Delegated Legislation has No Force of Law until Published in Official Gazette: Supreme Court on DGFT’s Steel MIP Notification [Read Order]

The Supreme Court held that delegated legislation does not acquire the force of law unless it is published in the Official Gazette, and mere uploading of a notification on a government website is not enough.

Justice Pamidigantam Sri Narasimha and Justice Alok Aradhe held that “the Notification itself acknowledges its incompleteness by declaring that it is ‘to be published in the Gazette of India’. The acknowledgement is a confession that, until such publication, the Notification had not crossed the threshold from intention to obligation.”

The apex court took a deviated view from the Delhi High Court.

Viraj Impex Pvt. Ltd’s batch of appeals were entertained by the apex court. The matter came out from the Delhi High Court judgment which had upheld the MinimumImport Price (MIP) notification for certain steel products even for importers who had opened Letters of Credit after the notification was uploaded online but before it was published in the Gazette.

The fact is that the appellants are engaged in importing and trading steel items such as Hot Rolled Coils, Cold Rolled Coils and steel plates. They entered into firm contracts with foreign exporters between 29.01.2016 and 04.02.2016, and opened irrevocable Letters of Credit (LCs) on 05.02.2016.

On the same day, the Directorate General of Foreign Trade (DGFT) uploaded Notification No. 38/2015-2020 dated 05.02.2016 on its website introducing MIP on specified steel products, though the document itself clearly stated that it was “to be published in the Official Gazette of India”.

The notification was published in the Official Gazette only on 11.02.2016.

The appellant, expecting restrictions, applied for registration of their LCs under the transitional protection provided in Para 1.05(b) of the Foreign Trade Policy (FTP) 2015-20 on 08.02.2016.

The central issue of the matter is on the effect of the date of the notification. The Para 2 of the MIP notification provided that imports under LCs entered into before the “date of this notification” would be exempt from MIP, subject to Para 1.05(b) of the FTP.

The appellant argued that the “date of the notification” must mean 11.02.2016, i.e., the date of Gazette publication, and since their LCs were opened on 05.02.2016, they were entitled to protection.

However, the Delhi High Court, while acknowledging that the notification would operate from 11.02.2016, held that uploading the notification on 05.02.2016 was sufficient notice to bind importers, and further held that the notification was not delegated legislation. This aggrieved the appellants and they preferred appeal before the supreme court.

The supreme court sets aside the decision of the Delhi High Court.

The court said that that ‘Law, to bind, must first exist. And to exist, it must be made known in the manner ordained by the legislature.’

‘Delegated legislation, unlike plenary legislation enacted by the Parliament, is framed in the executive chambers without open legislative debate. The requirement of publication in the Gazette, therefore, serves a dual constitutional purpose i.e. (a) it ensures accessibility and notice to those governed by the law, and (b) it ensures accountability and solemnity in the exercise of delegated legislative power’ said the apex bench.

Therefore, applying the above principles, the court noted that the Section3 of the parent act, the Foreign Trade (Development and Regulation) Act, 1992 clearly states that the restrictions on imports must be imposed by an order published in the Official Gazette.

The notification could not acquire legal force prior to its Gazette publication on 11.02.2016. Therefore, Court also held that Para 2 of the notification incorporates Para 1.05(b) of the FTP and therefore importers who opened irrevocable LCs before the restriction date and complied with the registration requirement were entitled to transitional protection.

The apex court rejected the government’s argument that the “date of notification” should remain fixed as 05.02.2016.

It held that a notification cannot operate in a fragmented manner, saying it is born in law only upon Gazette publication. Therefore, it quashed the Delhi High Court ruling and clarified the effective date of a delegated legislation.

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