1967 (11) TMI 108 - SC - Indian Laws

Whether order passed by the Textile Commissioner and confirmed by the Central Government imposing cut in the import entitlement by the respondents should be set aside and quashed? Held that - Under our jurisprudence the Government is not exempt from liability to, carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise, solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances. in which the obligation has arisen. We agree with the High Court that the impugned order passed by the Textile Commissioner and confirmed by the Central Government imposing cut in the import entitlement by the respondents should be set aside and quashed and that the Textile Commissioner and the Joint Chief Controller of Imports and Exports be directed to issue to the respondents import certificates for the total amount equal to 100% of the f.o.b. value of the goods exported by them, unless there is some decision which fails within cl. 10 of the Scheme in question. It is common ground that the report of the Committee was not made available to them and the Textile Commissioner, before he passed the orders, did not call for their explanations. It must therefore be held that enquiry in a manner consonant with the rules of justice was not made in the case of those four exporters also. Appeal dismissed.

Issues Involved:

1. Validity and enforceability of the Export Promotion Scheme.
2. Authority of the Textile Commissioner.
3. Compliance with natural justice.
4. Government's obligation to honor representations made in the Scheme.
5. Judicial review of administrative actions.

Detailed Analysis:

1. Validity and enforceability of the Export Promotion Scheme:

The Export Promotion Scheme, published on October 10, 1962, and extended to exports to Afghanistan on January 1, 1963, provided incentives to exporters of woolen goods. Clause 2 of the Scheme stated that exporters would be entitled to import raw materials equal to 100% of the f.o.b. value of the exports. The respondents exported woolen goods worth Rs. 5,03,471.73 but were issued an Import Entitlement Certificate for only Rs. 1,99,459. Representations for the full value failed, leading to a petition under Article 226 of the Constitution. The High Court held that the respondents were entitled to import licenses equal to 100% of the f.o.b. value unless over-invoicing was found after due enquiry under Clause 10. The Supreme Court affirmed this, emphasizing the Scheme's binding nature and the need for compliance with its terms.

2. Authority of the Textile Commissioner:

The Textile Commissioner, under Clause 10 of the Scheme, had the authority to investigate if the declared value of exported goods was higher than the real value. However, the Commissioner reduced the import entitlement without informing the respondents or giving them an opportunity to explain, acting on subjective satisfaction. The Supreme Court held that the Textile Commissioner must act in accordance with the Scheme and natural justice principles. The Commissioner's actions were found to be arbitrary and not in compliance with the Scheme's requirements.

3. Compliance with natural justice:

The Textile Commissioner's reduction of the import entitlement without a proper enquiry and without giving the respondents an opportunity to present their case was a violation of natural justice. The Supreme Court emphasized that the authority vested in the Textile Commissioner must be exercised in a manner consonant with justice and fair play. The respondents were not informed of the evidence against them, nor were they given a chance to explain, making the Commissioner's actions subject to judicial scrutiny and rectification.

4. Government's obligation to honor representations made in the Scheme:

The Government contended that the Scheme was administrative and did not create enforceable rights. However, the Supreme Court held that the Scheme, even if executive in character, created an obligation on the Government to honor its representations. The respondents, having acted to their detriment based on the Scheme, were entitled to seek judicial intervention to enforce the Government's promises. The principle of executive necessity could not be invoked to escape this obligation, as it would undermine the rule of law.

5. Judicial review of administrative actions:

The Supreme Court affirmed that administrative actions, even if based on executive policies, are subject to judicial review to ensure they are not arbitrary or unjust. The Court held that the Textile Commissioner's actions were subject to review, and the respondents were entitled to relief as the Commissioner failed to comply with the Scheme and principles of natural justice. The Court directed the Textile Commissioner and the Joint Chief Controller of Imports and Exports to issue import certificates for the full f.o.b. value of the goods exported by the respondents, unless a valid decision under Clause 10 was made.

Conclusion:

The Supreme Court dismissed the appeals, holding that the Textile Commissioner and the Central Government acted arbitrarily and failed to comply with the Export Promotion Scheme and principles of natural justice. The respondents were entitled to import certificates equal to 100% of the f.o.b. value of the goods exported, and the Government was bound by its representations in the Scheme. The judgment reinforced the enforceability of executive schemes and the requirement for administrative actions to adhere to principles of justice and fair play.

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