1.

THE PRESENT PROCEEDINGS ARE AN ABUSE OF THE PROCESS OF

LAW AND THE HONABLE DGFT IS NOT APPROPRIATE FORUM FOR A
CIVIL DISPUTE CONCERNING THE QUALITY OF THE GOODS PROVIDED
BY THE RESPONDANT TO THE COMPLAINT.
2. Thus, it is clear that the section only envisages the suspension/cancellation of
an IEC in cases where the Director-General has reason to believe that the
export/import has been :-
a) Gravely prejudicial to the interests of Indians Of India’s trade relations with
another country (in this case Canada)
b) Gravely prejudicial to the interests of other importers and exporters in India;
or
c) Brought disrepute to credits of goods of India.
3. That the present case is not a case where any of these 3 situations can be
clearly said to have arisen. It is submitted that it is unlikely that a trade dispute
over the quality of flanges provided by the respondant to the complainant
(amounting to less than $70000/-) can barely be said to pose a threat to trade
relations of two sovereign nations as large as India and Canada or to be
significant enough to damage the reputation of Indian goods to the extent that
it will have a negative impact on ability of other Indian exporters to procure
business.
4. In the present case , what is an issue is wheather and to what extent both
parties have abided by an agreement that was voluntarily arrived at by them.
There is a dispute with respect to who is at fault for the frustration of an
agrrement between the parties.The dispute will clearly require detailed
evidence and adjudication before it there can be judicial declaration of which
parties at fault for frustration of the agreement. In other words, this is a case of
a commercial dispute between the parties that ought to be resolved through a
civil suit before an appropriatre jurisdictional court. Till there has been a
judicial finding that M/s Hindon Forge Pvt. Ltd. Is the party at fault for
frustration of the agreement. In other words, this is a case of a commercial
dispute between the parties that ought to be resolved through a civil suit
before an aooripriate jurisdictional court. Till there has been a judicial finding
that M/s Hindon Forge Pvt. Ltd. Is the party at fault for frusttaion of the
agreement, there can be no question of the director general having reason to
believe that M/s Hindon Forge Pvt. Ltd has committed an act that falls within
one of the aforementioned reasons for suspension/cancellation of its IEC
under Section 8(1)(b) of the FTDR act.
5. Thus, it is submitted that the complaint of M/s Proflange Limited against M/s
Hindon Forge Pvt. Ltd ought not to be entertained as it falls beyond the scope
and ambit of Section 8(1)(b) of FTDR Act. It is humbly submitted that the
proper course of action would be for M/s Proflange Limited to file a civil suit for
recovery of sym that it clains is due to it under the agreement between the
parties before the appropriate jurisdictional court. The proceedings under
 Section 14 of FDTR act are not meant to be a substitute/alternative to a civil
suit in cases where there is a factual dispute between the parties. In fact, it
must be noted that it is an admitted position of fact that the Complainant has
already files a civil suit for damages against the respondant in the Courts of
India and that the said suit is still pending.
II. THAT THE COMPLAINANT HAS FAILED TO PROOVE THE FACT THERE
WAS ANY DEFECT IN THE QUALITY OF THE FLANGES PROVIDED TO IT BY
THE RESPONDANT
1. At the outset it is submitted that in the present case, the burden of proof to
show that there was in fact a defect the quality of the flanges provided by the
respondant and that such defects had resulted in the claimed monetary loss to
the complainant. However, it is submitted that the complainant has not done
this at all.
2. The only attempt made by the complainant to show that there was in fact a
defect in the quality of the flanges provided by the respondant was to aanex
some papers that allegedly showed that some flanges provided by the
respondant had failed the quality tests conducted by the complainant. It is
submitted that given that respondant has categorically taken view that the said
tests are not acurate and are not properly conducted, there can be no question
of accepting the same to be accurate till the same are properly proved be so
by evidence.
3. In any event, even if one were to assume for the sake of argument(but not
conceding that ) the test was accurate, there is nothing to show how many
flanges were defective.The complainant has assumed that every flange in a
given shipment will also be effective even through there is no evidence to
assume the same.
4. It must also be noted that every one of the items that were exported to Canada
were inspected and checked by m/s Proflange Limited own inspection team in
India itself before they were consigned the shipment. In other words, every last
piece/item whose quality is now being called into question was inspected and
approved by M/S proflange Canada before the same shipped to them. This
position of fact has been accepted by the complainant.
5. Though it has been argues on behalf of the complainant that the quality control
issyes/defects have been admitted by the respondant in certain emails
between the parties- it is submitted that this contention is wholly without merit .
It is submitted that in light on the long standing and successful business
relationship between the parties and because the respondant had already
made substantial investments and stockpiled flanges worth over Rs. 60 lakhs
after a lot of correspondence and the complainant effectively freezing its
pending orders, the Respondant eventually took a business decision to expect
a financial liability for that allegedly defective goods. Consequently, both
parties voluntarily arrived at a settlement agreement dated 15.01.2014. Under
the terms of said agreement the respondant accepted liability for allegedly
 defective good and agreed to an arrangement whereby it took on the second
liability in the form of debit notes and cash payments to the complainant
undertook that it would continue to source material from place orders with
respondant. This is evident from clause 3 of the email dated 15.01.2013
(annexure H to M/s Proflange Lmited which states as under :-
Respondent eventually took a business decision to except a financial liability
for the allegedly defective goods. consequently both parties voluntarily arrived
at settlement agreement between dated 15.01.2014. Under the terms of said
agreement the respondent accepted liability for allegedly defective courts and
agreed to an arrangement whereby it took on the said liability in the form of
debit notes and cash payments to the complainant that were both spread out
ever time. In return the complainant undertook that it would continue to source
material from place orders with the respondent. This is Evident from clause
three of the email dated 15.01.2013 (Annexure H to m/s profolnge Ltd which
states as under

Pro flange Will start issuing enquiries for carbon flanges after receiving first
installation from SS 317L flaying rejection. After getting satisfactory
confirmation from in Hindon forge for quality, price and delivery to Pro flange
will start issuing orders with your terms and conditions

6. The primary consideration the respondent for taking on said liability under the
aforementioned agreement between parties would say that it would effectively
preserve a long-standing business relationship between the parties and avoid
any controversy that might add an indirect determinant effect on our reputation
manufacturer. The decision to enter into the aforesaid agreement was
presimed on the understanding and expectation that whatever losses might
occur in the short term of said by the benefits from the continue business
relationship and orders coming from company. To this end and with this
understanding in mind the respondent began to adjust the mounting question
In the form of debit notes on shipment and cash payments that were made in
instalments. This has been acknowledged by the complainant in an email
dated 08.04.2013 where in they admit the receipt of two instalments
amounting to $14060/- each. Unfortunately despite the show of good faith, the
complainant did not face the face orders give any business to us.

7. In light of complainant if you were to abide by the terms of aforementioned

agreement between the parties, the agreement was effectively frustrated. It is
submitted that the conditional acceptance of liability on the part of the
respondent in the various emails that have been referred to cannot be held to
be an admission of any defects in the facts of the present case. All the emails
in question were made as a part of an effort to settle the matter in the mutually
beneficial manner and as such were clearly without prejudice to the rights and
contentions of parties in the case of proceedings arising ( as they now have).
III. THAT THE COMPLAINANT HAS NOT LEAD ANY EVIDENCE TO
SHOW OR SUGGEST THAT THE INITIAL QUALITY ISSUES WITH
RESPECT TO THE GOODS PROVIDED BY THE RESPONDENT
HAVE CAUSED ANY DAMAGES TO THE COMPLAINANT OR TO THE
INDO CANADIAN TRADE RELATIONSHIP OR TWO OTHER
EXPORTERS IN INDIA OR TO THE REPUTATION OF INDIAN GOODS
AS A WHOLE

1. It is submitted that for a case for suspension cancellation of the

respondents license to be made the complainant needs to satisfy the
Ld. DGFT that the least quality issues with respect to the goods
provided by the respondent have moved beyond being a simple civil
dispute between the parties. The complainant must show that the
issues are of such magnitude that they would have resulted in harm
to the Indo Canadian trade relationship or two those in India or to the
reputation of Indian goods as a whole. This is the mandate to S. 8 of
the act.

2. It is submitted that in the present case, far from leading sufficient

evidence to prove the claim,the complainant has not attempted to
plead the same before the DGFT. Such a small dispute between two
private companies that have done work together for over a decade
period to the dispute arising cannot be said to be such a magnitude
that it has resulted in harm to the Indo Canadian trade relationship on
other exporters in India what it to the petition of Indian goods as a
whole. In fact, the fact that there has been no harm to the reputation
of Indian exporters and other goods by the dispute is clear from the
fact that the company continues to source code from the other
suppliers is in India.

THAT THE DGFT‘S ORDER DATED 19. 04. 2016 DID NOT CREATE
ANY BINDING OBLIGATIONS ON THE PARTIES AND AS SUCH
THERE CAN BE NO QUESTION OF HAVING VIOLATED ANY
ORDERS OF THE LD.DGFT

1. The order dated 19. 04. 2016 attempted the to create a framework
for a mutually beneficial settlement between the parties. The order
recorded that the payment between the parties dated 15. 01.2013
would be basis for the resolution of the dispute between parties.
The rough roadmap that was a kid between the parties was that
the respondent would Be given further work orders by the
complainant and the respondent would make payments and give
 discounts to the complainant in return for the same. It was also
made clear that the parties would work out a mutually agreeable
mechanism to ensure quality control of the product being provided.
It is submitted that the said route map was not meant to be binding
on either party and was only meant to enable us a settlement
Thus, there can be no question on the same having been violated
by the respondent

2. It is for the summitted that there was only one part of the order that
was mandatory that is the part of the order that stated the
complaining must send a proposal for settlement to the responding
with the period of two months from the date of order. The relevant
part of the said order states,

It is agreed by both the parties that all issues will be settled within
a period of two months for that purpose m/s pro flange will send a
proposal to M/s Hindon for which will be strictly within the scope
of the women dated 15. 01.2013 which may also include the terms
of repayment like a amount and number of instalments.

3. However for best known that the complainant did not comply with
the order and did not send the said proposal in a timely manner. In
the circumstances it became clear to the respondent and the
complainant was only abusing the process under the act and
attempt to cause it into the plane the age damages or is the
cancellation of its licence under the act. It is humbly submitted that
this contact of complainant alone is enough for the Ld. DGFT to
disregard and dismiss the present complaint, even irrespective of
the other facts of the case.

THAT SECTION 11 OF FTDR ACT HAS NO

APPLICATIONS IN THE FACTS OF THE PRESENT CASE

1. The complainant has forced the provisions of section 11 of the

TDR that we applied against the respondent. However it is
submitted that the said section has no application to the facts of
the case at hand. Section 11 of the act deals with the cases where
there is an hour unauthorised import/export of all good. It is
certainly not meant to apply to the facts of the case where there is
dispute between parties adjust to the quality of goods supplied
even where the goods that have been supplied have been found to
 be defective and the customer is dissatisfied with the remedies
offered to him.

2. Further it is submitted that under section 11(3) Of the act it is made

clear that before any action can be taken under section 11 of the
act, the act concerned must be given express notice of the fact
that the proceedings are taking place under section 11 so that he
can make an informed decision about whether or not to make a
request to the provisions of section 11(3) In the present case the
petitioner was not given such a notice and as such cannot be
subjected to any penalty under section 11 after FTDR act

M. THAT THE COMPLAINANT HAS NOT LED ANY EVIDENCE

TO SHOW OR
SUGGEST THAT THE ALLEGED QUALITY ISSUES WITH
RESPECT TO THE GOODS
PROVIDED BY THE RESPONDENT HAVE CAUSED ANY
DAMAGES TO THE
COMPLAINANT OR TO THE INDO-CANADIAN TRADE
RELATIONSHIP OR TO
OTHER EXPORTERS IN INDIA OR TO THE REPUTATION OF
INDIAN GOODS AS A
WHOLE
1. It is submitted that for a case for suspension / cancellation of
the Respondents
license to be made out the Complainant needs to satisfy the Ld.
DGFT that the
alleged quality issues with respect to the goods provided by the
Respondent have
moved beyond being a simple civil dispute between the parties.
The complainant
must show that the issues are of such a magnitude that they have
resulted in
harm to the Indo-Canadian trade relationship or to other exporters
in India or to
the reputation of Indian goods as a whole. This is the mandate of
s. 8 of the Act.

2. It is submitted that in the present case, far from leading

sufficient evidence to
prove the claim, the Complainant has not even attempted to plead
the same
before the DGFT. Such a small dispute between two private
companies that have
done work together for over a decade prior to the dispute arising
cannot be said
to be of such a magnitude that it has resulted in harm to the Indo-
Canadian trade
relationship or to other exporters in India or to the reputation of
Indian goods as
a whole. In fact, the fact that there has been no harm to the
reputation of Indian
exporters and Indian goods by this dispute is clear from the fact
that the
Complaint continues to source goods from other suppliers in India.
IV.
THAT THE LD. DGFT'S ORDER DATED 19.04.2016 DID NOT
CREATE ANY
BINDING OBLIGATIONS ON THE PARTIES AND AS SUCH
THERE CAN BE NO
QUESTION OF HAVING VIOLATED ANY ORDERS OF THE LD.
DGFT.

1. That the order dated 19.04.2016 attempted to create the

framework for a mutually
beneficial settlement between the parties. The order recorded that
the agreement
between the parties dated 15.01.2013 would be the basis for the
resolution of the
dispute between parties. The rough roadmap that was agreed
between the parties
was that the Respondent would be given further work orders by
the Complainant
and that the Respondent would make payments and give
discounts to the
Complainant in return for the same. It was also made clear that
the parties would
work out a mutually agreeable mechanism to ensure quality
control of the
product being provided. It is submitted that the said roadmap was
not meant to
be binding on either party and was only meant to enable a
settlement. Thus, there
can be no question of the same having been violated by the
Respondent.

2. It is further submitted that there was only one part of the order
that was
mandatory, i.e. the part of the order that stated the Complainant
must send a
proposal for settlement to the Respondent within a period of two
months from
the date of the order. The relevant part of the said order states,
"It is agreed by both parties that all issues will be settled within a
period of two months and for that purpose, M/s Pro Flange will
send a proposal to M/s Hindon Forge which will be strictly
within the scope of the agreement dated 15.01.2013 which may
also include terms of repayment like amount and number of
instalments."
3. However, for reasons best known to it the Complainant did not
comply with the
order and did not send the said proposal in a timely manner. In
the
circumstances, it became clear to the Respondent that the
Complainant was only
abusing the process under the Act and attempt to coerce it into
paying the alleged
damages or risk the cancellation of its license under the Act. It is
humbly
submitted that this conduct of the Complainant alone is enough for
the Ld. DGFT
to disregard and dismiss the present complaint, even irrespective
of the other
facts of the case.
THAT SECTION 11 OF THE FTDRACT HAS NO APPLICATION
IN THE FACTS OF
JE PRESENT CASE
1. The Complainant has urged that the provisions of s. 11 of the
FDTR Act be applied
against the Respondent. However, it is submitted that the said
section has no
application to the facts of the case at hand. Section 11 of the Act
deals with cases
where there is an unauthorised import/export of a good. It is
certainly not meant
to apply to the facts of a case where there is a dispute between
parties as to the
quality of goods supplied or even where the goods that have been
supplied have
been found to be defective and the customer is dissatisfied with
the remedies
offered to him.

2. Further, it is submitted that under s. 11(3) of the Act it is made

clear that before
any action can be taken under s. 11 of the Act, the party
concerned must be given
express notice of the fact that the proceedings are taking place
under s. 11 so that
he can make an informed decision about whether or not to take
recourse to the
provisions of s. 11(3). In the present case, the Petitioner was not
given such a
notice and as such cannot be subjected to any penalty under s. 11
of the FDTR
Act.