Promissory estoppel and arbitrariness limited a revised export policy that blocked completed goods prepared for export.

Promissory estoppel was held capable of operating against a revised export policy made under statutory power, including subordinate or delegated legislation, where exporters had altered their position on the faith of the earlier policy by contracting, obtaining letters of credit, manufacturing goods, and incurring liability. The Court also held that a prohibition extending to finished red sanders wood products already prepared for export was unreasonable and arbitrary because it lacked a rational nexus with the stated ecological objective, especially where there was no material showing that tree cutting itself had been banned. The writ appeal failed and the export relief was sustained.

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Issues: (i) Whether the doctrine of promissory estoppel could be invoked against the enforcement of the revised export policy made under the Imports and Exports (Control) Act, 1947; (ii) Whether the revised policy, insofar as it prohibited export of finished goods made from red sanders wood already prepared for export, was unreasonable and arbitrary.

Issue (i): Whether the doctrine of promissory estoppel could be invoked against the enforcement of the revised export policy made under the Imports and Exports (Control) Act, 1947.

Analysis: The earlier export policy permitted export of red sanders wood products and the exporter had acted upon that representation by entering contracts, obtaining letters of credit, manufacturing the goods, and incurring financial liability. The Court held that governmental action taken under statutory power, including subordinate or delegated legislation, is not immune from the doctrine of promissory estoppel. A policy change that defeats pre-existing commitments and prejudices parties who altered their position on the faith of the earlier representation can be restrained on the facts of a given case.

Conclusion: The doctrine of promissory estoppel applied against enforcement of the revised policy, and the contention that it was unavailable because the policy was legislative in character was rejected.

Issue (ii): Whether the revised policy, insofar as it prohibited export of finished goods made from red sanders wood already prepared for export, was unreasonable and arbitrary.

Analysis: The Court found that the prohibition extended to finished musical instrument parts already manufactured and ready for export, even though there was no material showing that cutting of the trees had itself been banned. In these circumstances, preventing export of completed goods did not bear a rational nexus to the stated ecological objective of the policy. A subordinate measure may be struck down if it is manifestly arbitrary or unreasonable and lacks a proper connection with the statutory purpose.

Conclusion: The revised policy was held to be unreasonable and arbitrary to that extent, and the mandamus directing issue of the export licence was upheld.

Final Conclusion: The writ appeal failed, and the order granting export relief to the respondent was sustained.

Ratio Decidendi: Promissory estoppel can operate against governmental action taken under statutory or delegated power, and a subordinate export policy may be invalidated where its application to completed goods is arbitrary and lacks nexus with the stated public purpose.

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