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TMI Blog1983 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... be made the Central Govt. changed the policy. The policy as laid down in the Export (Control) Order, 1977, was that the manufactures and pro-ducts wholly or mainly of silver with more than 50 per cent. of silver contents, excluding silver Zari goods, were permitted to be exported under the open general licence. This policy was changed on March 30, 1979. Under the Exports (Control) 22nd Amendment Order, dated March 30, 1979, this item was deleted from the open general licence and was placed under the heading " on merits " which meant that the exporter concerned will have to apply to the Licensing Authority for permission or licence to export. Contemporaneously with the amendment of the Export Control Order the Central Govt. issued a Public Notice dated March 30, 1979, informing the public about the change in the policy. This Public Notice stated that the provisions of para. 316 of the Hand Book of Import Export Procedures will not be applicable to any " pre-ban commitments " consequent to this Public Notice. It was said that all such cases will be decided " on merits " only. On September 12, 1979, the Chief Controller of Imports and Exports issued another Public Notice setting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic Notice dated March 30, 1979. If under S. 3 of the Act the Export Control Orders can be amended from time to time it is difficult to see why para. 316 of the Hand Book cannot be replaced by a new set of guidelines for conserving a certain commodity in the national or public interest. This is its " statutory birthright ", to use a phrase of Lord Sumner. [Birkdale District Electric Supply Co. v. Southport Corporation [1926] AC 355, 372 (HL)]. The government policy can be changed from time to time as the occasion arises and the needs of the country demand. This is why the Hand Book announces: " Instructions and guidelines contained in this Book are applicable subject to such amendments/changes as may be made from time to time " (Ch. T, p. 1). So when the policy changes the guidelines can also be changed. Assuming for a moment that para. 316 applies, I am of the opinion that the contract dated March 25, 1977, is not a " pre-control commitment " in the sense in which that expression is used in para. 316. The term " commitment " means something which is not capable of change, revision or withdrawal. (Webster-Third International Dictionary). The contract in question was not such a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 13, 1979, the Central Govt. issued the Export (Control) 43rd Amendment Order, 1979. Manufactures and products having 50 per cent. or less silver contents were placed in the category of those cases where export was to be allowed " on merits ". The provisions of para. 295 of the Hand Book were made inapplicable to " precontrol commitments " consequent to the Public Notice dated August 13, 1979. The pre-control commitments were to be decided in the light of the new guidelines issued by the Central Govt. These were: " (i) Advance payment received through an authorised dealer in foreign exchange covering the full f.o.b. value of the consignment before the date of this Public Notice; or (ii) Where based on firm contracts, irrevocable letter of credit was opened by the Foreign buyer and accepted by the Indian Bank prior to the date of his Public, Notice and in which Shipping Bills were passed and goods cleared by the Customs but could not be exported because of this Public Notice." The Government refused permission to export to the petitioners because they did not satisfy these new guidelines. Hence, this petition. It is not disputed that the petitioners do not fulfil these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnounced by Government would amount to enforcing contractual rights even though the contract did not comply with art. 299. The court rejected the argument, holding that the respondents did not seek to enforce a contractual right, but an equity arising in their favour after they had carried out their part under the policy announced by the Government. The court observed that licensing authorities were not entitled at their whim to ignore the promises made by the Government : to concede such a power would be to strike at the very root of the rule of law. Even if the scheme is executive in character, the court said, the, respondents who are aggrieved because of the failure to carry out the promises of the scheme, are entitled to resort to court and claim that the obligation imposed upon the Textile Commissioner by the scheme be ordered to be carried out. The court held that an equity had arisen in respondents' favour as a result of the representation made on behalf of the Union of India in the export promotion scheme. The court relied upon the judgment of Denning J. in Robertson v. Minister of Pensions [1949] 1 KB 227 (KB) and the following observations of Chandrasekhara Aiyar J. in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m cannot be defeated on some " undefined and undisclosed ground " of executive necessity. Indo-Afghan decisively rejected the plea that promissory estoppel did not bind the State or a policy statement of the Government cannot fetter its executive action. No public authority can be permitted to go back on its representation at the sheer convenience of the administration. To do justice to the exporters the court pressed into service nearly all the well-known concepts of administrative law. (1) Rule of law ; (2) judicial review ; (3) natural justice ; (4) access to the courts and the right of redress; and (5) promissory estoppel were all summoned to produce a just result. Indo-Afghan emphasised the duty of surveillance entrusted to the courts for the protection of the citizen. Shah J. held that the Textile Commissioner's refusal to grant 100 per cent. import entitlements was for no defined and disclosed reason. The export promotion scheme was made to further the purposes of the Act. Whenever the public authority acts arbitrarily the courts have a duty to interfere. The fact that the scheme was executive in character is no reason why the courts should give up the task and abandon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal Corporations of Bombay v. Secy. of State [1905] ILR 29 Bom 580). Throughout its history the basic concepts of " justice and fair play ", to use the words of Shah J., or "I honesty or , good faith ", to use the expression of Chandrasekhara Aiyar J., have been largely responsible for the development of the doctrine in its modern form. " The accepted standards of right conduct ". Justice Cardozo has said, have inevitably shaped the progress of law. The modern doctrine of promissory estoppel is a recent advance in public law. The common law doctrine of estoppel contained in the Evidence Act, 1872, is but a shadow of its modern self. Orthodox concepts have been discarded. Consideration is no longer necessary. You can found an independent cause of action on promissory estoppel now. Not only as a shield it can also be used as a sword, Detriment is no longer required to be proved. It is enough if the promisee has altered the position on the faith of the representation. 'The desire to do justice through equitable possibilities is so strong that the old traditional concepts of private law are crumbling and giving rise to a now estoppel and a " new equity "'in public law. The courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statutory powers vested in it in the public interest under the authority of the Legislature cannot act inconsistently or incompatibly with the purposes for which the statutory powers have been granted. Estoppel would create contractual fetters. It would fetter the exercise of statutory powers. This raises the question of relationship between this doctrine and the doctrine concerning the fettering of public . Would the doctrine of estoppel be excluded whenever its operation would fetter the powers of a public body in a way that could not be done by a contract ? It seems logical that it should be so. (Government and Law-Hertley and Griffith pp. 294-295). The application of estoppel in such a case would infringe the rill(! concerning statutory duties. "The basic powers of Government cannot be subject to bargain ". Earl of Birkenhead in a case decided by the House of Lords in 1926 (Birkdale District Electric Supply Co. Ltd. v. Southport Corporation [1926] AC 355, 364), formulated the principle concerning public authorities in these words : " ...it a person or public body is entrusted by the Legislature with certain powers and duties expressly or impliedly for public purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otecting the individual against the executive excesses. If the communication is executive in character, on the authorities, it appears to me, that the doctrine of promissory estoppel can be properly pressed against public authorities, as was done in Indo-Afghan against the Textile Commissioner, and against the Chief Secretary in Motilal Padampat Sugar Mills. The State in both cases was held bound by its representation, in one case by the representation made to the exporters in the export promotion scheme and in the other by a written assurance given by the chief secretary under his own hand to the mills that it will enjoy a sales tax holiday for 3 years. In both cases the court came to the conclusion that to allow the public authority to act inconsistently with its representation would work injustice to the individual without any countervailing benefit for the public. The right question to ask will be : Has an equity arisen in favour of the applicant ? Shah J. answered it in the affirmative in Indo-Afghan. So did Bhagwati J. in Motilal Padampat Sugar Mills. " A man should keep his word ", Lord Denning has said. A promise which the promisor should reasonably expect to induce a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to make statutory instruments or rules, regulations, bye-laws, carries with it the power to revoke, amend or re-enact them. This power may be exercised or the duty performed from time to time as occasion arises. The petitioners' attack, therefore, on Export (Control) 43rd Amendment Order, 1979, dated August 13, 1979, cannot be sustained. The short answer is that it is legislative in character. Against the legislature the doctrine of estoppel cannot be pleaded. That the Export Control Order is legislative in character is established by the fact that this document was published in the official gazette so that every one knows what the policy is as regards the export of manufactures and products having 50 per cent. or less silver contents. In place of OGL the export of these products was put under the heading on merits " under the licensing policy 'in the policy statement at p. 22 of the Export Policy 1979-90. Legislation has been defined as " the creation and promulgation of a general rule of conduct without reference to par cases" (Sa de Smith-Judicial of Administrative Action, 4th Edn. (1980), p. 71). An Act may delegate power to legisate. Delegated legislation should not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umble of executive instructions and matters which impose several restrictions on the rights of the citizens ". The Government issues executive or administrative instructions in order to implement the policy declared by the Statutory Orders (Indo-Afghan, AIR 1968 SC 718, 723). I will assume, and that is the case of the petitioners, that para 295 is executive in character and has a direct impact upon the rights and liberties of the citizens. The right which it confers on the citizens is that the pre-ban commitments would " ordinarily " be honoured if certain conditions are satisfied. This was the policy announced for 1979-80. But in the middle of the year, i.e., on August 13, 1979, the right available to the citizen under para. 295 was taken away and the new guidelines were framed placing severe restrictions on the export of products having 50 per cent. or less silver contents. It appears to me, if there had been nothing else, the petitioners had a good case for the invocation of promissory estoppel against the maker of the representation, namely, the Central Govt. There was a representation in para. 295. The petitioners had altered their position. They had acted on the faith of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation v. Hodgson (Wickford) Ltd. [1962] 1 QB 416 (per Parker C.J.). citizen can say that he has acted on the faith of the representation of the announced policy to his detriment and, therefore, the Government is bound by promissory estoppel to allow him to export certain commodities under the pre-amendment policy. But, if the overriding public interest requires the Government to act differently, the doctrine of estoppel may not be applied. The reason is that the doctrine may advance the interest of private contractors, but on the whole it will injure the public interest. It is for acting in public interest that the power under s. 3 of the Act is conferred on the Central Government. The guidelines framed from time to time have only one object, namely, public interest. If public interest requires, the guidelines can also be changed. It must be remembered that the function of the Government is to consider public interest and to act accordingly. If we apply promissory estoppel in this case an injustice to the petitioners may no doubt be avoided but the public interest will suffer. The problem can be put in this way. On the one hand we have the applicant relying in all honesty on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for" pre-ban commitments ". Section 3 of the Act confers wide powers on the Government. The power is one and indivisible, although in the exercise of it, various Export Control Orders are issued from time to time. It is a fallacy to think that the Government enters into a contract when it announces its policy. There is no enforceable contract between the Government and the exporters. The Government can change the policy from time to time according to the needs of a developing economy. This is its " statutory birthright ". If we apply estoppel it will prevent the public authority from performing its duty. This is why the Government has categorically announced that it can change the policy from time to time and will inform the public about the change through public notices and the Gazette notifications. In the Hand Book the public is informed that " instructions and guidelines contained in this Book are applicable subject to such amendments/ changes as may be made from time to time ". (Ch. 1, p. 1). It forewarns the exporter. It puts them on their guard. So if the Government changes the export policy it can also change the guidelines. This it has announced publicly. If there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no representation which can furnish the ground for an equitable estoppel. Everything is subject to change. Assuming there is a representation, the government can always show that public good requires the exercise of the power contrary to the representation. In a word promissory estoppel will always be subservient to public interest. If its application is detrimental to public interest and produces results deleterious to the public good, the court would refuse to give effect to a plea based on it. Protection to the individual litigant cannot be given at the expense of the public interest. Contractual fetters-this is what promissory estoppel amounts to-have no place where public interest is the dominant consideration. The rights of the individual should be protected-but is the individual right to be favoured against all public interest ? The answer to the question is clearly. " No ". The question comes into prominence when the dispute is between the individual and the State. As Bhagwati J. pointed out in Motilal Padampat Sugar Mills [1979] 44 STC 42 (SC), the burden would be upon the Government to show that the public interest in the Government acting otherwise than in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the exercise of discretionary power. Repudiation of promissory liability by the state for no good reason is synonymous with arbitrary power. This is what Indo-Afghans holds. This is our commitment to the rule of law. There is one lasting benefit of Indo-Afghan. It "established the supremacy of the law (Motilal PadamPat Sugar Mills, p. 643). Indo-Afghan Revisited Seervai suggests that it was not necessary to invoke the doctrine of promissory estoppel in Indo-Afghan (Constitutional Law, Vol. I, P. 433). The truth is that Shah J. was dealing with the perennial problem of power. The starting point of his enquiry is that " power is of an encroaching nature, not necessarily because it is unscrupulously pursued and exercised, but because that is a quality inherent in it. " (C.K. Allen, Law and Orders, 3rd Edn., p. 21). When Parliament delegates absolute powers in general terms to an executive body it believes that such powers will be reasonably exercised. The fact is that nobody on earth can be trusted with power without restraint. The need for control, and control according to law, will remain so long as men believe that uncontrolled power is an evil to be eradicated from civili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utive action. Not legislative action. In other words, the doctrine can be properly pressed against administrative action. It strikes at executive action where, in the name of State necessity, individual interests are affected adversely for no disclosed reason. lit Ram, AIR 1980 SC 1285, emphasises that promissory estoppel cannot be invoked against the legislative or statutory powers of the Government. Motilal Padampat Sugar Mills, AIR 1979 SC 62 1 ; [1979] 44 STC 42, holds in positive terms that it applies to the executive action and admits that it has no application against the statute. The two aspects of the doctrine dealt in these two cases are obverse and the reverse of the same coin. What is the distinction between a legislative and an executive document ? This is one of the most teasing problems in the whole of our administrative law. But there is not much of difficulty in this case. Orders made under S. 3 of the Act have statutory force. The Central Govt. in exercise of the powers conferred by sec. 3 of the Act makes statutory orders and is required to publish them in the Official Gazette. But Public Notices are policy statements administratively made by the Government fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. When the State is able to show that it was required to act differently because the public interest demanded it, the doctrine of promissory estoppel cannot be properly pressed against it. The Government, I think, has succeeded in showing that its action was in the best public interest. The argument that the Government cannot replace para. 295 by a new set of guidelines is specious rather than sound. When a distinguished twentieth-century Chinese scholar was asked to give his opinion on the effects of the French Revolution of 1789, he replied " It is too soon to tell ". Similarly it is too early to tell the future of the doctrine of promissory estoppel: (see Woodhouse A. C. Israel Cocoa Ltd. v. Nigerian Produce Marketing Co. Ltd. [1972] AC 741, 758 (HL) ], per Lord Hailsham LC. Promissory estoppel is essentially " a child of equity ". It is still a delicate child, with an uncertain future, but it is beginning to take the shape of manhood. In an essentially equitable doctrine, no equity can be claimed in favour of an individual when public good requires the State to act differently. Promissory estoppel is a tool fashioned by the judges for preventing injustice. It is a product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 4. The detriment which is to be suffered is not some prejudice suffered by the promisee by acting on the promise, but the prejudice which would be caused to the promisee if the promissor were allowed to go back on the promise. 5. The guidelines and the Hand Book of Import Export Procedures as well as Import and Export Policy, referred to by learned counsel in this case, cannot be regarded as statutory though the Import and Export (Control) Orders issued under the Import and Export (Control) Act are statutory. Policies are framed by the Government in exercise of power other than statutory or legislative power. Likewise, procedures and guidelines for the benefit of importers and exporters as also the administrative departments are issued in administrative capacity, which cannot be regarded as exercise of any statutory or legislative power. It is thus clear and it was not disputed that the doctrine of promissory estoppel requires that, when any party wants to invoke the said doctrine, the equities between the two parties, namely, the promisor and the promisee be weighed. In Civil Writ No, 1432 of 1979, a firm contract was no doubt entered into by the petitioners. The p ..... 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