Delhi High Court (September 12, 2001) 2001 (TLS)125799 2001-AD (Del)-7-963 :: 2001-ILRDLH-7-183 GUDI TRADING Vs. UNION OF INDIA MUKUL MUDGAL ( 1 ) THE principal challenge in all these writ petitions and the stay applications is to the classification of members by the respondent No. 2 ( hereinafter referred to as the AEPC ). The classification which is sought to be impugned in all these writ petitions is the footnote in the Registration-cum- membership Certificate (hereinafter referred to as the RCMC ) which reads as under: "certificate does not confer any membership rights as per the provisions of Companies Act. and Articles of Association of the council. " ( 2 ) IT is contended that two classes of Members are created as under: (a) those entitled to vote according to the regulation 1 (d) having exports over 20 lacs during any of the 3 previous years. (b) those like the petitioners who do not fall within category (a) above and hold a Registration-cum membership Certificate (RCMC ). ( 3 ) THE petitioners have based their claim on the basis of article 13. 8 of the Export-Import Policy 1997-2001 which is as follows: "an exporter may, on application, register and become a member of an Export Promotion council. On being admitted to membership, the applicant shall be granted forthwith registration-cum-Membership Certificate (RCMS) of the EPC concerned, subject to such terms and conditions as may be specified in this behalf. " ( 4 ) THE challenge is based on an earlier judgement of this court in Pramod Chopra and Others Vs apparels Export Promotion council reported as ILR (1984) I Delhi 717 which struck down the offending Articles of Association which created two classes of members, voting and non-voting. ( 5 ) THE main challenge is to the impugned Regulation l (d) which reads as under:- "his export performance of garments during any of the three previous years or in the year he applied to become Member of the council is less than Rs. 2,00,000. 00 lacs. An applicant desirous of becoming a Member of the Council will be required to submit a certificate to the effect by a Chartered accountant or the Applicant s Bankers. 2,00,000. 00 lacs. An applicant desirous of becoming a Member of the Council will be required to submit a certificate to the effect by a Chartered accountant or the Applicant s Bankers. "the said Regulation according to the petitioners is an attempt to get over the aforesaid judgment of Pramod chopra (Supra) by introducing through the backdoor of regulations, a stipulation which was found to be illegal by this Court when incorporated in the Articles of Association. The petitioners plea is that what could not be done directly through Articles of Association is sought to be done through the Regulation 1 (D ). ( 6 ) FURTHERMORE in addition it is submitted by the petitioner/applicant in CM. 9370/01 in CW. 5093/98 as under: "out of approx. 30,000 exporters registered with the AEPC, the member exporters (having voting rights) are only. 3300. At the same time as per aepc annual report over 3200 performing exporters fulfilling 2,00,000. 00 lacs criteria and qualifying eligibility otherwise are being kept out because of cumbersome conversion procedures. Out of these 3300 voters, 1750 in the year 1998 were given show cause notices, pursuant to filing of the writ petition, since they did not meet the criteria mentioned in Regulation 1 (d) referred above. However, no action against these exporters was taken and their proxies have been used in the elections in the last three years as they benefit the caucus of members of executive council. Even presently, as per the Agenda of the 162nd Executive commitee meeting held on 20/8/2001, 950 such members still exist who do not fulfill this criteria. However, since these members/proxies belong to the this caucus, no action on the show cause notices is being taken and they are being permitted to participate in the electoral process. In fact, almost 9 of the present Executive Committee members who fall in this category of 950 members who do not fulfill this criteria (Refer page 15,16 and 17 of the present CM ). Even the extracts of opinion of legal counsel of AEPC provided in the said Agenda reflect that this has been deprecated by counsel of respondent No. 2. Even the extracts of opinion of legal counsel of AEPC provided in the said Agenda reflect that this has been deprecated by counsel of respondent No. 2. It may also be pertinent to mention that in all elections the total polling varies from 1400 to 1700 votes and therefore these 950 votes of members who do not fulfill this criteria assume importance and have been misused by the Executive commitee members to maintain their stranglehold. (Refer Additional affidavit, page 149 of the petition ). Therefore, either the operation and effect of Regulation 1 (d) must be stayed or if this classification is permitted, these 950 members who admittedly as per the record of respondent no. 2, do not fulfill the criteria of Regulation 1 (d), be not permitted to participate in the electoral process. " ( 7 ) THE AEPC, i. e. , respondent No. 2 submitted as under: "the judgment of this Court in Pramod Chopra s case (Supra) is sought to be distinguished. It is also pleaded that except for grant of quota no other functions amenable to writ jurisdiction are performed and the appropriate remedy is under Section 111 (4) of the Companies act and not the writ Court as there is an alternative statutory remedy available. It was also submitted that the impugned regulations were brought in the years 1984 and therefore no interim relief he granted as the election process stated to begin from 13/9/2001". ( 8 ) PRIMA facie at this stage I am not inclined to grant a stay of operation of Regulation l (d) which seeks to clarify the eligibility for the franchise to those having a requirement of Rs. 2,00,000. 00 lacs export per annum over a period of 3 years. Furthermore the impugned Regulations were framed in 1984 and hence the interim order at this stage is not justified. Since the challenge to the classification is based on the annual export of Rs. 2,00,000. 00 lacs, the challenge in the writ Court cannot be sustained at this stage prima facie because the Regulation 1 (D) cannot be considered to be unreasonable, arbitrary and lacking a rational classification at the interim stage. ( 9 ) HOWEVER, the test of Rs. 2,00,000. 2,00,000. 00 lacs, the challenge in the writ Court cannot be sustained at this stage prima facie because the Regulation 1 (D) cannot be considered to be unreasonable, arbitrary and lacking a rational classification at the interim stage. ( 9 ) HOWEVER, the test of Rs. 2,00,000. 00 lacs must be strictly applied all across the board and consequently as per the agenda of the 162nd Executive Committee Meeting held on 20/8/2001, the 950 members mentioned therein under show cause notice for not fulfilling the criteria may vote, but their votes shall be tabulated separately and will not be counted until further orders of the Court and the declaration of the results of the election will be subject to further orders of this Court. ( 10 ) WITH these observations, all the applications are disposed of with no orders as to costs. --- *** --- .