RBI export ban on PPE kits was in furtherance of ‘legitimate goal’: SC

Court says it does not violate right to do business

The Supreme Court on Monday held that a Reserve Bank of India (RBI) ban on exporting PPE kits during the second wave of the pandemic was a “legitimate aim”, which was of sufficient importance to override the constitutional right of freedom to conduct business.

“The RBI elaborated on the state of the pandemic in the country and the necessity of ensuring adequate stock of PPE products. The executive’s aim to ensure sufficient availability of PPE products, considering the ongoing pandemic, is legitimate. Accordingly, we hold that the impugned measure was enacted in furtherance of a legitimate aim that was of sufficient importance to override a constitutional right of freedom to conduct business,” a Bench led by Justice D.Y. Chandrachud held in a judgment.

The verdict was based on an appeal filed by a firm’s managing director who was stopped from acting as an intermediary in the sale of PPE products to the U.S.

The Revised Guidelines on Merchanting Trade Transactions (MTT) issued by the RBI in January 2020, however, banned the export of PPE products through successive notifications even as the death rate from the pandemic climbed.

‘Violation of right’

Petitioner Akshay N. Patel argued that the prohibition in the export of PPE products was in violation of his right to equality and arbitrary.

Disagreeing, Justice Chandrachud, for the Bench, reasoned that the prohibition was based on a legitimate goal. “When an Indian entity facilitates the trade of PPE products to another nation, it takes away from India’s possible stock in the global market… there is a rational nexus in the prohibition of MTTs in respect of PPE products and the public health of Indian citizens,” he explained.

The court said that the “democratic interests that secure the well-being of the masses cannot be judicially aborted to preserve the unfettered freedom to conduct business of the few”.