1993 (3) TMI 374 - HC - Indian Laws

Summary

Issues Involved:
1. Application of the doctrine of promissory estoppel against legislative action.
2. Reasonableness and arbitrariness of the new export-import policy concerning red sanders wood.

Issue-wise Detailed Analysis:

1. Application of the Doctrine of Promissory Estoppel Against Legislative Action:

The primary issue was whether the principle of promissory estoppel could be invoked against the Government's action in changing the export-import policy under Section 3 of the Imports and Exports (Control) Act, 1947. The appellants contended that the doctrine of promissory estoppel does not apply to legislative actions, citing the Delhi High Court's decision in Bansal Exports (P) Ltd. v. Union of India, which held that promissory estoppel could only be invoked against executive actions, not legislative ones.

However, the court referred to several precedents, including Union of India v. M/s. Anglo Afghan Agencies Ltd., which established that the Government is bound by its representations even if not recorded as a formal contract. The court also cited Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India, where it was held that subordinate legislation could be challenged on grounds of unreasonableness and arbitrariness.

The court concluded that the doctrine of promissory estoppel is applicable against governmental actions taken in the exercise of statutory power and against subordinate and delegated legislations. Therefore, the export-import policy issued under Section 3 of the Act could be subject to the principle of promissory estoppel.

2. Reasonableness and Arbitrariness of the New Export-Import Policy:

The court examined whether the new policy, which prohibited the export of red sanders wood in any form, was unreasonable and arbitrary, especially concerning goods already prepared for export. The respondent argued that they had acted on the earlier policy, which allowed the export of red sanders wood, and had suffered detriment by borrowing loans and manufacturing musical instrument parts.

The court noted that the respondent had entered into contracts based on the earlier policy and had an open and irrevocable letter of credit dated 21-2-1992. The respondent had already exported part of the goods and had prepared the remaining goods for export. The sudden change in policy, effective from 1-4-1992, prohibited the export of red sanders wood, affecting the respondent's ability to fulfill pre-ban contractual obligations.

The court found that the new policy was arbitrary and unreasonable as it lacked a nexus with the proclaimed objective of ecological conservation. The court pointed out that there was no ban on cutting red sanders wood, and the refusal to issue export licenses for finished goods did not contribute to ecological conservation.

Conclusion:

The court upheld the learned single Judge's decision, applying the doctrine of promissory estoppel against the new policy and finding the policy unreasonable and arbitrary concerning goods already prepared for export. The court issued a writ of mandamus directing the appellants to issue a license for the export of goods valued at US Dollars 75,000 against the letter of credit No. 41-2432445-031. The writ appeal was dismissed with no costs.