A court in India has overturned an order by India's Director General of Foreign Trade (DGFT) for an exporter to stop shipments of skimmed milk powder (SMP) as specified in letters of credit (L/Cs) opened before India decided to ban SMP exports.

The Bombay High Court asked the DGFT to allow Parag Milk and Milk Products (PMMP) to recommence the exports.

DFGT overruled

The court quashed the DFGT's order after PMMP filed a writ challenging the ban.

Before issuing the writ, the DGFT had rejected PMMP's plea asking it to consider the firm's request to fulfil its commitments as specified in the L/C documentation.

L/C commitments

According to PMMP, it had opened three irrevocable letters of credit for export of SMP to buyers in Thailand and France on 24 and 31 January this year. It had agreed to supply 1,000 tonnes of SMP each to these buyers every month until May 2007 and February 2008, respectively.

India imposed a ban on milk and SMP exports on 9 February.

Wrong decision

In its order, the court said the DGFT's order did not conform with the law and the ban order was not retrospective. Therefore the court found that the firm's request to continue exports should not have been turned down.

The ban on milk and SMP exports runs until 30 September.

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