A) ABSTRACT / HEADNOTE

The judgment adjudicates the constitutional and statutory validity of multiple notifications and trade notices issued by the Union of India under the Foreign Trade (Development and Regulation) Act, 1992, whereby imports of certain pulses, including peas, moong, urad and tur, were shifted from the free to the restricted category and made subject to quantitative ceilings and prior authorisation. The principal controversy arose from the challenge mounted by importers asserting that such restrictions amounted to quantitative restrictions under Section 9A of the Act, necessitating compliance with the safeguard investigation mechanism and procedural safeguards prescribed under the Safeguard Measures (Quantitative Restrictions) Rules, 2012.

The Court undertook an extensive interpretative exercise concerning the statutory scheme of Sections 3 and 9A of the FTDR Act, harmonising domestic law with India’s international obligations under GATT 1994, particularly Articles XI and XIX. A detailed exposition was rendered on the doctrines of act of transformation, direct application, and invocability of international treaties within Indian municipal law.

Rejecting the importers’ challenge, the Court held that Section 9A is an enabling and exceptional provision incorporating Article XIX of GATT, and does not curtail the plenary power of the Central Government under Section 3(2) to impose import restrictions. The impugned notifications were upheld as intra vires, validly issued, and consistent with constitutional and statutory mandates. The judgment constitutes a seminal authority on the relationship between trade policy discretion, domestic legislative competence, and international trade obligations.

Keywords:
Foreign Trade Regulation; Quantitative Restrictions; GATT 1994; Section 3 FTDR Act; Section 9A FTDR Act; WTO Law; Import Policy; International Treaty Law

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute emerged in the context of India’s evolving foreign trade policy aimed at balancing domestic agricultural interests with international trade commitments. Acting under Section 3 of the FTDR Act, the Central Government issued a series of notifications dated 29 March 2019, revising the import policy of pulses by imposing quantitative ceilings and requiring prior authorisation. These measures were justified on grounds of protecting domestic producers and managing agricultural surplus.

The importers challenged these measures before various High Courts, resulting in divergent interim orders that permitted unrestricted imports, thereby frustrating the policy objectives. Given the pan-India ramifications and conflicting judicial directions, the Supreme Court exercised its jurisdiction under Article 139A to transfer and consolidate the matters.

A significant dimension of the challenge concerned the alleged violation of India’s obligations under GATT 1994, particularly the prohibition against quantitative restrictions under Article XI. The importers contended that Section 9A constituted the exclusive statutory route for imposing quantitative restrictions, requiring adherence to safeguard investigations and procedural fairness.

The Court was thus required to examine the interplay between domestic statutory powers, delegated legislation, and international treaty obligations. The judgment situates itself at the intersection of constitutional executive power, trade regulation, and international law, offering authoritative guidance on treaty implementation and statutory interpretation in India.

D) FACTS OF THE CASE

The Union of India issued notifications shifting imports of peas and certain pulses from the free category to the restricted category, imposing annual quotas and mandating licences issued by the Directorate General of Foreign Trade. A subsequent trade notice prescribed that licences would be issued only to actual users, namely millers and refiners.

Importers challenged these actions on multiple grounds. They alleged lack of authority of the DGFT, improper delegation, non-compliance with parliamentary laying requirements, arbitrariness under Article 14, and violation of Section 9A safeguards. Several High Courts granted interim relief permitting unrestricted imports, resulting in a surge of imports beyond prescribed quotas.

The Union contended that the notifications were issued by the Central Government itself, with DGFT merely performing ministerial publication. It was further argued that Section 9A was not the exclusive source of power to impose restrictions, and that Section 3(2) conferred independent and plenary authority.

The Supreme Court framed the central issue as whether the impugned notifications constituted safeguard quantitative restrictions under Section 9A, or ordinary regulatory restrictions permissible under Section 3(2).

E) LEGAL ISSUES RAISED

i. Whether the impugned notifications constituted quantitative restrictions requiring compliance with Section 9A of the FTDR Act?
ii. Whether Section 9A overrides or restricts the powers under Section 3(2) of the FTDR Act?
iii. Whether Article XI of GATT 1994 is directly enforceable in Indian courts?
iv. Whether the DGFT lacked authority in issuing the impugned notifications and trade notices?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for the petitioners submitted that the restrictions imposed were quantitative restrictions within the meaning of Section 9A, necessitating adherence to safeguard procedures. They argued that the absence of investigation, causal determination of injury, and stakeholder hearing rendered the notifications ultra vires.

It was contended that Article XI of GATT 1994 prohibits quantitative restrictions and stands incorporated into Indian law through the FTDR Act. Reliance was placed on Director General of Foreign Trade v. Kanak Exports to argue excessive delegation and lack of authority. The petitioners also alleged arbitrariness and violation of legitimate expectations.

G) RESPONDENT’S ARGUMENTS

The counsels for the Union of India submitted that Section 3(2) confers broad regulatory authority independent of Section 9A. It was argued that Section 9A is an escape clause aligned with Article XIX of GATT, applicable only in safeguard situations involving serious injury.

The Union contended that GATT 1994 is not directly applicable absent legislative transformation. It was further submitted that the DGFT acted as an extended arm of the Central Government, and the notifications were constitutionally valid under Article 77.

H) RELATED LEGAL PROVISIONS

i. Section 3(2), FTDR Act, 1992
ii. Section 9A, FTDR Act, 1992
iii. Article 77, Constitution of India
iv. Article XI & XIX, GATT 1994
v. Safeguard Measures (Quantitative Restrictions) Rules, 2012

I) JUDGEMENT 

The Court upheld the validity of the impugned notifications. It held that Section 3(2) empowers the Central Government to impose restrictions, including quantitative ceilings, independent of Section 9A. Section 9A was construed as a specific safeguard provision enabling deviation from Article XI obligations under Article XIX circumstances.

The Court elaborated on the doctrines of dualism and act of transformation, holding that GATT 1994 is not self-executing in India. Article XI has not been legislatively incorporated, and therefore is not directly invocable before municipal courts.

The argument of excessive delegation was rejected, with the Court affirming that DGFT acted within its statutory role. The expression “total quantity” was interpreted as an aggregate national ceiling, not a per-license entitlement.

The judgment affirmed India’s sovereign discretion in trade regulation while remaining compliant with international obligations through appropriate statutory mechanisms.

a) RATIO DECIDENDI

Section 9A of the FTDR Act does not eclipse or limit the Central Government’s power under Section 3(2) to impose import restrictions; GATT 1994 Article XI is not directly enforceable absent legislative transformation; safeguard procedures apply only when Section 9A is invoked.

b) OBITER DICTA

The Court observed that international treaties operate as constraints on sovereign discretion at the international plane but do not automatically confer enforceable rights domestically.

c) GUIDELINES

i. Import restrictions may be imposed under Section 3(2) without invoking safeguard mechanisms.
ii. Section 9A applies only when restrictions are imposed as safeguard measures.
iii. Treaty provisions require legislative transformation for domestic enforceability.

J) REFERENCES

a) Important Cases Referred

i. Director General of Foreign Trade v. Kanak Exports [2015] 15 SCR 287
ii. Maganbhai Ishwarbhai Patel v. Union of India [1969] 3 SCR 254
iii. Gramophone Company of India Ltd. v. Birendra Bahadur Pandey [1984] 2 SCR 664

b) Important Statutes Referred

i. Foreign Trade (Development and Regulation) Act, 1992
ii. Customs Act, 1962
iii. General Agreement on Tariffs and Trade, 1994