1993 (4) TMI 175 - HC - Customs

Court rules in favor of garment exporter in Cash Compensatory Support case, invoking promissory estoppel.

OLD VILLAGE INDUSTRIES LTD. Versus UNION OF INDIA

The Court ruled in favor of the petitioner, an exporter of ready-made garments, in a case challenging the withdrawal of Cash Compensatory Support by the ... Exports - Cash Compensatory Scheme Issues:Challenge to withdrawal of Cash Compensatory Support for exports under Government policy.Analysis:The petitioner, an exporter of ready-made garments, challenged the withdrawal of Cash Compensatory Support by the respondents, violating the promise made by the Government of India regarding export incentives. The petitioner argued that it relied on the promise to price its goods for export and enter into firm contracts with foreign buyers. The circular discontinuing the support from 1st January, 1979, led to potential breaches of contracts, financial losses, and damage to reputation. The petitioner invoked the doctrine of promissory estoppel, claiming that the support could not be withdrawn for contracts entered into before the discontinuation date.The judgment referred to decisions by other High Courts, including Bombay, Madras, and Karnataka, which upheld the rights of exporters in similar cases. The courts applied the doctrine of promissory estoppel, ruling that the Government could not withdraw promised incentives retrospectively. The judgments emphasized that exporters were entitled to benefits under the scheme if contracts were concluded before the discontinuation date. The Delhi High Court agreed with these views, supporting the petitioner's claim.The Court noted the lack of counter-affidavits from the respondents despite the prolonged litigation. The respondents' argument of delay and laches in filing the petition was dismissed, as the petitioner's claims were not refuted, and the nature of the dispute warranted consideration. The Court distinguished previous cases where petitions were dismissed due to delay, emphasizing that each case should be evaluated based on its merits.Regarding the legal relationship between the Government and the petitioner, the Court rejected the argument that no such relationship existed. It affirmed that the petitioner had relied on the Government's promises in pricing goods for export, establishing a valid claim. The withdrawal of the support was deemed illegal and a violation of promissory estoppel. The circular discontinuing the support for confirmed contracts was quashed, and the respondents were directed to assess contracts entered into under the scheme before 1st January, 1979, granting cash assistance accordingly within six months. The writ petition was allowed, and costs were left to the parties.