8 of the Exim Policy clearly states that the exporter may ‘on application, register and become a member of an EPC’. Therefore, the EPC that is registered as a company under Section 25 of the CA cannot possibly take recourse of Table C to the Schedule I of the CA to restrict, through clauses in its AOA or the Regulations made thereunder. The submission made on behalf of the AEPC that the concept of membership flows from the CA and the concept of registered exporter flows from the Exim Policy is untenable in law. While the prerogative to restrict membership may have been generally available to a company incorporated under Section 25 CA, the position is different when such company has been incorporated essentially to satisfy the mandatory requirement of Para 13.4 of the Exim Policy. The AOA of such company, which is in effect an EPC, will have to be in conformity with paras 13.7 and 13.8 of the Exim Policy. The AEPC which owes its very existence to the Exim Policy has to abide by the conditionalities of the Exim Policy and cannot incorporate into its AOA restrictions as to the eligibility for membership of the AEPC in a manner inconsistent with or in excess of what is contained in the Exim Policy. The words “subject to such terms and conditions as may be specified in this behalf” occurring in para 13.8 of the Exim Policy, necessarily mean such terms and conditions as may be specified in the Exim Policy itself. If such terms and conditions are specified in the Regulations made by the EPC concerned, they have to be consistent with the Exim Policy. This position is unique to an EPC and, therefore, none of the decisions cited by learned Senior counsel for the AEPC, which concerned the position in companies in general, have any relevance to the situation on hand.
33. The submission that the registration of an exporter under Para 13.8 of the Exim Policy is only for the purposes of issuance of an RCMC and not for becoming a member of the AEPC is, on the face of it, fallacious. The sequence envisaged in Para 13.8, which has been extracted hereinbefore, is that upon registration the exporter becomes a member of the AEPC. The word ‘member’ in Para 13.8 means just that. There cannot be one member for the purposes of the Exim Policy and another for the purposes of the CA. Once registered under the Exim Policy, a right inheres in the exporter to become a member of the AEPC. That cannot be taken away by means of Membership Regulations made under the AOA of the AEPC. The note appended at the bottom of the RCMC issued by the AEPC to the effect that the RCMC did not confer “any membership rights as per the provisions of the Companies Act, 1956 and the Articles of Association of the Council” is without legal basis and is ultra vires the Exim Policy to which the AEPC owes its existence.
34. It was submitted by Mr. Rawal that in terms of Para 13.2 of the HBP, an exporter could obtain an RCMC even from the Federation of Indian Exporters Organisation (FIEO) and, therefore, the question of ‘membership’ of such exporter of a particular EPC became redundant. According to Mr. Rawal, this showed that the issuance of an RCMC and becoming a member of the EPC were two different things.
35. The above submission is outside the context of the present petition which is not concerned with a situation where an exporter chooses to get an RCMC from an FIEO. Therefore the question whether such exporter stands deprived of the right of registration with an EPC and consequent membership also does not arise. In any event, the facility of obtaining an RCMC from an FIEO in terms of Para 13.2 HBP is in addition to the one available to an exporter under Para 13.8 of the Exim Policy. It does not take away the right of an exporter to seek registration with, and consequential membership of an EPC under Para 13.8 of the Exim policy. Contrary to the submission made on behalf of the AEPC, Para 13.8 of the Exim Policy makes it plain that membership of an EPC follows registration of an exporter with such EPC.
36. The AEPC cannot possibly take recourse to Clause 5 (a) of the AOA to justify the making of regulations that bring about the above two classes of registered exporters. An EPC, even if happens to be incorporated under Section 25 CA as a company limited by guarantee, has to frame its Regulations consistent with the Exim Policy. An EPC receiving support from the government has to, in terms of Para 13.7 of the Exim Policy, ensure democratisation of its members and democratic election of its office bearers. The Membership Regulations, in particular Regulation 1 (d), is contrary to this mandate. There is no denial by the AEPC that by 2001 there were nearly 33,000 exporters registered with it in terms of Clause 13.4 of the Exim Policy. Of these, not even 10% were recognised as ‘members’ eligible to vote at the elections to its EC. This can, by no means, be considered democratic. The electorate has to comprise the registered exporters from among whom the EC can be elected. Consequently, this Court is unable to appreciate how the AEPC can possibly create a further classification amongst registered exporters and restrict the eligibility for membership of the AEPC in the manner it has chosen to do by means of the Regulations of Membership. The classification of exporters registered with the AEPC into ‘registered exporters’ and ‘member exporters’ has no nexus with the object of ensuring democratisation of such membership or democratic elections to the EC of the AEPC. The Membership Regulations are, therefore, violative of Article 14 of the Constitution. The restriction on membership brought about by the Membership Regulations, apart from being ultra vires the Exim Policy, are unreasonable and violative of Article 19(1)(g) of the Constitution.
Conclusion
37. In the considered view of this Court, the Regulations of Membership made by the AEPC to the extent they are inconsistent with the Exim Policy are unconstitutional and ultra vires para 13.8 read with para 13.7 of the Exim Policy (effective from 1 April 1997 to 31 March 2002). They are accordingly, struck down as such. Any further amendments made to the AOA of the AEPC to bring about the classification of exporters into ‘member exporters’ and ‘registered exporters’, granting them different rights and privileges, will stand invalidated for the above reasons.
38. However, in view of the fact that the application for interim relief was rejected by this Court by the order dated 12 September 2001, it is clarified that this judgment will only have prospective effect. In other words, this judgment will not have the effect of invalidating the elections held thus far to the EC of the AEPC. The elections to the EC of the AEPC hereafter will be held on the basis of the Membership Regulations of the AEPC, to the extent they are consistent with the Exim Policy.
39. The writ petition is accordingly allowed in the above terms with costs of Rs. 5,000/- which will be paid by the Respondent No. 2 to the Petitioners within a period of four weeks from today. The pending applications are disposed of.
Comments