Promissory estoppel enforced against government, with writ jurisdiction upheld and canalisation rule held insufficient to refuse licences.

A governmental promise to issue import licences, once knowingly relied on and acted upon by the promisee, could be enforced under promissory estoppel because the petitioners altered their position to their detriment. Writ jurisdiction under Article 226 was maintainable since the impugned action was statutory and challenged as arbitrary State action, even though the underlying arrangement was contractual. Rule 6(1)(c) of the Import Control Order did not create an absolute bar to licences for a canalised item and could not be used to defeat the concluded arrangement without lawful justification. The refusals were held unsustainable and the import licences were directed to be granted.

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Issues: (i) whether the Government was bound by its promise to grant import licences during the subsistence of the agreement on the principle of promissory estoppel; (ii) whether a writ petition under Article 226 of the Constitution of India was maintainable where the grievance arose out of a contractual arrangement with a public authority exercising statutory powers; (iii) whether Rule 6(1)(c) of the Import Control Order justified refusal of import licences for a canalised item.

Issue (i): whether the Government was bound by its promise to grant import licences during the subsistence of the agreement on the principle of promissory estoppel.

Analysis: The petitioners established that they altered their position in reliance on the Government's assurance by restructuring their shareholding and continuing business commitments. The promise was made with knowledge that it would be acted upon, and the subsequent refusal to honour it was sought to be justified only on general grounds. In the absence of a legally sustainable basis to displace the promise after reliance and detriment, the equitable doctrine applied against the Government.

Conclusion: The doctrine of promissory estoppel applied and the refusal to grant import licences on that basis was untenable, in favour of the petitioners.

Issue (ii): whether a writ petition under Article 226 of the Constitution of India was maintainable where the grievance arose out of a contractual arrangement with a public authority exercising statutory powers.

Analysis: The challenge was directed against orders made by a public authority invested with statutory power, and the relief sought was against arbitrary and unlawful administrative action. The fact that the source of the asserted right was a contract did not bar writ jurisdiction where the impugned action was statutory in character and the dispute concerned enforcement against State action.

Conclusion: The writ petition was maintainable, in favour of the petitioners.

Issue (iii): whether Rule 6(1)(c) of the Import Control Order justified refusal of import licences for a canalised item.

Analysis: The rule enabled refusal where imports were canalised through special agencies, but it did not create an absolute prohibition. The existence of canalisation did not override the Government's own agreement with the petitioners, and the licensing authority could not rely on the rule to defeat the concluded arrangement without a legally sufficient basis.

Conclusion: Rule 6(1)(c) did not justify refusal of the licences, in favour of the petitioners.

Final Conclusion: The impugned refusals were unsustainable, the petition succeeded, and the petitioners were entitled to the grant of import licences.

Ratio Decidendi: A governmental promise knowingly made and acted upon, resulting in alteration of position by the promisee, can be enforced against the Government in writ proceedings unless a clear legal bar or overriding public interest legally justifies refusal; a statutory licensing power cannot be used to defeat such a promise arbitrarily.

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