TMI Blog1967 (11) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... there is some decision which fails within cl. 10 of the Scheme in question. It is common ground that the report of the Committee was not made available to them and the Textile Commissioner, before he passed the orders, did not call for their explanations. It must therefore be held that enquiry in a manner consonant with the rules of justice was not made in the case of those four exporters also. Appeal dismissed. - Civil Appeals Nos. 885, 893 of 1967 and Civil Appeals Nos. 973 to 975 of 1967 - - - Dated:- 22-11-1967 - SHAH, J.C., SIKRI, S.M. AND SHELAT, J.M., JJ. For the Appellant : B.R.L. lyengar, R.N. Sachthey and S.P. Nayar, For the Respondent : Bhagirath Dass, Sobhag Mal Jain and B.P. Maheshwari,. O.P. Varma, A.K. Sen and O.P. Varma, K.L. Arora and H.K. Puri, H.L. Anand and K.B. Mehta JUDGMENT Shah, J. The facts which give rise to Appeal No. 885 of are these: The Textile Commissioner published on October 10, 1962, a scheme called the Export Promotion Scheme providing incentives to exporters of woollen goods. The scheme was extended by a Trade Notice dated January 1, 1963, to exports of wooden goods to Afghanistan. Messrs. Indo-Afghan Agencies-hereinaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1946. By s. 3 of that Act it was provided: "(1) The Central Government may by order published in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling in all cases or in specified classes of cases, and subject to such exceptions if any, as may be made by or under the order :-- (a) the import, export, carriage coastwise or shipment as ships stores of goods of any specified description; (b) the bringing into any port or place in India of goods of any specified description intended to be taken out of India without being removed from the ship or conveyance in which they are being carried. (2).................... (3)..................... By s. 4 the orders made under r. 84 of the Defence of India Rules, 1939, or under that rule as continued in force by the Emergency Provisions (Continuance) Ordinance, 1946, and in force immediately before the commencement of the Act were, insofar as they were not inconsistent with the provisions of the Act, to continue to remain in force and to be deemed to have been made under the Act. In exercise of the powers conferred on the Central Government by s. 3, the Central Government issued the Impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and machinery parts and spare parts for woollen industry for a total amount equal to 100% of the f.o.b. value of the exports." Clause 4 provided: "Only such exporters who satisfy the Textile Commissioner that they are interested in export (either by past performance or by showing proof of action taken to obtain firm order etc.) will be registered by the Textile Commissioner." Clause 6 imposed certain obligations upon the registered exporters, such as adherence to the code of conduct as and when evolved; adoption of the standard contract form with suitable clauses for arbitration and settlement of disputes; abiding by the decision of the Textile Commissioner in the matter of dispute between the exporter and his foreign customers; forwarding figures of exports of woollen goods made by him every month to the Textile Commissioner and abiding by such quality control and pre-shipment inspection procedures as may be evolved Clause 7 provided for the application for grant of import licences against actual exports effected on a monthly or on a quarterly basis. Clause 9 provided: "After scrutiny of the applications, the Textile Commissioner shall issue an entitlement certificate indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents was proposed to be reduced. It was stated in the affidavit of the Union of India that it was not a necessary requirement of the Scheme to set out the reasons for reducing the import entitlement: that under paragraph 20(d) to Appendix 23 of the Import Trade Control Policy for the year April 1962 to March 1963 the licensing authority was authorised to refuse the issue of a licence or "to reduce the value of the licence to such amount as he deemed fit" in cases where he considered the value of the goods exported was over- invoiced, and the Trade Notice having been issued in exercise of the executive power of the State, attack by the respondents on the ground set up was "completely misplaced and without any foundation in law". In passing the orders impugned by the respondents, the Textile Commissioner did not hold an enquiry consistent with the rules of natural justice. Counsel for the Union of India submitted that for good reasons of which the Textile Commissioner was the sole judge, it was open to that Officer to reduce the import entitlement below the f.o.b. value of the goods exported, and exercise of the power conferred upon him is not limited by the terms of cl. 10 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment can bind itself through its officers by a commercial contract, and if it does so it must perform it like anybody else or pay damages for the breach. But this was not a commercial contract, it was an arrangement whereby the Government purported to give an assurance as to what its executive action would be in the future in relation to a particular ship in the event of her coming to this country with a particular kind of cargo. And that is, to my mind, not a contract for the breach of which damages can be sued for in a Court of law. It was merely an expression of intention to act in a particular way m a certain event. My main reason for so thinking is that it is not competent for the Government to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises. It cannot by contract hamper its freedom of action in matters which concern the welfare of the State." This observation is, "clearly very wide and it is difficult to determine its proper scope": Anson's "English Law of Contract", 22nd Ed., p. 174. It may also be noticed that before Rowlatt, J., the applicants Claimed enforcement of a contract against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relying on which citizens have acted to their detriment. Under our constitutional set-up no person may be deprived of his fight or liberty except in due course of and by authority of law: if a member of the executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law-common or statute--the Courts will be competent to and indeed would be bound to, protect the rights of the aggrieved citizen. The orders which the Central Government may issue in exercise of the power conferred by s. 3 of the Imports and Exports Control Act may be executive or legislative. In exercise of that power, the Order was issued on December 7, 1955, that was clearly legislative in character. It appears 'that prior to the issuance of this notification several orders had been issued under the Defence of India Rules and under the Imports and Exports Act dealing with the grant of licences to import certain classes of goods. Those orders which are set out in the IVth Schedule to the Order were repealed by cl. 12 of the Order of 1955, and. machinery for granting licences was set up by the Order dated December 7, 1955. Counsel for the respondents submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sets out forms of applications, the designations of licensing authorities, amounts of application and licensing fees, last dates for applications, intermixed with definitions of 'Established/reporters', 'Actual users', 'New comers', and others and details of different schemes such as Quota Registration Schemes, Export Promotion Schemes etc. There is no pattern of order or logical sequence in the policy statement: it is a jumble of executive instructions and matters which impose several restrictions upon the rights of citizens. Some of the provisions which impose restrictions upon citizens in the exercise of their right to carry on trade without statutory limits may be open to serious objection, but we do not find it necessary to embark upon an enquiry whether the provision which authorises the issue of import entitlement certificate for the full f.o.b. value of the goods exported is legislative in character. Granting that it is executive in character, this Court has held that Courts have the power in appropriate cases to compel performance of the obligations imposed by the Schemes upon the departmental authorities. The question whether the Import Trade Policy is legislative in ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Government. Since in that case the power granted to the licensing authority was to grant licences only upto the maximum specified in cl. 2 of Appendix. 42, the restriction imposed was held not to be unreasonable. It was also observed that it did not impose an obligation upon the controller enforceable at the instance of the exporter, to issue a licence for the amount (subject to the maximum prescribed) claimed by the exporter, and since the order of the Controller granting a licence only for 45% of the value of goods exported did not infringe the fundamental right of the exporter under Art. 19(1)(g) of the Constitution, the petition filed by the exporter was liable to be dismissed. But the Court observed: "The licensing authority would normally issue an import licence for 100% of the value of the goods exported, but having regard to special considerations such as difficult foreign exchange position or other matters which have a bearing on the general interest of the State, import licences for a smaller percentage may be granted to the exporters. But by the use of the expression 'upto the following percentage of the rupee equivalent' power to fix arbitrarily a percentage of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t where a person has acted upon representations made in an Export Promotion Scheme that import licences upto the value of the goods exported will be issued, and had exported goods, his claim for import licence for the maximum value permissible by the Scheme could not be arbitrarily rejected. Reduction in the amount of import certificate may be justified on the ground of misconduct of the exporter in relation to the goods exported, or on special considerations such as difficult foreign exchange position, or other matters which have a bearing on the general interests of the State. In the present case, the Scheme provides for grant of import entitlement of. the value, and not upto the value, of the goods exported. The Textile Commissioner was, therefore, in the ordinary course required to grant import certificate for the full value of the goods exported: he could only reduce that amount after enquiry contemplated by el. 10 of the Scheme. The judgment of this Court in Joint Chief Controller of Ira,ports and Exports, Madras v. M/s Amin Chand Mutha etc.( [1966] 1 S.C.R. 262) may also be usefully referred to. In that case, after the dissolution of a firm which was the holder of quota figh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In each of the three cases, the Court observed that the Court was competent to grant relief in appropriate cases, if, contrary to the Scheme, the authority declined to grant a licence or import certificate or the authority acted arbitrarily. Therefore even assuming that the provisions relating to the issue of Trade Notices offering inducement to. the prospective exporters are in character executive, the Union Government and its officers are, on the authorities of tiffs Court, not entitled at their mere whim to ignore the promises made by the Government. We cannot therefore accept the plea that the Textile Commissioner is the sole judge of the quantum of import licence to be granted to an exporter, and that the Courts are powerless to grant relief, if the promised import licence is not given to an exporter who has acted to his prejudice relying upon the representation. To concede to the Departmental authorities that power would be to. strike at the very root of the rule of law. By the Export Promotion Scheme for woolen textiles as extended to exports to Afghanistan, the exporters were invited to get themselves registered with the Textile Commissioner for exporting woolen goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required by Art. 299 of the Constitution was executed, and the exporter would be entitled to claim damages contrary to that provision for breach of the contract even though no formal written contract had been executed in the manner provided by that Article. But the respondents are not seeking to enforce any contractual fight: they are seeking to enforce compliance with the obligation which is laid upon the Textile Commissioner by the terms of the Scheme, and we are of the view that even if the Scheme is executive in character, the respondents who were aggrieved because of the failure to carry out the terms of the Scheme were entitled to seek resort to the Court and claim that the obligation imposed upon the Textile Commissioner by the Scheme be ordered to be carried out. We hold that the claim of the respondents is appropriately rounded upon the equity which arises in their favour as a result of the representation made on behalf of the Union of India in the Export Promotion Scheme, and the action taken by the respondents acting upon that representation under the belief that the Government would carry out the representation made by it. On the facts proved in this case, no ground ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, which is not a rule of equity, but is a rule of evidence that was formulated and applied in Courts of law; while the doctrine. with which I am now dealing, takes its origin from the jurisdiction assumed by Courts of Equity to intervene in the case of, or to prevent fraud." After referring to Ramsclen v. Dyson(L.R. 28 I.A. 211), the learned Chief Justice observed that the Crown comes within the range of equity and proceeded to examine whether the facts of the case invited the application of that principle. This case is, in our judgment a clear authority that even though the case, does not fall within the terms of s. 115 of the Evidence Act, it is still open to, a party who has acted on a representation made by the Government to claim that the Government shall be bound to. carry out the promise made by it, even though the promise is not recorded in the form of a formal contract as required by the Constitution. In Ahmad Yar Khan and others v. Secretary of State for India in Council and another(3), the plaintiffs claimed title to a canal supplied with water from the Sutlej having been constructed at great expense by their predecessors for purposes of irrigation, with the san ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s land revenue on the land in question, because the Corporation had taken possession of the land in terms of the Government resolution and had continued in such possession openly, uninterruptedly and as of right for over 70 years, and had thereby acquired the limited title it had been prescribing for during the period, the right to hold the land in perpetuity free of rent. Chandrasekhara Aiyar J., observed that even if it be assumed that there was no representation in fact that the land was rent free at the time when it was given to the Municipality, if there was a holding out of a promise that no rent will 'be charged in the future, the Government must be deemed in the circumstances of the case to have bound themselves to fulfill it, and a Court of Enquiry must prevent the perpetration of a legal fraud. Chandrasekhara Aiyar J., observed at p. 63: "Whether it is the equity recognised in Ramsden's case, or it is some other form of equity, is not of much importance, Courts must do justice by the promotion of honesty and good faith, as far as it lies in their power." Patanjali Sastri J., expressed a contrary view holding that the express provisions of the statute coul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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