Export ban on silver applied to pre-ban contracts, while equitable relief limited enforcement of supplier indemnity obligations.

A valid export prohibition on silver under the statutory control regime was treated as applicable even to contracts concluded before the ban, and pre-ban commitments did not justify an exception. The Court also indicated that, on the special facts, a performing supplier could be relieved in equity from enforcement of an indemnity clause that would otherwise expose it to unfair consequential liability, where performance had been offered but export was prohibited and acceptance was impossible. The article further notes that this relief was confined to the facts, while the broader question of automatic absolution from indemnity obligations was left open.

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Issues: (i) Whether the ban on export of silver under the exports control regime applied to contracts concluded before the ban; (ii) whether the indemnity clause in the supplier-STC contract could be enforced against the supplier in the special circumstances of the case.

Issue (i): Whether the ban on export of silver under the exports control regime applied to contracts concluded before the ban.

Analysis: The export restriction was issued under the Central Government's power to regulate and prohibit exports under the Imports and Exports (Control) Act, 1947. The Court treated export policy in a strategic commodity as primarily for executive determination and declined to interfere with the ban on grounds of policy or constitutional challenge in the facts of the case. The existence of pre-ban contractual arrangements did not persuade the Court to carve out an exception to the prohibition.

Conclusion: The ban on export of silver was upheld and was held applicable even to pre-ban commitments.

Issue (ii): Whether the indemnity clause in the supplier-STC contract could be enforced against the supplier in the special circumstances of the case.

Analysis: The supplier had already performed its contractual obligation by offering delivery, while the STC was unable to accept performance because export had been prohibited. The Court invoked its equitable jurisdiction under Article 136 of the Constitution of India and relied on the ad interim arrangement made earlier to prevent unfair exposure of the supplier to foreign liability. It left open the general question of automatic absolution from indemnity clauses, but held that the special facts justified relief.

Conclusion: The indemnity clause was directed not to be enforced against the supplier in this case.

Final Conclusion: The export ban was sustained, but the supplier was protected from enforcement of the indemnity obligation on equitable grounds, and the connected writ proceedings were rendered unnecessary in light of that direction.

Ratio Decidendi: Where an export prohibition is validly imposed under the statutory control regime, the Court may still, in the exercise of equitable appellate jurisdiction on the special facts of the case, relieve a performing supplier from enforcement of an indemnity clause that would otherwise expose it to unfair consequential liability.

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