Important Point
The government is entitled to issue or withdraw or modify the export or import policy in accordance with the scheme evolved and an applicant has no vested right to have export or import licences in terms of the policies in force at the date of his making application as the grant of licence depends upon the policy prevailing as on the date of the grant of the licence.

Headnote:Foreign Trade Development Regulations Act, 1992-Export and Import Policy-Withdrawal of previous policy and introduction of new policy-Validity of-Doctrine of legitimate expectations-Not applicable when appropriate authority is empowered to take a decision by an executive policy or under law-An applicant has no vested right to have export or import licences in terms of policies in force at the date of his making application-Granting of licences depends upon the policy prevailing on the date of grant of licence or permit.
       Held : The power to lay policy by executive decision or by legislation includes power to withdraw the same unless in the former case, it is by malafide exercise of power or the decision or action taken is in abuse of power. The doctrine of legitimate expectation plays no role when the appropriate authority is empowered to take a decision by an executive policy or under law. The Court leaves the authority to decide its full range of choice within the executive or legislative power. In matters of economic policy, it is a settled law that the Court gives the large leeway to the executive and the legislature. Granting licences for import or export is by executive or legislative policy. Government would take diverse factors for formulating the policy for import or export of the goods granting relatively greater priorities to various items in the overall larger interest of the economy of the country. It is, therefore, by exercise of the power given to the executive or as the case may be, the legislature is at liberty to evolve such policies. (Para 3)
       Further held that grant of licence depends upon the policy prevailing as on the date of the grant of the licence. The Court, therefore, would not bind the Government with a policy which was existing on the date of application as per previous policy. A prior decision would not bind the Government for all times to come. When the Government are satisfied that change in the policy was necessary in the public interest, it would be entitled to revise the policy and lay down new policy. The Court, therefore, would prefer to allow free play to the Government to evolve fiscal policy in the public interest and to act upon the same. Equally, the Government is left free to determine priorities in the matters of allocations or allotments or utilisation of its finances in the public interest. It is equally entitled, therefore, to issue or withdraw or modify the export or import policy in accordance with the scheme evolved. (Para 5)

Order

These special leave petitions arise from the judgment and order of the Division Bench of the Madras High Court dated March 7, 1996 made in writ petition Nos. 17490 and batch and 147/96 and batch. The admitted facts are that the petitioners are exporters of readymade garments to divers countries. The export and import is governed by Foreign Trade Development Regulations Act, 1992. The Government of India, Ministry of Commerce evolved 1992-93 Export and Import Policy declaring that the export policy to augment productivity, modernization and competitiveness of the Indian agriculture industry and service. For the year 1994-95, export policy for the readymade garments was notified in notification No. 1-29-93 dated September 4, 1993. The policy classified allotment under heads, namely, (a) Past Performance Entitlement (for short, ‘PPE’); (b) Manufacturer Export Entitlement (for short, ‘MEE’); and (c) Non-quota Exporters Entitlement (for short, ‘NQE’), The Uruguay round of negotiations of the GATT received final approval of the negotiations incorporating separate agreements to diverse sectors including the Textile and Clothing sector. The latter is known as the Agreement on Textile and Clothing (ATC). Thereunder, the Government of India committed to phase-out incentives or quota by December, 2004 and planned to introduce changes in quota also w.e.f. January 1, 2005. The goal thereby sought to be achieved is that an exporter, whether in India or abroad, would export garments to any other part of the world without any quota restrictions for providing right environment for textile and clothing exporters to be ready to achieve the goal. Consequently, new export policy from ATC w.e.f. January 1, 1996 was introduced withdrawing the previous policy referred to hereinbefore. It was initially notified on November 28, 1995 announcing total change in the garment quota policy, the allotment for MEE and NQE system were thereby totally withdrawn under the new policy. The new policy envisages only two methods, namely, (i) Past Performance Entitlement (PPE) 80%; and (ii) First Come, First Serve (FCFS) 20%. The petitioners have challenged this change in the policy in the High Court on three grounds one of which is promissory estoppel on legitimate expectation. The High Court in the impugned judgment negatived all the three contentions. Thus, these special leave petitions.

2. Shri Vaidyanathan, learned counsel, contended that the Government had promised to grant MEE and NQE quotas for those who upto date their quality of products by purchasing new machines after expiry of 5 years life span or given promise that all those who performed their applications MEE were entitled to NQE quota and that, therefore, the respondents and estopped to recile from the promise made to them. They cannot act in a way detrimental to their legitimate expectations. We find no force in the contention. It is seen that the change in the policy is as a result of GATT agreement with all contracting countries. The quota system was available to export garments and clothing to European countries, viz., U.S.A. Canada, Norway etc. The Government took the policy that with a view to meet more competitive quality in the foreign markets introduced FCFS system giving 20% of the export. PPE was provided with 80% of the export. The new dynamism in the policy would make the trade more competitive and it will be in the best interest of the country and to boost in export potentiality and foreign exchange, on account thereof MEE and NQE quotas were eliminated and large allocation was issued to PPE system and rest of 20% was marked for FCFS system. It was also pointed that the Government encountered that MEE system was beset with floods of false declarations of the productive capacity by unscrupulous traders masquerading as exporters. Though action was being taken against persons who committed fraud but it became difficult to stop misutilisation of the scheme completely. Conseq

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1996 Supreme(SC) 949

Cases Referred (1)