2022 (10) TMI 1221 - HC - Customs

Withdrawal of permission for export of non-basmati rice by notification dated 15.10.2007 - subsequent withdrawal of notification - case of the petitioners is that the abrupt change in the policy is arbitrary and highhanded affecting the vested rights of the petitioners and as such requires to be set aside - HELD THAT - The 2nd respondent having accepted in principle the requirement of protecting the persons who had already acted on the existing policy could not have restricted the protection to only the three categories mentioned in the impugned notification. As can be seen in the present case the petitioners in all the three cases acting on the basis of the existing policy had entered into contracts with third parties outside India and had also procured the broken rice necessary to execute such contracts even before the policy was changed. Prima of facie a case is definitely made out for the petitioners to be allowed to export the broken rice which has already been procured by them and which is presently stored at various ware houses even before 08.09.2022. In the circumstances there shall be an interim direction to the respondents to permit the petitioners to export the broken rice stored by the petitioners at the ware houses before 08.09.2022 - Post on 27.10.2022 for counter.

Summary

Issues:
1. Challenge to notification prohibiting export of broken rice.
2. Exemption criteria under the notification.
3. Arbitrariness of policy change affecting vested rights.
4. Discrimination in granting exemptions.
5. Impact on ongoing contracts and potential damages.
6. Legal precedents supporting protection of vested rights.
7. Necessity of interim relief for petitioners to export broken rice.

Detailed Analysis:
The High Court of Andhra Pradesh addressed multiple issues in a judgment concerning the prohibition of broken rice export. Initially permitted, the export was later banned through a notification by the Director General of Foreign Trade, prompting challenges via Writ Petitions. The sudden policy shift in 2022 prohibited broken rice export, exempting specific consignments under certain conditions until 15.10.2022. Petitioners contended the policy change was arbitrary, affecting vested rights and ongoing contracts, potentially leading to damages and arbitration disputes. They argued for equal exemption treatment, highlighting accumulated broken rice stocks procured before the policy change.

The Court considered legal arguments citing Supreme Court judgments emphasizing protection of vested rights and intervention against policy decisions violating fundamental rights. The Deputy Solicitor General defended the policy change citing price surge and food security concerns, noting exemptions for advanced stage contract holders. Petitioners' counsels stressed time-sensitive contracts, potential damages, and lack of domestic market for broken rice, foreseeing substantial losses if unable to export. They urged for interim relief to prevent contract breaches and financial losses.

Drawing parallels to a similar situation in 2007-2008, the Court noted the necessity of protecting those who acted based on the existing policy. It criticized the limited exemption categories in the impugned notification, advocating for broader protection considering the petitioners' circumstances. Consequently, the Court issued interim directions allowing petitioners to export pre-policy change broken rice stored in warehouses before 08.09.2022, without permitting further exports. The judgment balanced the need for protection of vested rights against the policy's objectives, ensuring fairness and addressing potential economic harm to the petitioners.

In conclusion, the Court's decision provided temporary relief to the petitioners, acknowledging the need to safeguard vested rights and mitigate potential financial losses arising from the abrupt policy change. The judgment highlighted the importance of balancing policy objectives with individual rights, emphasizing the court's role in ensuring fairness and equity in such matters.