TaxTMI 
TaxTMI 
1993 (3) TMI 374
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....ders musical instruments and chips, powder and koto-parts had been taking place in the past several years from Tamil Nadu as per the exports and imports policy prevailing up to 31-3-1992, The export of the said products was on the basis of the licence issued by the Chief Controller of Imports and Exports, New Delhi. As a matter of fact, the export and import policy was announced for the period from April 1990 to March 1993. But, however, in March 1992, the export import policy was suddenly changed and a new policy was framed for 5 years commencing from 1-4-1992 and ending with 31-3-1997, Under the export import policy for the period from 1-4-1992 to 31-3-1997, (hereinafter referred to as new policy) a prohibition is introduced against export of red sanders in any form. The respondent made a representation to the authorities and wanted to know from them as to whether musical instruments and other chips made out of red sanders wood, which was being exported by the respondent, could be exported, even after the coming into force of the new policy. The second appellant sent a reply dated 14-5-1992 Stating that the export of red sanders wood in any form is prohibited under the new policy....
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....in exercise of the power under Section 3 of the Act. Under the earlier export and import policy for the years 1990 to 1993, export of red sanders wood, was not prohibited. It is only Clause 7 of Part I of the Negative List of the new policy which prohibits export of wood and wood products in the form of logs, timber, stumps, roots, barks, chips, powder, flakes, dust, pulp and charcoal. Therefore, under the new policy, even chips, powder of red sanders are prohibited. Serial Number 44 of Part V of the Negative List of the new policy allows export of processed timber alone of all species, excluding sandalwood and red sanders wood. 4. Before the learned single Judge, who heard the writ petition, it was contended on behalf of the respondent herein, that the principle of promissory estoppel would apply to the case of the respondent and. the respondent having acted upon the representations made by the appellants in the earlier export and import policy which was to be in force till 31-3-1993 and suffered detriment by availing loans from financial institutions for the purpose of purchasing red sanders and manufacturing parts of musical instruments, it is not open to the appellants to ch....
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....ecision, it was held that the doctrine of promissory estoppel can be invoked only against executive actions of the Government, but not against legislature. In that decision the Full Bench of the Delhi High Court, further held that the export control orders issued under Section 3 of the Act are examples of delegated legislation and they can be amended from time td time and they being legislative in nature, the doctrine of promissory estoppel of cannot be invoked against the provision for such orders. 6. Per contra, Mr. R. Krishnamurty, learned Senior Counsel appearing for the respondent, reiterated the contentions urged on behalf of the respondent before the learned single Judge and submitted that the principle of promissory estoppel will apply to the case of the respondent, because on the representations made by the appellants in the earlier policy which was to be in force up to 31-3-1993, the respondent suffered detriment by purchasing red sanders wood after taking loans from financial institutions and by manufacturing parts of musical instruments and, therefore, it is not open to the appellants to change the policy even before 31-3-1993 and prevent the respondent from fulfilli....
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....39;over' invoiced' the goods exported; and the Government also acted in a similar manner in dealing with the representation of the respondents. In the appeal before the Supreme Court, it was contended inter alia, on behalf of the Union of India that the Export Promotion Scheme was administrative in character, that it contained mere executive instructions issued by the Central Government to the Textile Commissioner, and created no enforceable rights in the exporters, who exported their goods in pursuance of the Scheme and that it imposed no obligations upon the Government to issue import certificates. The Supreme Court while repelling the above contention of the appellant, held as follows at page 727 : "This case is, in our judgment a clear authority that even though the case does not fall within the terms of Section 115 of the Evidence Act, it is still open to a party who has acted on a representation made by the Government to claim that the Government shall be bound to carry out the promise made by it, even though the promise is not recorded in this form of a formal contract as required by the Constitution." In the above decision, the Supreme Court while holding, ....
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....t being reasonable, but in the sense that it is manifestly arbitrary. In England, the Judges would say "Parliament never intended authority to make such rules. They are unreasonable and ultra vires". In paragraphs 76 and 77 of the above judgment, the Supreme Court further observes thus: "A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary powers. In the latter case the question may be considered on all grounds on which administrative action may be questioned, such as, non-application of mind taking irrelevant matters into consideration, failure to take relevant matters into consideration, etc. etc. On the facts and circumstances of a case, a subordinate legislation may be struck down as arbitrary or contrary to statute, if it fails to take into account very vital facts, which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that it does not conform to the statutory or constitutional requi....
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....s possible to invoke the principle of promissory estoppel against legislature, observed thus: "25. Petitioners in writ petition No. 794/86 had claimed that pursuant to the arrangement entered into between them and the State following the invitation by the State they had invested Rs. 1.68 crore in shape of plant and machinery and 63 lacs of rupees by way of land and buildings. The petitioner in the other two cases stated that investments had been made by them as well. The petitioners were invited to set up industries by assuring them supply of the raw material. They changed their position on the basis of representation made by the State and when the factories were ready and they were in a position to utilise the raw material, the impugned Act came into force to obliterate their rights and enabled the State to get out of the commitments. We are inclined to agree with the submissions made on behalf of the petitioners that the circumstances gave rise to a fact situation of estoppel. It is true that there is no estoppel against the legislature and the vires of the Act cannot be tested by invoking the plea but so far as the State Government is concerned the rule of estoppel does....
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....icy issued under S. 3 of the Act has to be taken as a legislative action. The new policy issued in exercise of the power under S. 3 of the Act, whether such policy is considered as a governmental action taken in exercise of the statutory power, or as subordinate or the delegated legislation, the doctrine of promissory estoppel can be applied against the enforcement of the new policy on the facts and circumstances of a given case. 16. Coming to the facts of the present case, the materials on record go to show that the respondent had acted in pursuance of the representations contained in the earlier export and import policy, which was announced for the period from 1-4-1990 to 31-3-1993 to the effect, that the export of red sanders in any form was permitted and entered into contract with foreign buyers for the export of musical instruments parts made out of red sanders wood and under one such a contract entered into by the respondent with a foreign purchaser, products worth US Dollars 1,00,000/-were agreed to be exported and for which purpose an open and irrevocable letter of credit No. 41-2432445-031 dated 21-2-1992 was opened, the beneficiary being the respondent herein. The mate....