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2014 Supreme(Guj) 512
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
AKIL KURESHI and SONIA GOKANI, JJ.
GEETANJALIL WOOLLENS PVT LTD - Petitioner
Versus
UNION OF INDIA - Respondent
SPECIAL CIVIL APPLICATION No. 16768 of 2013
Decided On : 3rd April 2014
Mr KAMAL TRIVEDI Sr Advocate with Mr PARESH M DAVE and Mr. PARITOSH GUPTA, Advocates for the Petitioners
Mr IH SYED, Asstt. Solicitor General of India with Mr RITURAJ M MEENA, ADVOCATE for the Respondent(s) No. 1 NOTICE SERVED for the Respondent(s) No. 2 4
The principle of promissory estoppel and its applicability in the case of abrupt curtailment of the Letter of Permission (LOP) without a change in policy or public interest involved.
Headnote:
LOP - Restriction on Validity - Foreign Trade Policy 2009-2014, Foreign Trade (Development & Regulation) Act, 1992 - The court discussed the legality of the action of the respondents in restricting the Letter of Permission (LOP) granted to the petitioners and the decision of the Board of Approval dated 8th October 2013. The court analyzed the provisions of the Foreign Trade Policy, the Foreign Trade (Development & Regulation) Act, 1992, and the Handbook of Procedures to determine the validity of the restrictions imposed on the LOP. The court also considered the principle of promissory estoppel and its applicability in the case. The court held that the abrupt curtailment of the LOP without a change in policy or public interest involved would be hit by the principle of promissory estoppel. The court allowed the petition to the limited extent of striking down the order of the authority dated 8th October 2013 and providing that the LOP in case of the present petitioners shall continue to be valid till 23rd October 2015.
Fact of the Case:
The petitioners, a company engaged in the business of manufacturing textile products, challenged the action of the respondents in restricting the validity of the Letter of Permission (LOP) granted to them. The petitioners had made substantial investments and commitments based on the period of validity of the LOP, and any curtailment therein would be hit by the principle of promissory estoppel.
Finding of the Court:
The court found that the abrupt curtailment of the LOP without a change in policy or public interest involved would be hit by the principle of promissory estoppel. The court allowed the petition to the limited extent of striking down the order of the authority dated 8th October 2013 and providing that the LOP in case of the present petitioners shall continue to be valid till 23rd October 2015.
Issues: The main issues revolved around the legality of the action of the respondents in restricting the validity of the LOP, the applicability of the Foreign Trade Policy and the Foreign Trade (Development & Regulation) Act, 1992, and the principle of promissory estoppel.
Ratio Decidendi: The court held that the abrupt curtailment of the LOP without a change in policy or public interest involved would be hit by the principle of promissory estoppel. The court allowed the petition to the limited extent of striking down the order of the authority dated 8th October 2013 and providing that the LOP in case of the present petitioners shall continue to be valid till 23rd October 2015.
Final Decision: The court allowed the petition to the limited extent of striking down the order of the authority dated 8th October 2013 and providing that the LOP in case of the present petitioners shall continue to be valid till 23rd October 2015.
AKIL KURESHI, J.
Petitioners have challenged the action of the respondents in restricting the Letter of Permission {“LOP” for short} granted in favour of the petitioners as also a decision of the Board of Approval dated 8th October 2013 by which the Board refused to accept the petitioners’ representation to withdraw the restrictions on the LOP. The petitioners have also challenged para 7 of Appendix 14IC of the Exim policy as being ultra vires Articles 14, 19(1)(g) of the Constitution of India. There are consequential prayers but all revolve around these main two challenges.
2. Facts in brief are as under :
2.1 The petitioner No. 1 is a company registered under the Companies Act, 1956. The petitioner No. 2 is its Chairman and Managing Director. The petitioners are engaged in the business of manufacture of textile products like fibers and clips and are recognized as 100% Export Oriented Undertaking [“EOU” for short].
2.2 On 1st October 1997, the Government of India granted LOP to the petitioners which was subject to the conditions contained in such letter as well as in a separate annexure annexed to the LOP. Some of the relevant conditions were that the unit would export its entire production in the domestic tariff area as per the provisions of Export and Import policy for a period of five years. At the end of such period, the unit would have an option either to seek renewal of its EOU status or to debond for production for domestic market “in light of the industrial policy in force at the time in relation to manufacture of the items reserved for small scale sector and sectoral policy prevailing at that point of time.” The unit had to achieve specified standards of export in value. The commercial production had to start within three years from the date of issuance of LOP. The petitioners had to confirm the acceptance of the said terms and conditions.
2.3 At the end of the period of validity of first LOP, the petitioners were granted periodic extensions. The first extension was granted under letter dated 15/21st February 2000 where certain conditions were added but it was specified that all other terms and conditions mentioned in the LOP would remain unaltered. In further extension granted on 19th March 2004, the validity of LOP was extended upto 23rd October 2005. On 29th November 2010, yet another extension was granted to the petitioners for a period upto 23rd October 2015. In such letter, it was specified that the LOP dated 1st October 1997 was extended for a further period of five years upto 23rd October 2015, on the basis of revised projections in terms of para 6.6 [a] of the Foreign Trade Policy 20092014. It was specified that, “this permission is issued subject to guidelines issued by the Department of Commerce from time to time on the subject of reprocessing of the used garments”.
2.4 Despite such extension upto 23rd October 2015, the petitioners received a letter from Deputy Development Commissioner {I/C}, Kandla Special Economic Zone dated 28th September 2012 in which it was stated as under :
“I have been directed to convey that the Board of Approval, in its meeting of 14.09.2012, has decided to curtail the validity of your LoP No. PER/276 (1997)/EOB/289/97 dated 01.10.1997 and Green Card No. KASEX/36/0506 dated 25.10.2005 from 23.10.2015 to 31.03.2013.”
3. The petitioners, therefore, approached this Court challenging the abrupt restriction on the validity of the LoP. The Court, by an order dated 6th March 2013 granted ad interim relief to the petitioners. Eventually, the writ petition was disposed of by an Order dated 26th June 2013 requiring the petitioners to make a detailed representation to the Board of Approval and the Board of Approval to decide such representation within the time frame, after granting personal hearing to the petitioners.
4. The petitioners appeared before the Board, made a representation as well as filed detailed written submissions, as also appeared in person. In the written submissions da
