Supreme Court Upholds Absolute Confiscation of Peas and Pulses Imported Beyond Permissible Quota: Union of India & Ors. vs. Raj Grow Impex LLP & Ors.

Background and Genesis of the Dispute

The Supreme Court of India, in the landmark case of Union of India & Ors. vs. Raj Grow Impex LLP & Ors., delivered a significant ruling on the treatment of imported peas and pulses that had been brought into India in excess of quantitative limits prescribed under government notifications, and without the mandatory import licence. The appeals before the Court arose from orders dated 15.10.2020 and 05.01.2021 passed by the High Court of Judicature at Bombay in Writ Petition (L) Nos. 3502-3503 of 2020 and Writ Petition (ST) No. 24 of 2021.

The core controversy centred on whether goods imported beyond the prescribed annual quota and without a valid licence under notifications issued under the Foreign Trade (Development and Regulation) Act, 1992 could be classified merely as "restricted goods" — eligible for release on payment of redemption fine — or whether they constituted "prohibited goods" subject to absolute confiscation under the Customs Act, 1962.

The Notification Framework

The Central Government, exercising powers under Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy 2015-2020, issued four key notifications bearing S.O. Nos. 1478(E), 1479(E), 1480(E) and 1481(E) dated 29.03.2019, amending the import policy for various items under Chapter 7 of the Indian Trade Classifications (Harmonized System) 2017, Schedule I.

These notifications established the following regime:

  • **Moong (Vigna Radiata)😗* Restricted, subject to an annual quota of 1.5 lakh MT, importable only against a DGFT licence
  • Peas (Pisum Sativum) including Yellow Peas, Green Peas, Dun Peas and Kaspa Peas: Restricted; for the period from 1st April 2019 to 31st March 2020, a total quantity of 1.5 lakh MT permitted against licence as per DGFT procedure
  • **Urad (Beans of SPP Vigna Radiata (L.) Wilezek)😗* Restricted, subject to an annual quota of 1.5 lakh MT with mandatory DGFT licence
  • **Pigeon Peas / Toor Dal (Cajanus Cajan)😗* Restricted, subject to an annual quota of 2 lakh MT per fiscal year under DGFT-notified procedure

The trade notice dated 16.04.2019 issued by the Directorate General of Foreign Trade (DGFT) laid down the procedural modalities for making applications for import of these commodities, requiring online applications from intending millers/refiners having their own processing capacity.

Chronology of Litigation Leading to the Present Appeals

Earlier Rounds of Judicial Challenges

Prior to the 2019 notifications, the Central Government had issued notifications in August 2017 and April 2018 imposing similar restrictions on pulses, shifting the import policy from "free" to "restricted" with annual quotas and prior licence requirements. These notifications faced legal challenges across multiple High Courts — including the Madras High Court, Bombay High Court, Madhya Pradesh High Court and Gujarat High Court — all of which ultimately dismissed the writ petitions upholding the validity of the restrictions.

An attempt to challenge the Gujarat High Court's order before the Supreme Court in Special Leave Petition (C) No. 1922 of 2019 also failed, with the petition being dismissed on 28.01.2019.

Despite this clear judicial trend, fresh writ petitions were filed before approximately 90 benches of the Rajasthan High Court, Jaipur Bench, and before the High Courts of Delhi, Punjab and Haryana, Andhra Pradesh, Bombay and Calcutta, challenging the notifications dated 29.03.2019 and trade notice dated 16.04.2019. In several of these petitions, interim orders were granted permitting imports without licence and beyond the quota.

The Agricas Judgment: Supreme Court's Foundational Ruling

The Union of India filed transfer petitions seeking consolidation of the scattered litigation. The Supreme Court withdrew the matters and heard them on merits, culminating in the judgment dated 26.08.2020 in Union of India and Ors. v. Agricas LLP and Ors. This decision upheld the notifications dated 29.03.2019 and the trade notice dated 16.04.2019 in their entirety.

Several critical holdings in Agricas are directly relevant to the present dispute:

On the purpose of the notifications, the Court took on record the Union of India's position that the restrictions were necessary to protect domestic farmers from the adverse price impact of large-scale imports. The Government had noted that against an annual quota of 1/1.5 lakh MT of peas, actual imports — enabled by High Court interim orders — had surged to 8,51,408 MT in 2018-19 and 6,52,607 MT in 2019-20. The resulting glut had caused gram prices to fall below the Minimum Support Price of Rs. 4,875 per quintal, with imported yellow peas available at approximately Rs. 2,028 per quintal (CIF value).

On the interpretation of the quota, the Court categorically rejected the contention that each individual licensee was entitled to import the maximum quantity specified in the notification: