Parisons Agrotech (P) Ltd. & Anr. v. Union of India & Ors.
Background
The appellants were edible-oil manufacturers based in Kerala who imported crude palm oil (their key raw material, sourced mainly from Indonesia and Malaysia) through the Kochi and Beypore ports close to their factories. The Central Government issued two notifications in 2007 under the Foreign Trade (Development and Regulation) Act, 1992, first banning palm oil imports through Kochi port and then extending the ban to all Kerala ports, forcing the appellants to import through more distant ports and significantly increasing their transportation costs. The appellants challenged the notifications as beyond the Government's statutory power and as discriminatory/arbitrary under Article 14 of the Constitution, but lost before a Single Judge and then before a Division Bench of the Kerala High Court, leading to this batch of three appeals.
Decision Breakdown
The Supreme Court held that Section 3(2) of the Foreign Trade Act gives the Central Government wide power to prohibit, restrict or regulate import/export of goods "subject to such exceptions... as may be made by or under the Order," and this wide power permits the Government to restrict imports of a particular commodity through particular ports while allowing it elsewhere, so long as the restriction is not arbitrary or irrational and is backed by sound reasons. The Court found there was a sufficient public-interest justification for banning palm oil imports specifically through Kerala's ports (reasons tied to local considerations placed on record by the Government), which answered the appellants' argument that singling out particular ports was unconstitutional discrimination. It distinguished the words "prohibit," "restrict" and "regulate" as carrying different degrees of restriction but held none of this affected the Government's statutory authority to act as it did. Finding no fault with the Kerala High Court's view upholding the notifications, the Supreme Court dismissed all three connected appeals.
Lesson Learnt
The government has broad, generally court-respected discretion to regulate imports/exports of a commodity differently across different ports or regions in the national or public interest, and a business cannot succeed in striking down such a regulation merely by showing it increases their costs: they must show the restriction itself is arbitrary, irrational, or lacks a legitimate public-interest justification.