TMI Blog1979 (10) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... ). The Imports and Exports (Control) Act, 1947 (herein called the Act), gives the Central Government powers to prohibit or restrict imports and exports. The Export Control Order, 1977 has been issued by the Government under section 3 of the Act. Under clause 3 of the Order the goods specified in Schedule I cannot be exported except under an export license. The goods listed in Part A of Schedule I are not normally allowed to be exported. This is popularly known as a ban on the exports. The goods listed in Part B of Schedule I are allowed to be exported on merits or subject to ceiling or other conditions to be specified from time to time. The goods specified in Schedule Iii are allowed to be exported without a license but subject to the conditions mentioned therein. Other goods may be exported without a license and free from all conditions. An overriding discretion has been reserved to the Central Government by sub-clause (d) of clause 5 under which the licensing authority may refuse to grant the license if the licensing authority considers that the grant of the license will not be in the interest of the country. A second reservation is made by clause 15(b) of the Order which says. t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenge the validity of the amendment of the Export Control Order, dated 30th March, 1979, by which item 77(ii) was deleted from Part B of Schedule I, as also of the Public Notice issued by the Chief Controller of Imports and Exports on that date which was as follows : Public Notice No. 30-ETC(PN)/79 SUB: Export Policy for the period ending 31st March, 1979. Attention is invited to the Department of commerce Public Notice No. 17-ETC(PN)/78 dated 3-4-1978, announcing the policy for the year April, 78 March, 79 and the Exports (Control) Amendment Order No. E(C) 0, 1977/AM(106) dated the 30th March, 1979 on the above subject. 2. The Policy for export of different items to be followed for the period ending 31st March, 1980 is indicated against each item in the Policy Statement enclosed with this Public Notice. 3. This comes into force with immediate effect. 4. The provisions of Para. 316 of the Hand Book of Import Export Procedures 1978-79 will not be applicable to any pre-ban commitments consequent to this Public Notice. All such cases will be decided on merits only. 5. In respect of items allowed for export On Merits , no person should enter into any commitment before obtainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the petitioners have come to the court. If Argenti Nitras was not in Schedules I and Iii then the impugned notification of 30th March, 1979 made no difference to the petitioners at all. They should not have impugned it at all. They should have simply sought a declaration that neither Schedule I nor Schedule Iii ever applied to Argenti Nitras and the export of Argenti Nitras always remained free before and after the ban. They have not done so. Prior to March, 1974 the export of silver had been banned by the Government. It is only between March 1974 and February, 1979 that it was allowed. It is improbable that silver compounds containing more than' 50 per cent silver could have been allowed to be freely exported as being out side the Export Control Order. If, on the other hand, Argenti Nitras was governed by the Export Control Order prior to 30th March, 1979, then it continued to be so governed even after 30th March, 1979. For, the description of the item as silver compound was the same before 30th March, 1979 and thereafter and the only difference was that prior to that date it was in Part B and thereafter it came in Part A. We hold, Therefore, that Argenti Nitras was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not beverages in the definition of liquor'. Mr. Mridul argued that the definition in item 77(ii) is not inclusive 'and, Therefore, the decision of the Supreme Court regarding the definition in the Bombay Act would not be applicable to the definition in item 77(ii). We, however, find that the Supreme Court further considered the definitions of statutes in the United States and United Kingdom. They are not inclusive definitions but wide definitions as is the definition in item 77(ii). It is because of the width of the language in those definitions that liquids which were not properly speaking drinks or beverages were held to be included in these wide definitions considered at pages 704 and 705 of the report in the SCR. (12) Construction Governed by the Object : The second method adopted at pages 706 and 707 is to construe the definition according to the object of the Prohibition Act. The object was to prevent evasion of the Act by including all possible substitutes for intoxicating drinks in the definition of liquor'. This was another reason why non-beverages were included in the special definition of liquor, in the Bombay Act. (13) In our view, both these methods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g silver do not cease to belong to generic category of silver compound, even though they may be used and known as different substances. (15) Mr. Mridul then referred to appendix 17 of the Import Policy April 1979 March, 1980. This is a statement of Import Policy for registered exporters. In this appendix Chemicals and allied products are described separately from drugs and drugs intermediate. Mr. Mridul argued that for the purpose of Export Policy these two items were different and, Therefore, in interpreting item 77(ii) of Part B of Schedule I of the Export Policy also drugs should be regarded as different from Chemicals and Chemical compounds described in item 77(ii). This argument is misconceived. The object of Export Control Order is to indicate very broadly what is normally exportable and what is not normally exportable. In indicating what is normally exportable in Part B of Schedule I, it was sufficient to show in item 77 broad classes of exportable goods. On the other hand, the object of the import policy is to reward only those exporters who succeed in exporting certain items, the export of which is necessary but has to be encouraged. It is only those who overcome diffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as being a beverage, but the law is well settled that the special would prevail over the general. Moreover the purpose was taxation. Once an item n included in the exemption it cannot be taxed as being still in the general class. For, the general class has to be read subject to the exception. This decision does not help the petitioners. (18) Reference was also made by a Division Bench of the Supreme Court. The question was whether the appellant could lawfully import camphor BP , a derivative of terpene, under an import license authorising the import of drugs and medicines. The import license is not valid for natural comphor manufactured from comphor laurel found in the island of Formosa and in the neighbouring regions of China and Japan. On the contrary comphor Bp is synthetic camphor manufactured from terpene. It has, Therefore, nothing to do with the natural camphor. The entry under which the import was to be made was drugs and medicines . It was, Therefore, held that camphor Bp could be. imported under that heading since it was not natural camphor. Since the camphor and camphor Bp were two totally different substances, this decision does not help the petitioners. For, in ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge it if circumstances of the international trade and the need of the country to conserve silver necessitates any change in item 77 including item 77(ii). The petitioners must have also understood that even a pre-ban commitment did not give them an absolute right to export. Further, the Government had a discretion to withdraw even the usual concession to the pre-ban commitments in view of the changeability of the whole policy including para 316 of the Hand Book of Import-Export Procedures. If the Government would be the offerer and the petitioners were to be the acceptors of that offer, could a contract have resulted from such an offer and acceptance assuming that it was for consideration ? In our view, the declaration in the policy that the representation or the offer would not confer any right on the acceptor to the issue of an export license made it clear that no resulting in promissory estopped ? The answer to this question Is a representation. If so, could such a representation be acted upon resulting in promissory estoppel ? The answer to this question is in the negative as would appear from the following statement of law and the decision of the House of Lords referred to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normally the item would be exportable prior to 30th March, 1979, the Government expressed a clear intention that this representation was not to be the basis for the creation of a legal right in the person acting upon it. The Government also announced that the policy was liable to be changed at any time according to the exigencies of the situation. The learned counsel for the petitioners could not deny these reservation expressed in the policy statement and could not give any reason why the Government could not change the policy in the middle of the year and could not also deny the concession of pre-ban commitments to the petitioners if the change of policy had to be extended to the withdrawal of this concession also. On the contrary, the Additional Solicitor General Shri Banerji strongly relied upon the decision of a Division Bench of this Court in which the principle of promissory estoppel was held not to be applicable to a change in the Government's Import and Export Policy when such change was caused by the change of circumstances in the international trade. In the present case, the power to change the policy was expressly reserved by the Government in the Policy Statement. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th at the time when the undertaking was given and if it was regarded as no more than an expression of intention on more than an expression of intention no Complaint could be made if subsequent events necessitated a change of policy. The principle on which this case was decided has been applied in a long line of cases concerned with public authorities other than the Crown. It was formulated in the following words by Lord Birkenbead in a case decided by the House of Lords in 1926. . . . if a person or public body is entrusted by the Legislature with certain powers and duties expressly or impliedly for public purposes, those persons or bodies cannot divest themselves of these powers and duties, They cannot enter into any contract or take any action incompatible with the due exercise of their powers or the discharge of their duties.' (27) That the defense of executive necessity is of limited scope. It only avails the Crown where there is an implied term to that effect or that is an implied term to that effect or that is the true meaning of the contract. (28) The distinction made by Lord Denning is in substance the distinction between 'the Government dealing with an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise ....... If the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. More claim of change of policy would not be sufficient to exonerate the Government from the liability ; the Government would have to show what precisely is the changed policy and also its reason and justification so the Court can judge for itself which way the public interest lies and what the equity of the case demands............... The burden would be upon the Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the Court would insist on a highly rigorous standard of proof in the discharge of this burden. (30) With respect, we are of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a term of five years or till he attains the age of 60. However, contrary to the contract the post held by the appellant was abolished before the expiry of the contract period. The writ petition based on the doctrine of promissory estoppel was dismissed by the High Court and the dismissal was upheld by the Supreme Court with the following observation in para 37 : THE High Court was correct in holding that no estoppel could arise against the State in regard to abolition of post .... The estoppel alleged by the appellant Ramanatha Pillai was on the ground that he entered into an agreement and thereby changed his position to his detriment. The High Court rightly held that the courts exclude the operation of the doctrine of estoppel, when it is found that the authority against whom estoppel is pleaded has owed a duty to the public against whom the estoppel cannot fairly operate. Just as the appellant, Ramanatha Pillai knew that the post was temporary, the petitioners before us also know that the policy wig liable to change. Just as the abolition of a post was a decision take by the Government in its governmental, public or sovereign capacity the change of Export Policy b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment. Therefore, as a general rule the doctrine of estoppel will not be applied against the State in its governmental, public or sovereign capacity. (35) In Assistant Custodian v. Brij Kishore, : [1975]2SCR359 , the Supreme Court expressed the opinion that the view taken by the House of Lords 'in Howell v. Falmouth Boat Construction Co. Ltd., 1951 A. C. 837, was the correct one and not the one taken by Lord Denning in Robertson v. Minister of Pensions referred to above. (36) After considering the series of decisions including those of the Supreme Court regarding estoppel against the Government, the conclusion . reached by M. P. Jain and S. N. Jain in 'Principles of Administrative Law', 2nd edition, page 479, is that For long the judicial opinion in India consistently took the position that no estoppel would be available against the Government in the matter of operation of a statute. (37) In State of Tamil Nadu others v. S. K. Krishnamurti etc. [1972]3SCR104 , the Government had prescribed text-books to be used in Schools for a period of three years. Before the end of the period of three years the State Government purported to act in exercise of the exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation by it to the civil servants serving under it. The Supreme Court, however, held that the State Government could not be held bound by its representation. Further, the conditions of service could be indisputably changed in exercise of the powers contained in Article 309 of the Constitution. Therefore, the rule of estoppel could not be invoked. (39) In a four-Judge decision of the Supreme Court in M/s. Andhra Industrial Works v. Chief Controller of Imports and others, [1975]1SCR321 . The following important observation is made regarding such an annual policy declared by the Government : INDEED, this Policy statement is the sheet-anchor of the petitioners' claim. Such a Policy Statement, as distinguished from an Import or Export Control Order issued under S. 3 of the said Act, is not a statutory document. No person can merely on the basis of such a statement of claim a right grant of an import license, enforceable at law. Moreover, such a Policy can be changed, rescinded or altered by more administrative Orders or executive instructions issued at any time. This statement of law is specifically made in relation to the annual policy statement of the Chief Controlle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the doctrine of estoppel cannot be allowed to impede the proper exercise of public and statutory functions by the State and public authorities. Prof. Wade also considers the question attempted by the Supreme Court in Motilal Padampat Sugar Mills case of the possible injustice that may be caused to the petitioners when the Court refuses to bind the Government by the doctrine of promissory estoppel. At page 329 he criticizes the decision of Lord Denning M. R. in Lever Finance Ltd. v. Westminster London Borough Council, (1971) 1 Q.B. 222, holding the local authority to be bound by the representation made by its planning officers in the following words: THE decision can be taken only as showing to what lengths a court may occasionally go to protect persons misled by wrong official rulings, when it is determined to find some reason for rescuing them. In this case the protection was given at the expense of the neighbouring house-owners, who were forced to accept houses overlooking them much more closely than the planning authority would have permitted. It was also given at the expense of the public interest, since the court deprived the responsible public authority of the powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h change were not concerned with the conduct of the represented of the Government. In making the policy statement the Government did not act like a private person subject to the private law. On the other hand, the Government acted as a sovereign power formulating a policy for the country and changing the policy according to the needs of the country. It is the duty of the Government to consider public interest in changing the policy. The performance of such a duty cannot be prevented by the petitioners by claiming to estop the Government from changing the policy. (43) A balance has, Therefore, to be struck between injustice that may be caused to the petitioners and injustice that may be caused to the public interests if the petitioners were allowed to bind the Government by the rule of estoppel. This brings us to the consideration of the next question. (44) Have the petitioners acted upon the representation ? It is true that the petitioners have entered into a contract with the foreign buyers and have taken it upon themselves to bear the consequences of any change of policy by the Government of India. Theoretically, the petitioners would not be exempted from payment of damages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s likely to change and that it did not confer on the sellers any enforceable right on the Government, can it be said that the conclusion of the contracts by the sellers with the foreign buyers by itself amounts to a change in the position of the sellers ? The question of changing the position should normally arise only when the representation by the Government was clear and unambiguous and thus capable of being acted ' upon by the sellers. If it was not so then, what is the good of the sellers saying that they have nevertheless acted upon the representation even though- they. know that the Government could not be held bound by the rule of promissory estoppel ? In our view, this second condition of the petitioners having, changed their position by acting upon the representation would arise for consideration only when the representation was capable of being acted upon. It was certainly capable of being acted upon when the Export Policy remains unchanged. But it was not capable of being acted upon if the Export Policy is changed. The potentiality of the change always existed. It makes no difference, Therefore, that the contracts were concluded before the change in the Export Polic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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