Prospective export restriction upheld: pre-notification contractual commitments and irrevocable letters of credit were protected.

The HC held that the export restriction notification was consistent with the Foreign Trade Policy, 2023 because the Central Government could amend export policy by notification in public interest. The Court also held that the change could operate only prospectively and could not defeat vested rights arising from contracts and irrevocable letters of credit executed before the notification. The Article 14 challenge failed because exporters with pre-notification shipment arrangements stood on a different footing from those still at the procurement stage, giving the classification a rational basis. Challenges based on natural justice and legitimate expectation were also rejected, as policy changes made in public interest did not require prior notice on these facts.

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Issues: (i) Whether the impugned export restriction notification was in conformity with the Foreign Trade Policy, 2023. (ii) Whether the policy change could operate retrospectively so as to take away accrued or vested rights of exporters. (iii) Whether the policy decision could be interfered with as arbitrary or violative of fundamental rights. (iv) Whether the decision was liable to be invalidated for breach of natural justice or legitimate expectation.

Issue (i): Whether the impugned export restriction notification was in conformity with the Foreign Trade Policy, 2023.

Analysis: The policy and the governing statute empowered the Central Government to amend export policy by notification in public interest. The impugned notification changed the export status of non-basmati white rice from free to prohibited while carving out specified exceptions. On that basis, the notification was treated as a valid policy amendment rather than a measure contrary to the policy framework.

Conclusion: The notification was held to be in conformity with the Foreign Trade Policy, 2023.

Issue (ii): Whether the policy change could operate retrospectively so as to take away accrued or vested rights of exporters.

Analysis: The exporters had entered into contracts and obtained irrevocable letters of credit before the notification. The governing policy contemplated prospective operation of policy changes and protected commitments backed by irrevocable commercial letters of credit. Relying on settled law that accrued rights cannot be withdrawn retrospectively by a policy change, the Court held that the prohibition could not defeat prior contractual positions already crystallised.

Conclusion: The notification was held to be prospective and not capable of taking away vested rights arising before 20.07.2023.

Issue (iii): Whether the policy decision could be interfered with as arbitrary or violative of fundamental rights.

Analysis: Although economic policy generally receives judicial deference, the classification made by the notification was examined against Article 14. The Court held that exporters who had already arranged shipment stood on a different footing from petitioners who were still at the procurement stage. The differentiation was therefore treated as having a rational basis linked to the object of the notification.

Conclusion: The challenge based on arbitrariness and violation of fundamental rights was rejected.

Issue (iv): Whether the decision was liable to be invalidated for breach of natural justice or legitimate expectation.

Analysis: The Court held that legitimate expectation is not an absolute right and must yield to overriding public interest. In the context of a policy decision taken to address public interest concerns, no prior notice was held necessary merely because the policy was altered. The doctrine of natural justice was not found to be independently violated on the facts.

Conclusion: The challenge based on natural justice and legitimate expectation was rejected.

Final Conclusion: The writ petitions were disposed of by confining the impugned restriction to prospective operation against the petitioners, while protecting exports backed by pre-notification irrevocable letters of credit.

Ratio Decidendi: A policy restriction on exports may operate only prospectively and cannot defeat accrued rights already protected by prior irrevocable commercial commitments, though the State retains power to alter export policy in public interest.

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