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Nirmal Construction and Finance Company and anr. Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 1038 of 1979
Reported inILR1980Delhi1; 1981LabIC1012; 1980RLR508
ActsImport & Export (Control) Act, 1947 - Sections 3; Export Control Order, 1977; Constitution of India - Article 73
AppellantNirmal Construction and Finance Company and anr.
RespondentUnion of India and ors.
Advocates: P.R. Mridual,; D.R. Poddar,; M.K. Banerjee and;
Cases ReferredPadampat Sugar Mills Co. Ltd. v. The State of U.P.
imports and exports (control) act, 1947 - section 3--the export control order, 1977, clauses 3, 5(d) & 15(b) and item 77(ii) in part b of schedule i-constitution of india, articles 73 & 246 (1).; in the instant case the export control order, 1977 issued under section 3 of the imports and exports (control) act, 1947, as amended (vide export control order dated 30th march, 1979) whereby item 77(ii) as it originally stood in part b of schedule i of the export control order and read as :--; 'silver salts, silver chemicals and compounds with more than 50 per cent of silver contents' was deleted from part b of schedule i. on the same date a public notice was issued by the chief controller of imports and exports. para 4 of the said notice stated that the provisions of para 316 of the.....v.s. dbshpamde, j. (1) the question. a question arising with increasing frequency is how far and when promissory estoppel binds the government. the answer broadly is that like all judicial review, it is available against ordinary administrative action, but not against policy decisions which are not aimed against individuals but are based on general considerations and public interest. this distinction will help to decide this and the connected writ petitions.(2) the context: entry 41 of list i of the seventh schedule read with article 246(1) of the constitution gives exclusive power to parliament to legislate about trade and commerce with foreign countries and import and export across customs frontiers. the executive power of the union of india under article 73 of the constitution extends.....

V.S. Dbshpamde, J.

(1) The Question. A question arising with increasing frequency is how far and when promissory estoppel binds the Government. The answer broadly is that like all judicial review, it is available against ordinary administrative action, but not against policy decisions which are not aimed against individuals but are based on general considerations and public interest. This distinction will help to decide this and the connected writ petitions.

(2) The Context: Entry 41 of List I of the Seventh Schedule read with Article 246(1) of the Constitution gives exclusive power to Parliament to legislate about trade and commerce with foreign countries and import and export across customs frontiers. The executive power of the Union of India under Article 73 of the Constitution extends to all matters with respect to which Parliament has power to make law). 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. that nothing in this Order shall apply to any goods covered by executive instructions issued by the Chief Controller of Imports and Exports. It would appear that the Hand Book of Import-Export Procedures and the Hand Books of Import Policy and Export Policy annually published by the Chief Controller of Imports and Exports are in exercise of this power. They supplement the provisions of the Export Control Order.

(3) The Facts : The petitioners entered into contracts for the export of Argenti Nitras with foreign buyers in the third week of March, 1979. Delivery was to be completed by March and June, 1980 that is more than one year after the contract. .No time limit was specified for the opening of the letters of credit. The seller was to be responsible for any loss arising out of any changes in rules and regulations and/or Government policies in India.

(4) We are concerned herewith item 77 as it stood originally in part B of Schedule 1 of the Order as follows :

'(I)Silver bullion, silver sheets and plates which have not under gone any process of manufacture subsequent to rolling. (ii) Silver salts, silver Chemicals and compounds with more than 50 per cent silver contents. (iii) Manufacturers and products wholly or mainly of silver with more than 50 per cent silver contents.'

(5) Increasing restrictions were placed on the export of silver by the Central Govt. during the year 1979 by the deletion of the different parts of item 77 one by one as follows : Item 77 (i) was deleted on 19th Fcbruary, 1979, item 77 (ii) was deleted on 30th March, 1979 and was transferred to Part A as item 55 while on 6th September 1979 the export of silver compounds containing even Iess than 50 per cent silver was also banned. There is no fundamental right to export articles outside the country and the restriction or prohibition of exports is a matter of national policy to be formulated by the Government of India, '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 (M/s. Ramchand Jagdish Chand v. Union of India, : [1962]3SCR72 ).' The Controller could impose restrictions 'on special considerations such as difficult foreign exchange position or other matters which have a bearing on the general interests of the State.

(6) The Challenge: The present writ petitions challenge 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 obtaining necessary permission for export. Applications in respect of such items should be subnutted to the Chief Controller of Imports and Exports, New Delhi.'

(7) Mr. P. R. Mridul forcefully put forward the following contentions in support of the petitions : (1) Argenti Nitras was a drug defined according to Indian and foreign pharmacopoeias. It is true that it consisted of more than 63 per cent of silver, but it was not a silver salt or silver Chemical or silver compound within the meaning of item 77(ii) of Part B of Schedule 1. The deletion of the item from part B of Schedule I, thereforee, do not affect the export of the drug. Such export was completely free as it was not mentioned in any part of the Export Control Order at all. It could, thereforee, be done without any license and free from all conditions ; (2) Assuming that Argenti Nitras is a silver salt or silver Chemical or a silver compound with 63.5 per cent silver contents within the meaning of item 77(ii), the contracts were entered into by the petitioners on the representation made by the Export Policy 1978-79' that such an item was normally to be exported. The change of policy by which the export of the item is not to be allowed from 30th March, 1979 should not affect the pre-ban commitments made by the petitioners in View of the provisions contained in para 316 of the Hand Book of Import- Export Procedures, 1979-80. The relevant part of this provision is as follows :

'UNLESSotherwise provided, the following types of pre-ban (including pre-control) commitments will be ordinarily honoured for export control purposes : Copies of pre-ban commitments......should be sent to the licensing authority by Registered Post A.D. within a period of 15 days from the date of public notice/Trade Notice or Notification announcing the ban on exports of the concerned commodity. The submission of such evidence shall not, however, confer any right on the person concerned to the grant of any export license or permission to export.'

(8) Before and After the Ban : The extreme contention that Argenti Nitras was not included in Schedules I and Iii either before or after the ban has not been made good. It was neither pleaded nor proved that the export was made as of right and without license and free from any conditions before and after the ban. On the contrary, it is only because of the ban of 30th March, 1979 that 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,979 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, thereforee, that Argenti Nitras wa' not outside the Export Control Order but was governed by it and since it was included in item 77(ii) of Part B of Schedule I it continues to be included in item 55 of Part A of Schedule I after the public notice of 30th March, 1979.

(9) Is Argenti Nitras covered by item 77(ii)? It is apparent that for the purposes of consumption or drug control, Argenti Nitras is a drug. It may even be assumed that ordinarily it would be regarded as a drug. At the same time it is a silver compound containing more than 50 per cent of silver within the meaning of item 77(ii). It was argued for the petitioners that Argenti Nitras is the result arrived at after processing silver nitrate. The judgment of Pendse J. of the High Court of Bombay, delivered on 5th September, 1979 in a miscellaneous petition filed by Nirmal Exports was relied upon. The said decision held that Argenti Nitras became a different substance after processing and ceased to be an article under item 77(ii).

(10) With respect, we think that the correct approach to the question is to consider whether or not Argenti Nitras is a silver compound for the purposes of item 77(ii) irrespective of whether it would be a drug for the purpose of drug control or consumption. The analogy of the reasoning in the State of Bombay v. F. N. Balsara, : [1951]2SCR682 , is relevant and, thereforee, binding in this respect. The question there was whether the definition of liquor' in the Bombay Prohibition Act, 1949 was unconstitutional because it included liquids which were not drinks or beverages. The High Court held that the word liquor' ordinarily meant a drink or a beverage. On this view it held that although the legislature may prevent the consumption of intoxicating beverages and also prevent the use of drinks of alcoholic liquids which are not normally consumed as drinks, it cannot prevent the legitimate use of alcoholic preparations which are not beverages nor the use of medicinal and toilet preparations ccntaining alcohol. In a unanimous decision, the Full Bench of the Supreme Court disagreed with the High Court and held that liquids which are not beverages were validly included in the definition of liquor. The conclusion of the Supreme Court was arrived at by two alternate methods.

(11) Textual Interpretation: The first method was to construe the language of the definition. It expressly included liquids which were not beverages in the definition of liquor'. Mr. Mridul argued that the definition in item 77(ii) is not inclusive 'and, thereforee, 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 difinitions 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 substitudes 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 of interpretation are applicable to item 77(ii). Firstly, the wide language includes Argenti Nitras in the words 'silver compound'. Argenti Nitras is made .from silver nitrate. According to a text-book of Inorganic Chemistry by J. R. Partingtion, 5th edition, page 806, 'silver nitrate' is described as compound of silver. This is a conclusive technical information to show that silver nitrate is a silver compound. Argenti Nitras is silver nitrate which has undergone further processing. By the processing it became usable as a drug, but it did not cease to be a silver nitrate or a silver compound for the purpose of item 77(ii). It is not the use but the nature of the article which is to be considered for the purpose of export according to item 77(ii). For, the wide language is used only to include all silver compounds irrespective of the use to which they may be put. Obviously, a silver compound is not meant for only one use. For the purpose of consumption it is not one substance. According to different uses to which different silver compounds are put the substance may be called differently and for the purposes of Drugs Act or other Acts they may be different substances. But, if the test of the use or the popular name is applied practically nothing will remain in item 77(ii) as a silver compound. For, every silver compound will have a different use and would, thereforee, become a substance different from what is described by the general words 'silver compound'.

(14) The second method of interpretation is also very relevant. Just as the object of the inclusive language of the definition in the Bombay Act and the wide language of the definition in the United States and United Kingdom statutes had the object of covering every possible liquid which could be used as a substitute for liquor even though it may not be ordinarily used or known as liquor, the object of item 77(ii) is to include every compound containing more than 50 per cent of silver. Item 77 as a whole has to be considered before coming to the meaning of item 77(ii). All the three parts of item 77 are concerned with silver. Item 77(i) is silver as a metal, Item 77(ii) is silver as a compound and item 77(iii) is product made out of silver. Just as different products made out of silver do not cease to contain silver and can, thereforee, be known as silver products. similarly different compounds containing 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, thereforee, 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 difficulties of exporting items, the export of which is needed by our country that are to be rewarded with special concession. Such concession is not given to those persons who export items, the export of which is not difficult. It is for this reason that the categories of articles described in appendix 17 of the Import Policy are much narrower. It is not the export of any Chemical compound that would secure the advantage of import entitlement but only those few Chemicals the export of which is to be encouraged. This is why drugs are separately mentioned in appendix 17. This narrow classification cannot be taken to be a guide for interpreting the broad classification in Schedule I Part B of the Export Control Order.

(16) An analogy will further explain the point. The object of describing goods for the imposition of excise duty is to make known to the manufacturers and traders what goods are chargeable to duty. The description of the goods, thereforee, tallies with the understanding of the manufacturers and traders. It is, thereforee, the way they understand the goods that the goods are described in the statute and the rules under which excise duty is leviable. It was accepted among the manufacturers that V. P. Latex is included in the manufacture of rubber raw. It, thereforee, falls under the entry of rubber raw for the purpose of the levy of duty. The mere fact that V. P. Latex is liable to be used for a different purpose is not relevant for the purpose of the classification because the object of the classification is to conform to the nature of the goods as understood by the manufacturers and not the different uses to which the same goods may be put.

(17) Reliance was also placed by the petitioners on Beecham Foods Ltd. v. Commissioners of Customs and Excise, (1971) I All E.R. 701. The question there was whether purchase tax was livable on Rabona under Group 35 of Schedule I Part I of the U.K. Act of 1963 or whether it was exempt under Group 33 thereof. Group 35 was described as 'manufactured beverages, including fruit juices...and syrups, etc.' Group 33 was described as 'drugs and medicines manufactured or prepared (except toilet preparations)'. A beverage was thus distinct from a drug. Since Ribena was a drug and was in the narrower class it got the benefit of exemption from taxation as being under Group 33. It could also be included in the broader clause 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, thereforee, nothing to do with the natural camphor. The entry under which the import was to be mad6 was 'drugs and medicines'. It was, thereforee, 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 our case, Argenti Nitras was silver nitrate is already included in item 77(ii) and is not in this sense a different substance at all.

(19) Areenti Nitras is Argentum Nitricum, which is merely the Latin name of Nitrate of Silver or Silver Nitrate, which is a silver compound. It is, thereforee, included Tin the expression 'silver compound' in item 77(ii) of Part B of Schedule I of the Export Control Order, 1977, and we find so.

(20) Promissory Estoppel : The petitioners have to satisfy two conditions before showing their entitlement to import licenses on the ground of promissory estoppel :

(I)The representation made by the Government must be clear and unambiguous; and (ii) The petitioners must have changed their position by acting on it.

(21) Representation not unconditional : The Export Policy April 1978 March 1979, was as usual a policy framed for that particular year. There is no complete free trade anywhere in the world. Every country regulates its imports and exports. This is a sovereign function of the Government. It is a policy like the framing of the annual budget which is discussed only in Parliament leading to the annual Finance Act, which can be passed by Parliament and changed only at the instance of the Government. No individuals have any right to have such a policy framed in any parttcular way. Paragraph 8 of the opening Chapter of Export Control Policy, 1978-79 announces that 'any change in this policy will be duly notified by a Public Notice or by a Trade Notice.' The Public Notice of 30th March, 1979 is in pursuance of this announcement. Paragraph 316 of the Handbook of Import-Export Procedure statina that ordinarily pre-ban commitments of exporters will be honoured by the Government is also a part of this policy. Like the rest of the policy, it is also subject to change and even those who have entered into pre-ban commitments are told vide sub-para (6) of para 316 that a pre-ban commitment shall not confer any right on the person concerned to the grant of any export license or permission to export. This is the representation of policy which is held out by the Government. What could the petitioners reasonably understand by it In our view, it would be reasonable for the petitioners to understand that hopefully the policy would continue to be the same throughout the year, but the Government would have always the power and duty to change 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 therein :

'WHENpromissory estoppel is invoked, the promise or assurance necessary to support it is inevitably less than a promise finding upon the parties in contract it would not be necessary to invoke the doctrine of promissory estoppel at all if the promise had contractual force. But nevertheless the promise supporting a promissory estoppel is closely analogous in many respects to a promise having contractual effect. One of its essential attributes is the the same degree of unequivocality which, if the same assurance had been given full-consideration would have clothed it with contractual effect. This was the rock upon which the plea of promissory estoppel foundered. both in the Court of Appeal and in the House of Lords In his judgment in the Court of Appeal [(1971) I All E.R. 665], Lord Denning M.R. referred to the 'extraordinary consequences' of holding that an assurance ineffectual (by reason of its indefiniteness) to vary a contract was yet definite enough to support a promissory estoppel bringing about the same result.'

(The Law Relating to Estoppel by Representation by Spencer Bower and Turner, third Edition, page 376).

(22) A further distinction is made by the learned authors between an ordinary estoppel based on representation of fact and a promissory estoppel based on a representation of future conduct in the following words :

'WEhave already seen that the representation of fact, reason ably interpreted in one sense by the representee, though another meaning had been intended by the representor. may be the foundation of a true estoppel. But a promises cannot found a promissory estoppel in the same circumstance-' (ibid 377).

(23) In the construction' of the correspondence between the buyer and the seller could be a matter for argument. It was not such as to be understood only in one sense without the need of an argument. It was unanimously held by the House of Lords that to found a promissory estoppel the representation land to be clear and unequivocal. Otherwise promissory estoppel could not be based on such representation.

(24) Can it be said that the representation by the Government was unambiguous that an export license would definitely be issued to the petitioners under item 77(ii) prior to 30th March, 1979 In our view, the answer is in the nagative. On the contrary the representation was clear that while 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 comitments 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. But even if such an express reservation is not made, it was pointed out in the decision in Indo-Foreign Commercial Agency case that it is an implied term in the announcement of the Government Policies that they are liable to be changed in the public interest according to the needs of the country. Inherent liability of such a policy to change has been pointed by the Supreme Court in M/s. Indo Afghan Agencies and M/s. Ramchand Jagdish Chand cases, to which references have already been made above by us. In also the power of the ^lovcmnient to change the policy is recognised. This power, in our view is referable to such implied term. The late Prof. S.A. De Smith in his 'Judicial Review of Administrative Action', 3rd Edition, page 279, has also stated that 'contracts and convents entered into by the Crown... are to be construed as incorporating an implied term that such powers remain exercisable.

(25) 'THE undertaking given by the Government to a ship that it would not be impounded was acted upon by the ship which visited the United Kingdom but was impounded in violation of the undertaking given by the Government. In Bederiaktiabolaget Amphitrite v. the King. 1921 3 Kb 500, it was held that while the Government could be bound by commercial contract (comparable to a contract entered into by our Government under Article 298 and 299 of the Constitution) the Government cannot give an assurance as to that would be its executive action in the future in a matter of policy since the policy is determined by the needs of the community. The Government cannot be contract hamper its freedom of action in matters which concern the welfare of the State.

(26) In 'Government and Law' by T. C. Hartley and J. A. G. Griffith. (1975), the distinction made is between (1) fettering the future powers of public authorities by earlier commitments contractual and otherwise, and (2) estoppel proper. Our case, like the Amohitrite case, properly falls within the former rather than the latter. Commenting on the decision in the Amphitrite case, the learned authors observed at page 290 as follows :

'HOWEVER,the basic powers of Government cannot be subject to bargain and it could be argued that the shipowners should have known that the Government did not intend to enter into a legally binding contract. There was no evidence that the Government was not acting in good faith 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 individual under its ordinary contratual powers (Artiles 298 and 299 of the Constitution) when it would be bound by the private law of contracts, and the Government acting de hors its ordinary contractual power and, thereforee, governed only by the public law such as Articles 53 and 73 of the Constitution. The representation was held binding on the Government in para 10, because 'The defense of executive necessity was not relied upon in the present case in the affidavit filed on behalf of the Union of India. It was also not pleaded that the representation in the Scheme was subject to an implied term that the Union of India will not be bound to grant the import certificate for the full value of the goods exported if they deem it inexpedient to grant the certificate'. On the contrary, in the present case, the Government has filed a counter affidavit, in paragraph 15 of which the following statement is made:

'THATin any case it is submitted that the Export Control Order in question was issued on 30th March, 1979 and the Government of India issued a Public Notice No. 54- ETC(PN)/79 and respect of the export of manufacture of products containing 50 per cent or less Silver on. 13th August, 1979. This public notice contains the conditions as to how the export is to be allowed in respect of title pre-ban commitments of such products. The policy announced in the said Public Notice has been adopted in respect of the export of Silver Salts, Silver Chemicals and Compound with more than 50 per cent Silver which was also banned on the same date 30th March, 1979 vide a public notice No. 61-ETC(PN)/79 dated 6th September, 1979 a copy annexed as Annexure.'

(29) Apparently, the counter affidavit by the Government is intended to meet the condition laid down by a Division Bench of the Supreme Court in the following words :

'WHENthe Government is able to show that in view of the acts which have transpired since the making of the promise, public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies. It would not 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 view that the condition laid down by the Supreme Court above is satisfied in this case for the following reasons. Firstly, the declaration of the policy itself contained the reservation that it would be liable to change and that it would not confer any enforceable right on the representees. Secondly, the proper scope of judicial review extends to the justiciable administrative actioan of the Government, but not to a non-justiciable policy decision of the Government.

(31) We must be careful, thereforee, to consider if the decision to change the export policy is such a policy decision which would not normally be subject to judicial review. We are warned by Griffith and Street as follows :

'THISword 'policy' must be looked at circumspectly; it has an emotive force which conjures up a vision of gome matter which should be settled at Cabinet level - . . The consideration of typical cases of regulatory action reveals that they do not involve policy in this sense at all . . . Properly understood, policy should be limited to the ultimate value judgments. There is a graduated scale of decisions at one end of which the ethical judgment is all important and at the other end of which is a factual proposition and all issues between are a blending of the two. Only where the normative or ethical element is relatively big in relation to the factual should there be merely political responsibility to Parliament.'

[J.A.G. Griffith and H. Street, Principles of Administrative Law 149, 5th ed. (1973)].

(32) In this graduated scale of decisions of the Government, where does the change of export policy stand Is it ordinary administrative action aimed against individuals which would be properly subject to judicial review or is it a policy decision based on considerations of public interest and is not directed against individuals as such and is, thereforee, not properly subject to judicial review We are of the view that the Export-Import policy which contains express reservations regarding its liability to change and the reasons for which change have been stated by the Government cannot be subject to judicial review in the same way as ordinary administrative action is. We are supported in this view by the Full Bench decision of the Supreme Court m M. Ramanatha Pillai v. The State of Kerala and another, : (1973)IILLJ409SC . The appellant in that case was appointed for a term of five years or till he attains the age of 60. However, contrary to die 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 :

'THEHigh 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 by the Government is also taken in suck a capacity. In that capacity the Government action is not subject to promissory estoppel.

(33) In Narinder Chand Hem Raj & others v. Lt. Governor, Union Territory of Himachal Pradesh and others, : [1972]1SCR940 , the Deputy Commissioner had announced that the Himachal Pradesh Government was considering the abolition of sales-tax on the sale of Indian foreign liquor. Relying upon this announcement, the petitioner appellant had bid at the auction for license to sell such liquor. But later the proposal to abolish the sales-tax on such liquor was rut pursued and sales-tax was imposed on it. Upholding the dismissal of the writ petition by the auction purchaser, a Division Bench of the Supreme Court held that the power to impose a tax is a legislative power. The exercise of that power cannot be fettered by any representation that such a power would not be exercised. No court can give a direction to the Government from enforcing a provision of law

(34) In Excise Commissioner U. P. Allahabad v. Rarnkuniar and others, : AIR1976SC2237 notification existed by which sales-tax on the sale of country liquor was exempted. The opptitioners-respondents relied upon the said notification and believed that such exempt on from sales-tax would continue. Later on the said notification was withdrawn and sales-tax was imposed on country liquor. The contention of the action purchaser was that the Government had not specifically announced that the exemption notification would later on be withdrawn. Rejeting the contention the Supreme Court held that The Government could, thereforee, impose the sales-tax at any time after withdrawing the exemption notification. This was in the interest of the revenues of the State which are required for the execution of the plans designed to meet the over-increasing needs of the development society. There can be no question of estoppel against the Government in the exercise of its legislative sovereign or executive powers. The court relied upon the decision in M. Ramanathan Pallai v. State of Kerala referred to above, quoting with approval the following statement contained in American Jurisprudence 2d, at page 783 para 123 :

'GENERALLY,a State is not subject to an estoppel to the same extent as an individual or a private corporation. Otherwise, it might be rendered helpless to assert 'its powers in government. thereforee, 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. Falmouti 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 executive powers vested in it by framing rules under Article 162 of the Constitution and introduced the policy of nationalisation of the text-books. The publishers of the books which had been earlier prescribed for a period of three years challenged the executive action of the Government as being contrary to the representation which had been previously made by the Government and was acted upon by the publishers in printing and publishing the prescribed text-books believing that they would be used for a period of three years in the Schools. This contention was rejected by a Division Bench of the Supreme Court. The ration of the decision in the words of the Supreme Court is well summed up in the head-note which is as follows :

'THERules are in the nature of Departmental Instructions and do not confer any right on the publishers, nor are they designed to safeguard the interest of publishers. They are conceived in public interest and the Government is at liberty to change the text-books and delete from and add to the list of approved text-books or even prescribe books which are not in the list. thereforee, the impugned directions have been issued by the Government in exercise of the powers reserved to it by the Rules themselves. 'There is no warrant for concluding that the Rules held out any kind of representation or assurance to the publishers, or that the Rules envisaged their participation in the scheme and as such the Government was estopp ed from resiling from the representation that the period of 3 years will not be altered.'

'THEselection of text-books by the Text-Book Committee does not involve any assurance to the publishers that their textbooks will be prescribed. The selection only implied that the books have been approve '' any of the schools pres cribed any of the approved text-books there is no assurance as to the number of books that may be required. The period during which a text-book once prescribed is to continue, is injunction to the Managers of schools to avoid hardship to failed candidates or to poor students intending to buy second hand books. It is not an assurance to the publishers, because, the Managers can change the text-books within the specified period with the approval of the prescribed authority.'

(38) In C. Sankaranarayanan, etc. v. The State of Kerala, : AIR1971SC1997 , the State Government acted contrary to the representation 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 indispvtably changed in exercise of the powers contained in Article 309 of the Constitution. thereforee, 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 Controller of Imports and Exports. It conclusively establishes that the policy is liable to change and such a change of policy cannot be made a ground of judicial review by the petitioners. The statement may be respectively supplemented by pointing out that the policy was liable to change was contained not only in the policy but also in the Export Control Order, 1977, cl. 15(b). The impugned public notice of 30th March, 1979 is precisely the executive instructions issued by the Chief Controller of Imports and Exports contemplated in clause 15(b). These instructions are not to be controlled by the Export Control Order, but are to prevail in respect of the said Order. Even in clause 5(d) of the Order itself the licensing authority is enabled to refuse the grant of license when such a grant would not be in the interests of the country according to the licensing authority.

(40) Not to speak of a representation, but even a contract entered into with the Government cannot prevent the Government from acting contrary to the contract if the subject matter of the contract relates lo the governmental sovereign or policy functions of the Government as distinguished from its ordinary contractual capacity. The power given to the Government is regulate imports and exports by section 3 of the Imports and Export Control Act, 1947 is a power to be exercised in the interests of the public and is, thereforee, a duty owed to the public. The rule of estoppel is that the party bound by its representation or contract is prevented from acting contrary to it. But when such a party has a duty to perform, imposed on it either by a statute or by its public functions, then such an authority cannot be estopped from performing such a duty. The law was setted long ago in Maritime Electric Co. Ltd. ^ General Dairies Ltd. (1937) A.C. 610, by Lord Maugham. When it is said 'that there can be no estoppel against a statute what is meant is that the rule of estoppel cannot prevent the public authority from doing its statutory duty (Ram Rattan Bhanot v. Faqir Chand, Ibr (1972) 2 Del 408, upheld on the non-applicability of estoppel by the Supreme Court in Faqir Chand v. R. R. Bhanot : [1973]3SCR454 from the judgment of which paragraphs 15 and 16 of the report were deleted by way of review en 26-3-1973).

(41) Prof. H.W.R. Wade, in 'Administrative Law', Fourth Edition, pages 329-330, pointed out that the doctrine of estoppel cannot be allowed to impede the proper exercise of public and statutory functions by the State and publie 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 criticises 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:

'THEdecision 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 per mitted. It was also given at the expense of the public interest, since the court deprived the responsible public authority of the powers control which the Act assigned to them and to them only. As has been amply illustrated, the court is normally extremely careful to prevent any legal doctrine from impeding the exercise of statutory discretion in the public interest. But in this instance that policy was disregarded.'

A review of the case confirms the distinction between ordinary administrative action including the exercise of the power to enter into contracts and make representations by the Government which is governed by the private law including the law of estoppel, and the exercise of sovereign executive power by the Government in the regional policy and not directed against particular individuals which is the subject matter of public law. The doctrine of estoppel was applied against the Government in Union of India v. Indo Afghan Agencies (supra), because the import entitlement of the individual firm was being disallowed without such reasons as would be in accordance with the policy. Similarly, in Century Spg. and Mfg. Co. Ltd. v. Ulhasanagar Municipal Council, : [1970]3SCR854 , the representation was made by the Municipal Corporation to the Mills that they would have a fax holiday. Relying on that representation the Mils changed their position. The Municipality was, thereforee, estopped from withdrawing the representation which had been acted upon. In Motilal p, Padampat Sugar Mills Co. Ltd. v. The State of U.P. : [1979]118ITR326(SC) , also a representation had been made by the sales-tax authorities of the Uttar Pradesh Government to individual forms that exemption from sales-tax would be granted to them for a certain number of yeas. The representees acted upon the representation and changed their position. The law did not prohibit the Government from granting such exemption. It could not thereforee be argued by the Govt. that there could' be any estoppel against statute. Hence the benefit of promissory estoppel was allowed to the Mills by the Supreme Court. In none of these cases the representation was contained in a statement of the Government policy which policy was expressly stated to be liable to be changed according to the exigencies of the situation. None of these decisions can, thereforee, help the petitioners.

(42) On the contrary, we have referred to several decisions in which the representation was a part of the Government policy which was liable to change. The reasons of such change were not concerned with the conduct of the representees 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 fie 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, thereforee, 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 to, the foreign buyer if the latter were to sue the petitioners. This eventually is, however, subject to many imponderables. Firstly, the petitioners are non-resident foreigners in respect of foreign buyers. Any suit for damages would have to be brought by the foreign buyers in this country. Secondly, no letters of credit have been opened by the foreign buyers 711 favor of the petitioners. The foreign buyers will have, thereforee, to consider whethcr without any financial commitments by them it is worthwhile for them to take the trouble of filing suits in a foreign country for compensation. Lastly, the payment of the price and supply of goods are simultaneous conditions in a contract of sale. No steps have been taken by the buyers to open the letters of credit. Normally, this would mean that till then the sellers were under no obligation to ship the poods- Before the obligation to ship the goods arosen the Export Policy of the Government of India has changed. This may make it impossible not only for the seller but also for the buyers to perform the contract. The buyers would' not like to arrange for the payment of the price knowing that the sellers would not be able to ship the goods. In turn the sellers can say that so long as the buyers have not opened the letters of credit the sellers were not bound to ship the goods. Thus the eventuality of the sellers having to pay any damages to the buyers may not arise at all.

(45) It is also true that the doctrine of promisory estoppel would apply once the sellers have changed their position in acting upon the I representation made by the Government. But what is the change inthe position? Such a change must be real and not only theoretical. If the foreign buyers would' in all likelihood not be able to sue the Indian sellers for damages then in effect the result is as if the contracts cancelled by frustration under section 56 ofthe Contract Act. Theoretically, section 56 may not apply due to the undertaking given in the contract by the sellers to bear the consequences of the change of policy of export by the Government of India, but this undertaking is not likely to be enforced in practice and to that extent the position of the sellers is changed only in theory but not in practice by their acting upon the representation of the Government.

(46) Further, if the petitioners knew that the Export Policy was likely to cliange 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 tile 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, thereforee, that the contracts were concluded before the change in the Export Policy. Since the liability to change of policy existed prior to the contracts, the contracts themselves would be subject to the liability of the change of policy. They were not such, thereforee, as would amount to the change of position by the sellers enabling them to enforce the representation of the Government against it.

(47) For the above reasons, the writ petitions fail and are dismissed without any order as to costs.

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