The Delhi High Court has held that role of the Central Bureau of Narcotics (CBN), under the procedural framework established by the Memorandum of Understanding (MOU) between India and Turkey and the corresponding Guidelines, is limited and consequential. The Court pointed out that the CBN’s legal obligation to register a sales contract for the import of poppy seeds arises only upon the reflection of that contract on the online portal maintained by the Turkish Grain Board (TMO).
In the absence of any provision in the governing framework imposing a duty on the CBN to monitor, supervise, or intervene in the internal registration and uploading procedures of the TMO (a foreign entity), no legal liability, arbitrariness, or violation of constitutional principles under Articles 14 and 19 of the Constitution can be fastened upon the CBN for its refusal to register contracts that are not reflected on the said portal, added the Court.
The High Court also clarified that any grievance arising from the non-uploading of a contract by the TMO cannot be remedied through a writ petition against the CBN, as the Indian courts cannot exercise jurisdiction over the actions of the foreign authority.
The Division Bench comprising Justice C. Hari Shankar and Justice Om Prakash Shukla observed that the scheme emerging from the MOU and the Guidelines is clear: the TMO is solely responsible for maintaining the online portal, and exporters must register their contracts with the TMO. The role of the CBN is limited to accessing this portal and verifying the sales contracts that are reflected therein. The Bench found that the CBN’s role is purely consequential and dependent upon the reflection of contracts by the TMO on the portal. Since it was established that the Appellants’ contracts were not reflected on the portal, the issue of any default on the part of the CBN in not registering them does not arise.
The Bench noted that a communication issued before the dispute, had already made a clear distinction between contracts being ‘registered by TMO’ and the same being ‘uploaded to CBN’. Further, Article III(5) of the MOU itself states that ‘CBN shall upload the details of sales contract so registered by it’, indicating that uploading is a distinct step that follows registration. Therefore, the Bench concluded that the reflection of a contract on the portal is not an automatic consequence of its registration with the TMO.
While concurring with the legal principle that the distribution of state largesse (like import licenses) must be fair and non-arbitrary, the Bench found no breach by the CBN. The CBN’s duty is triggered only when contracts appear on the portal. The question of whether the non-uploading of the Appellants’ contracts by the TMO was justified is not a matter for adjudication in a writ proceeding, as the Court cannot sit in appeal over the decisions of a foreign entity like the TMO. The allegation of a ‘pick-and-choose’ approach by the CBN was held to be unfounded, as the Appellants’ contracts were never on the portal for the CBN to consider in the first place.
The Appellants contended that the CBN had a duty to intervene to ensure a fair mechanism once it became aware that registrations had exceeded the Country Cap. The Bench, however, held that a legitimate expectation must be founded on a sanction of law or an established procedure, not a mere hope or wish. Nothing in the MOU or the Guidelines imposed an obligation on the CBN to monitor, supervise, or intervene in the registration process adopted by the TMO. Such an expectation from the CBN could not be transformed into a legally enforceable right.
The Appellants’ reliance on the ‘effects doctrine’ to assume jurisdiction over actions taken by the TMO in Turkey was held to be misplaced, and the Bench clarified that this doctrine applies where conduct outside India results in a restrictive trade practice within India. In this case, the non-uploading of the Appellants’ contracts by the TMO, because the pre-determined Country Cap had already been exhausted, did not constitute a restrictive trade practice or cause any distortion of competition in the Indian market.
Briefly, the Appellants are importers engaged in the business of importing and selling poppy seeds in India. The import of poppy seeds is regulated by the Central Bureau of Narcotics (CBN), Respondent No. 2. In 2018, the Government of India (Respondent No. 1) entered into a Memorandum of Understanding (MOU) with the Republic of Turkey to regulate these imports. As per the MOU, Turkish exporters were required to register their sales contracts with the Turkish Grain Board (TMO) through an online portal. Subsequently, the CBN was to register these contracts based on the details reflected on the portal. The MOU also mandated the fixation of a ‘Country Cap’, which is the maximum annual quantity of poppy seeds that can be imported from Turkey, and stipulated that the TMO should not register contracts exceeding this cap.
In 2019, the CBN issued a Public Notice and Guidelines for the import of poppy seeds for the crop year 2018-19, but the Country Cap had not yet been fixed. The Appellants filed a writ petition challenging the registration process in the absence of a fixed Country Cap. The Respondents conceded that the cap was not fixed and that no imports would be permitted for the 2018-19 crop year. Subsequently, a provisional Country Cap of 18,000 MT was fixed for the next crop year, 2019-20. The TMO confirmed that all prior registrations would be removed and exporters would have to apply afresh.
Following a new Public Notice, the TMO opened its portal for registration in 2019. The Appellants’ exporters registered their sales contracts with the TMO. However, these registrations were not reflected on the online portal accessible to the CBN, and as a result, the CBN did not issue the requisite import permits to the Appellants. Upon seeking clarification, the TMO informed the CBN via a letter, that the Appellants’ contracts could not be approved or uploaded because the notified Country Cap of 18,000 MT had already been exhausted by other registered contracts. The Appellants’ subsequent representations to enhance the Country Cap were rejected, and the final cap was fixed at 18,000 MT. Aggrieved by the non-registration of their contracts, the Appellants challenged the Respondents’ actions before a Single Judge, who dismissed their petitions.
Appearances:
Senior Advocate Jayant Mehta and Ashish Dholakia, along with Advocates Damini Chawla, Pallav Arora, Vishal Thakur, Harsh Gupta, and Damini Chawla, for the Appellant
Advocates Mukul Singh, Aryan Dhaka, Vikrant Badesra, Ripudaman Bhardwaj, Gaurav Barathi, Vishal Thakur, Chirantan Priyadarshan, Kushagra Kumar and Amit Kumar Rana, for the Respondent
