Promissory estoppel and arbitrariness in export policy: Madras HC protected export-ready goods from a later restriction.

The Madras HC held that promissory estoppel may operate against subordinate or delegated legislation and against governmental notifications issued under statutory power, where a party has altered its position on the faith of an earlier export policy. Applying that principle, the Court found the new restriction on export of red-sanders wood products, as applied to goods already manufactured and export-ready, lacked a real nexus with the stated ecological object and was arbitrary in the facts. The petitioner had acted on the earlier policy, entered contracts, arranged finance, and processed the goods for export, so the impugned communication could not be sustained. Relief was granted by directing issuance of the export licence against the letter of credit.

---

---

Issues: Whether the Government could enforce the new export policy to prohibit export of red-sanders wood products already manufactured for export, and whether the petitioner could invoke promissory estoppel and arbitrariness to obtain a licence against the existing letter of credit.

Analysis: The petitioner had acted on the earlier export policy, entered into contracts, arranged finance, and processed the goods into export-ready musical instrument parts before the policy change. The Court held that promissory estoppel could operate against subordinate or delegated legislation and against governmental notifications issued under statutory power, though not against plenary legislative enactments. The new policy, as applied to goods already converted and ready for export, was found to have no real nexus with the stated ecological object, since stopping export at that stage would not further conservation if cutting of the raw wood itself was not prohibited. The restriction was therefore treated as arbitrary and unreasonable in the facts of the case.

Conclusion: The petitioner was entitled to the requested export licence value against the letter of credit, and the impugned communication could not be sustained.

Final Conclusion: Relief was granted by directing issuance of the export licence for the stipulated value, with the writ petition allowed to that extent.

Ratio Decidendi: Promissory estoppel can be invoked against governmental subordinate or delegated legislation where the claimant has altered position on the faith of a representation, and a policy restriction lacking rational nexus to its stated object may be struck down as arbitrary in its application to goods already made export-ready.

---