1979 (1) TMI 246 - HC - Customs

Summary

Issues Involved:
1. Constitutionality of Section 3(1) and (3) of the Imports and Exports (Control) Act, 1947.
2. Legality of the Exports (Control) Order, 1977, and the Exports (Control) Twenty-Seventh Amendment Order, 1978.
3. Validity of the Public Notice dated June 5, 1978.
4. Application of the principles of promissory estoppel.

Detailed Analysis:

1. Constitutionality of Section 3(1) and (3) of the Imports and Exports (Control) Act, 1947:
The petitioners challenged the constitutionality of Section 3(1) and (3) of the Act on the grounds that they offend Articles 14, 19(1)(f) and (g), and 31 of the Constitution. The contention was that these provisions suffer from excessive delegation and lack of legislative guidelines, which leads to uncanalised and arbitrary power being vested in the executive.

2. Legality of the Exports (Control) Order, 1977, and the Exports (Control) Twenty-Seventh Amendment Order, 1978:
The petitioners contended that the Exports (Control) Order, 1977, as amended by the Twenty-Seventh Amendment Order, 1978, was unconstitutional because it imposed a total ban on the export of teak wood in sawn sizes without any relevant considerations or data. The petitioners argued that the ban was excessive, disproportionate, and irrational, and lacked any reasonable classification or nexus. It was also claimed to be discriminatory and violative of the principles of promissory estoppel.

3. Validity of the Public Notice dated June 5, 1978:
The petitioners challenged the Public Notice dated June 5, 1978, which banned the export of teak wood in sawn sizes, on the grounds of arbitrariness and violation of Articles 14, 19(1)(f) and (g), and 31 of the Constitution. The petitioners argued that the notice was discriminatory and lacked any intelligible criteria. The retrospective fixing of May 19, 1978, as the cut-off date for applications for export licenses was also challenged as irrational and without any basis.

4. Application of the Principles of Promissory Estoppel:
The petitioners argued that the principle of promissory estoppel was applicable in this case because the government had announced an export policy for teak wood for the year 1978-79 in March 1977, based on which the petitioners had entered into firm contracts and received advance payments. The subsequent imposition of a total ban on the export of teak wood in sawn sizes was claimed to be a violation of the doctrine of promissory estoppel.

Judgment:

Constitutionality of Section 3(1) and (3):
The court did not pronounce upon the constitutionality of Section 3(1) and (3) of the Act, assuming their validity for the purpose of this judgment. However, it was noted that Section 3 does not lay down any legislative policy or guidelines, especially in the absence of rules framed under Section 8. The court suggested that the Central Government should frame rules under Section 8 to provide guidelines for the exercise of power under Section 3.

Legality of the Exports (Control) Order, 1977, and the Exports (Control) Twenty-Seventh Amendment Order, 1978:
The court held that the impugned ban brought in by the Exports (Control) Twenty-Seventh Amendment Order, 1978, was invalid and unconstitutional. The total ban was found to be arbitrary and based on no intelligible criteria. The respondents failed to produce any relevant material or data to justify the imposition of the total ban. The court concluded that the ban was imposed without any basis and was excessive, disproportionate, and discriminatory.

Validity of the Public Notice dated June 5, 1978:
The court struck down the Public Notice dated June 5, 1978, on the grounds that it was arbitrary, discriminatory, and in violation of Article 14 of the Constitution. The retrospective fixing of May 19, 1978, as the cut-off date was found to be irrational and without any basis. The notice also discriminated between Letters of Credit and advance payments without any intelligible criteria.

Application of the Principles of Promissory Estoppel:
The court held that the principle of promissory estoppel was fully attracted in this case. The petitioners had acted on the basis of the government's announced export policy for the year 1978-79 and had entered into firm contracts and received advance payments. The subsequent imposition of the total ban was a violation of the doctrine of promissory estoppel.

Relief:
The court declared the Exports (Control) Twenty-Seventh Amendment Order, 1978, and the Public Notice dated June 5, 1978, as invalid, illegal, unconstitutional, and arbitrary. A mandamus was issued directing the respondents to issue necessary export licenses to the petitioners to export teak in sawn sizes against firm contracts entered into before June 5, 1978, upon submission of fresh applications, proof of firm contracts, proof of advance payments, and identification of the source of procurement of the teak in sawn sizes sought to be exported. The petitioners were also awarded costs.