Shivani Bhati | Dec 6, 2021 |
RBI Regulations For Export Ban On PPE Kits upheld by Apex Court
Supreme Court held that Clause 2(iii) of the 2020 MTT Guidelines is to ensure the availability of sufficient domestic stock of PPE products.
Issue
The appellant has challenged the constitutionality of Clause 2(iii) of the 2020 MTT (Merchanting Trade Transactions) Guidelines by alleging a violation of his rights under Articles 14, 19(1)(g) and 21.
Appellant has raised the issue on the grounds of RBI’s restriction to prohibit MTTs in PPE products is restrictive of the appellant’s right to equality under Article 14 on the ground that it is arbitrary, whether it is a reasonable restriction on the appellant’s freedom to conduct trade under Articles 19(1)(g) read with Article 19(6), and if it violates the appellant’s liberty and right to livelihood under Article 21.
Facts
Findings
This Court had accepted the Canadian Supreme Court’s analysis of the doctrine of proportionality and held it to be applicable to constitutional rights in India by stating that when a law limits a constitutional right, such a limitation is constitutional if it is proportional. The law imposing restrictions will be treated as proportional if it is meant to achieve a proper purpose and if the measures taken to achieve such a purpose are rationally connected to the purpose, and such measures are necessary.
The Court also adopted an integrated proportionality analysis where the limitation on each of the rights is common and affects them in a similar way.
Talking about RBI’s decision the RBI is responsible for issuing guidelines to authorized persons under FEMA. Hence, the role of the RBI under FEMA is directed towards ensuring that India’s foreign exchange market is regulated, with a view to preserving India’s foreign exchange reserves. On a review of the guidelines issued by the RBI in respect of MTTs since 2000, it became clear that most of them are technical in nature and seek to regulate the manner in which India’s foreign reserves are traded. Consequently, the RBI has not made the policy decision to classify products for which MTTs are impermissible but has opted to rely on the decision made by the UOI under the FTP.
Judgment
Supreme Court held that the judgment dated 8 October 2020 of the Madhya Pradesh High Court was correct in holding that Clause 2(iii) of the 2020 MTT Guidelines was a proportionate measure in ensuring the availability of sufficient domestic stock of PPE products. The measure was validly enacted, in pursuance of legitimate state interest and did not disproportionately impact the fundamental rights of the appellant.
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