TMI Blog2022 (3) TMI 1505X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Court. Although the petitioner has sought to contend that the ground of food security in the country put forward by the respondents to justify the change in the policy, to be factually incorrect, the Court would not substitute its own consideration against that of the policy makers. There may be host of considerations which may have actuated the respondents to prohibit the export of the broken rice - The principle of promissory estoppel also cannot be applied when there has been a change in policy to contend that the changed policy should continue. The policy, the policy considerations and the change and alteration in the policy is the domain of Executive. The doctrine of legitimate expectation has a play in the facts and circumstances obtained. The measure of change of policy prohibiting the export of broken rice was a sudden measure which unsettled the regular affair of the exporters who were engaged in the exporting of the commodity in question. The prohibitory policy, therefore, was required to be preceded with certain regulatory or adjustive measures at the end of the authority in order to create minimal adverse effect on the class of exporters - When the notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question the action on part of the respondents in not permitting export of consignments of the commodity broken rice already procured by the petitioner before the date of imposition of the prohibition. 3. The petitioner No.1, a company registered under the provisions of the Companies Act,2013, is engaged in the business of export of different agricultural products. The petitioner No.1 is a wholly owned subsidiary of Krishak Bharti Cooperative Limited which is a multi-state co-operative society formed to cater to the needs of the farmers in the entire country. It was stated that Krishak Bharti Cooperative Limited (KRIBHCO) established the petitioner No.1 company to export agro commodities from India to different countries. 3.1 The commodity 100% broken rice under ITC HS CODE 1006 40 00, was a free commodity available for export, till the issuance of impugned notification. It is the case of the petitioner that it used to procure regularly the said commodity to export it out of India. The petitioner stated that presently also it was in process of procuring the said commodity in different quantities. It is the case of the petitioner that the said commodity 100% broken rice of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 2022 and the message exchange date between Indian and Foreign bank / swift date also had been prior to 8th September, 2022 to be exported during the year 2022-2023 was notified. In connection with the aforesaid notification, Trade Notice dated 14th October, 2022 came to be issued by the Ministry whereby the procedure to be complied with for obtaining permission under the quota notified as above came to be outlined. The procedural conditions mentioned in the said Trade Notice included that the on-line applications for export of broken rice under HS Code 1006 40 00 filed from 16.10.2022 to 20.10.2022 would be considered. The Director General of Foreign Trade reserved right to decide and alter the modalities of distribution and allocation of quota obtaining on the total quantity of broken rice as per the applications received to be exported through valid Letters of Credit. 3.6 It is the case of the petitioner company that in its regular course of activity and business, it had procured 100% broken rice. It was stated that stock register of the petitioner company as on 8.9.2022 had 3006.110 M.T. quantity of broken rice. The stock certificate, available on the record of the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was submitted that the petitioner had entered into contract with the third party for exporting quantity already procured. It was submitted that default in carrying out the obligations under the contract, would lead to sufferance of further damages, and liquidated damages. It was submitted that by contracting and procuring the commodity to export it, the petitioner altered its position, that the petitioner acted in view of the policy already prevailing and that due to sudden change, the ban put the petitioner to an irreversible situation. 4.1.1 It is also the case of the petitioner that in the year 2001, similar prohibition was acted upon in respect of export of non-Basmati rice by issuing notification dated 24.10.2007 and 2.11.2007. However, the rice brought for export into the godowns till the date of ban were allowed to be exported, as evidenced by notifications in that regard produced. 4.2 The petition and the prayers were contested by the respondents by filling affidavit-in-reply. Learned advocate for the respondent raised his contentions based on the contents of affidavit-inreply. It was submitted that on account of sudden spike in the global prices of rice due to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Public Distribution System. There has been price difference too, it was indicated. It was further stated that the major use of 100% broken rice HSN Code 1006 40 00 is for human consumption in poor and vulnerable countries like Dakar, Senegal, Togo, Niger, Chad, Sudar, Mail etc.. It was contended that major use of 100% broken rice in India is for animal and cattle feeding and this category of broken rice could also be used for ethanol manufacturing. What was thus highlighted was that 100% broken rice which are prohibited are not consumed in India by the human population in any manner. Therefore, the ground of food security aspect for issuing the notification to prohibit the export thereof was without any basis, it was submitted. 4.4 Further affidavit was filed by respondent No.2 in which the provision of quota allowed to be exported as per notification dated 12.10.2022 were highlighted to submit that the care was taken to mitigate hardship caused to the exporters because of sudden ban on the export. It were stated that exporters falling within the zone of consideration as mentioned under the exceptions, were allowed to export their consignments till 30.09.2021 and 15.10.2022 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a subsequent stage. The different units including the appellant rested upon the said representation of the Government and based on that, came forward and altered their position. It was held that the State Government was bound by the principles of promissory estoppel. Yet another decision in Mahabir Vegetable Oils Pvt. Ltd. vs State Of Haryana [(2006) 3 SCC 620], was referred to, to highlight the proposition that where the party has altered the position and invested huge amount in setting up new industrial unit, as the facts were in that case, the State could not act against the long drawn course of action and promises meted out thereby. 4.6 On the other hand, learned advocate for the respondent relied on decision of the Supreme Court in Small Scale Industrial Manufactures Association Vs. Union of India and others [2021 (8) SCC 511] , and submitted that on the basis of the said decision that the scope of judicial review in respect of economic policy decision of the Government was minimum and the courts courts could not encroach upon these areas. By pressing into service another decision in Union Of India vs M/s Unicorn Industries [(2019) 10 SCC 574], it was sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the Court would not substitute its own consideration against that of the policy makers. There may be host of considerations which may have actuated the respondents to prohibit the export of the broken rice. 5.1.2 The principle that the scope of judicial review in the economic policy decision and in the economic matters is minimal was emphasized in Small Scale Industrial Manufactures Association (supra). 5.1.3 The principle of promissory estoppel also cannot be applied when there has been a change in policy to contend that the changed policy should continue. The policy, the policy considerations and the change and alteration in the policy is the domain of Executive. In Unicorn Industries (supra), the Supreme Court stated with regard to the applicability of doctrine of promissory estoppel that it cannot be invoked in abstract manner without availability of sound foundation for raising the doctrine. 5.1.4 For all the aforesaid reasons, the prayer to set aside the notification dated 08.09.2022 could not be granted. 5.2 At the same time, it is to be stated that when any policy of the Government undergoes a change or a new policy is introduced in substitution of the preva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s based on Wednesbury unreasonableness ... ...The choice of the policy is for the decision-maker and not for the court. The legitimate substantive expectation merely permits the court to find out if the change in policy which is the cause for defeating the legitimate expectation is irrational or perverse or one which no reasonable person could have made. (Paras 38, 40 and 42) 5.2.4 It was explained about the doctrine of legitimate expectation thus, The procedural part of it relates to a representation that a hearing or other appropriate procedure will be afforded before the decision is made. The substantive part of the principle is that if a representation is made that a benefit of a substantive nature will be granted or if the person is already in receipt of the benefit that it will be continued and not be substantially varied, then the same could be enforced. The doctrine of legitimate expectation in the substantive sense has been accepted as part of our law. The decision-maker can normally be compelled to give effect to his representation in a regard to the expectation based on previous practice or past conduct unless some overriding public interest comes in the way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctrine, (a) The court may decide that the public authority is only required to bear in mind its previous policy or other representation, giving it the weight it thinks right, but no more, before deciding whether to change course. Here the court is confined to reviewing the decision of Wednesbury grounds. This has been held to be the effect of changes of policy. (b) On the other hand the court may decide that the promise or practice induces a legitimate expectation of, for example, being consulted before a particular decision is taken. Here it is uncontentious that the court itself will require the opportunity for consultation to be given unless there is an overriding reason to resile from it in which case the court will itself judge the adequacy of the reason advanced for the change of policy, taking into account what fairness requires. (c) Where the court considers that a lawful promise or practice has induced a legitimate expectation of a benefit which is substantive, not simply procedural, authority now establishes that there too the court will in a proper case decide whether to frustrate the expectation is so unfair that to take a new and different course will a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition. In that case also, the petitioner had collected the material to be exported and some part was stored in warehouse at different places for transporting the same to China. 6.2.1 It was observed by the Andhra Pradesh High Court that in relation to the effect of the notification dated 8.9.2022, even the authorities had accepted in principle that abrupt change in the policy would cause loss to the person who had acted on the basis of the existing policy by virtue of subsequent notification. The respondent also provided protection to such class of persons as was rightly noticed by the Andhra Pradesh High Court. The categories were mentioned in the subsequent notifications which class of exporters were allowed to export the quantity of broken rice though policy had brought into force prohibiting the export. 6.2.2 The Andhra Pradesh high Court proceeded to observe, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the petitioner had altered its position to put itself to detriment by procuring the rice under contract to export. However, admittedly, the petitioner could not identify itself with the said class and could not group itself with the said homogeneous class for the only reason that the petitioner could not have the online access to the portal. As a result, he could not apply under the said quota. The petitioner fulfilled required conditions that its letter of credit was opened before the date of the notification. 6.4.1 It was only irregularity, and no substantive defect, that the petitioner could not have the online access to the portal. It was given out that there were 52 applicants to be considered for pro-rata allotment of the quantity of broken rice permitted to be exported under Notification dated 12.10.2022. The technical reason of lack of access to portal could not be said to be reasonable ground to oust the petitioner from earning the benefit of the quota earmarked for export on pro-rata basis. 6.4.2 The petitioner belonged to the same class of exporters who are to be considered for pro-rata allotment within the quota offered for export. Denying the petitioner this re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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