UNION OF INDIA AND ORS.versusM/S. CHOWGULE AND CO. LTD. AND ORS.

                           UNION OF INDIA AND ORS.                                    A
                                           v.
                  M/S. CHOWGULE AND CO. LTD. AND ORS.

                                JANUARY 24, 2003

         [SYED SHAH MOHAMMED QUADRI AND ASHOK BHAN, JJ.)                              B


           Export-Import Policy-Trading houses-Grant ofexim scrips/REP licence
     under new policy for exports made when old policy was ill force-Entitlement
     to 20% premium instead ofadditional licence as per Circular dated 5. 5. I 993-   C
     Claim rejected by authorities-High Court quashed the rejection order and
     directed Government to pay 20% premium instead of additional licence-On
     appeal held, trading houses entitled to additional licence but subject to
     condition that items imported would be relatable to import policy in force--
     Hence High Court right in its direction-Export-Import Policy April, I 988-
     March, 1991 and April 1990-March, 1993-REP Circular No.11193, 5.5.1993.          D
           Under the Export-Import Policy for April 1988-March 1991, trading
     houses were eligible for the benefit of additional licences of value defined
     against the export of processed iron ore under the policy. This policy was
     terminated and new policy was introduced for April 1990-March 1993.
     Respondent company recognized as trading house exported processed iron           E
     ore during the period April 1989 to March 1990 and applied for additional
     licence of a defined value in June 1990. Controller as well as other
     authorities rejected the claim. A Circular was issued which provided that
     if applications for gran,t of additional licence are pending in respect of the
     exports made and export proceeds are realised prior to l.3.1992 then             F
     instead of issuing the licences, 20% premium shall be paid. Respondent
     claimed 20% premium which was rejected. Aggrieved respondent filed
     writ petition for quashing of the orders of the authoriti.s and direction to
     the appellants to pay premium of 20% in terms of the Circular, instead
     of issuing of additional licence. High Court allowed the petition. Hence
     the present appeals.                                                             G

•-         Appellants contended that there was no application from the party
     pending for entitlement of additional licence as their application was
     rejected; that the rejection was not contrary to law or null and void or in
     excess of jurisdiction; that the claim for additional licence in subsequent
     .                                    5~                                          H
    544                    SUPREME COURT REPORTS                 [2003] I S.C.R.

A year was ineligible under the new policy although that might have been
    available under the old policy; and that the respondents had to lodge their    ·~
    right/entitlement to get the additional licence under the new policy for the
    exports made during the period when the old policy was in force.

            Dismissing the appeals, the Court
B
        HELD: 1. Export-Import Policy for April 1988-March 1991 (old                     )
  policy) provides that eligibility to the additional licence was to be            '-"..
  determined on the b~sis of the admissible exports made in the preceding
  licensing year. Transitional arrangements of the policy for April 1990-
  March 1993 (new policy) provides that where the applications from export
c houses/trading houses for additional licences for any of the preceding
  licensing year, have not been disposed of by the end of the licensing year,
  licences will be issued as per the relevant policy provisions prevailing
  during the period to which the additional licences relate. This is subject
  to the condition that the items which can be imported would be relatable
D to the import policy in force, i.e., the new policy. In the instant case
  application is pending as the controversy is still alive being adjudicated
  then the licence has to be issued as per the re~evant policy provisions
  prevailing during the period to which the additional licence relates which                 ..
  would be under the old policy. The entitlement of the export houses/trading           --I-
  houses to get the additional licence has not been taken away. Therefore,
E under the new policy as well, the export houses/trading houses would
  remain entitled to the additional licence for the exports made during the
  period when the old policy was in force however, subject to the condition.
  Hence there is no infirmity in the order of High Court and is in strict
  conformity with the Circular 11 of 93 dated 5.5.1993.
F                                                                                       ~
        1.2. The submission that respondents had to lodge their right/             ..


  entitlement to get the additional licence under the new policy for the
  exports made during the period when the old policy was in force cannot
  be accepted. The application for the additional licence could be made only
  after the end of the fiscal year, as only thereafter the export hou~e could
G know its entitlement. [550-D-H; 551-A, B]

    1994.
            CIVIL APPELLATE JURISDICTION : Civil Appe~l Nos. 2185-88/
                                                                                   •._
        From the Judgment and Order dated 16.12.93 of the High Court of
H   Bombay in WP Nos. 480, 490, 522, 521/93.
                           U.0.1. v. CHOWGULE & CO. LTD. [ASHOK BHAN,!.]                    545

                     P.P. Malhotra, G.L. Sanghi, T.V. Ratnam, P.Panneswaran, Dhruv Mehta,           A
                Ms. Shalini Gupta, Mohit Chaudhary, S.K. Mehta, P.S. Sudheer, K.l. John,
        , . (
       -;I:     Gopal Jain, Amit Dhingra and P.H. Parekh for the appearing parties.

                      The Judgment of the Court was delivered by


    :~) '
                      BHAN, J. I. Union of India has filed these appeals against a common           B
                judgment/order of the High Court of Bombay, Panaji Bench, Goa dated 16th
                December, 1993 passed in Writ Petition Nos. 480 of 1993, 490 of 1993, 522
     -.A--,
       _.       of 1993 and 521 of 1993 filed by the respondents who were the petitioner
                before the High Court. By the impugned judgment the High Court has quashed
                the orders passed by the authorities rejecting the claim of the respondents for
                grant of additional licence against the export orders. But because of the           c
                intervening circumstances, i.e., issuance of REP Circular No. I I of 1993 dated
                3th May, 1993 by the Directorate General of Foreign Trade, instead of granting
                the additional licence the Union of India has been directed to pay to the
                respondents the premium amount of20% in tenns of the said Circular. Union
                of India was directed to work out the amount payable subject to the respondents     D
                producing .the Bank Certificate in respect of the realisation of foreign exchange
                of export proceeds.

                      2. The facts which are common to all the appeals being similar are
    ~           taken from the appal: Union of India v. Chowgule & Co. ltd & Ors.
                                                                                                    E
                      3. Respondent is a limited company incorporated under the Companies
                Act, 1956. It is engaged, inter alia, in the export of processed iron ore of Goa
                origin. It is also recognised as a trading house. Under the Import Export
                Policy for April 1988-March 1991 (hereinafter referred to as 'the old policy')
                trading houses were eligible for the benefit inter a/ia of additional licences

    }J          of defined value against the export of processed iron ore under the policy. F
                Old policy was tenninated and instead a new policy starting w.e.f. April
                1990-March 1993 (for short 'the Now Policy') was introduced. During the
                period 1.4.1989 to 31.3.1990 the respondents had exported processed iron
                ore of the value of Rupees 21,92, 15,711.69. On 4.6.1990 the company applied
~               lo the Assistant Chief Controller of Import & Exports for additional licence
•               of a value of Rs. 2,12,63,924 against the said exports. The application was
                                                                                                 G
                rejected by the Assistant Chief Controller of Import & Exports on 24th
     _....      September, 1990 on the ground that application for additional licence for the
                licensing year 1990-91 could not be considered on the basis of the items
                appearing in Appendix 12 of the New Policy because there was no provision
                for grant of licence under the heading transitional arrangements in tenns of H
    546                       SUPREME COURT REPORTS                     (2003) I S.C.R.

A   the paragraph 222 of the New Policy. Respondents preferred an appeal which
    was dismissed on 2 lth January, 199 l. Likewise second appeal was dismissed
    on 12th March, 1992. Review Petition filed by the respondents was also
    rejected on 9th June, 1993.

         4. Government of India, Ministry of Commerce, Directorate General of
B   Foreign Trade, Udyog Bhavan, New Delhi issued REP Circular No. 11/93
    dated 5th May, 1993 (hereinafter referred to as 'the Circular 11 of 93')
    providing therein:                                                                     -t .
          •   "(b) Where the applications for issue of Exim Scrips/REP etc. licences
              are pending in respect of exports made :tnd export proceeds realised
c             there against prior to 1.3.92, the 20% ~ •emium will be straightway
              paid, instead of issuing the licences, provided that licensing authority
              after processing the application and determining the eligibility for
              issue of licences is satisfied that the applicant is eligible for grant of
              Exim Scrips/REP etc. licences."
D         5. On 14th July, 1993 respondents lodged its claim for 20% premium
    instead of additional licence for the licensing year April-March 1991 against
    exports of processed iron ore in the proceeding licensing year April-March
    1990. The claim of the company was rejected by the Deputy Director General
    of Foreign Trade, Panaji vide letter dated I st September, 1993 on the ground
E   that minerals and ores appearing in Appendix 12 of the policy book 1990-
    1993 were ineligible for addit:on::.I licence.

          6. Aggrieved against the aforesaid sets of orders the respondents filed
    the writ petitions in the High Court of Bombay, Panaji Bench, Goa seeking
    two-fold relief. Firstly, for quashing of the orders passed by the various
F   authorities as mentioned above refusing their prayer for additional licence
    and secondly a writ of mandamus or any other appropriate writ directing the
    Union of India of forthwith pay to them premium of20% of Rs. 2,12,63,924/
    - being the face value of the additional licence for April-March 1991 to
    which the respondents were entitled to under the Circular 11 of 1993.
G          7. The respondents in their writ petitions raised three-fold contentions
    firstly it was urged on their behalf that by exporting processed iron ore
    during the period l.4.1989 to 31.3.1990 under the import export policy for
    the years 1988-1991 (old Policy), they had acquired a vested right to iet              ).__   '

    additional licence in the licensing year April-March 1990-1991 of the value
H   prescribed in the import expo.rt policy relevant for April 1988-March 1991



                                                                                                  --
           U.0.1. v. CHOWGULE & CO. LTD. [ASHOK BHAN, J.)                    547

and the said right could not be defeated by the provisions of the new policy.        A
Secondly, it was contended that on a true construction of the relevant provisions
of the import export policy for April 1990-March 1993, in particular, paragraph
220 thereof, the respondents were entitled to additional licence for the licensing
year April 1990-March 1991 against exports of processed iron ore made in
the preceding licensing year, i.e., April 1989-March 1990 and that the               B
authorities have misconstrued the relevant provisions. Thirdly, it was contended
that the Union of India was precluded by the doctrine of Promissory Estoppel
for denying the additional licence to the company during the licensing year
April-March I 991 of the value defined having represented to the Trading
Houses/Exporters that they would be entitled to the additional licence, the
parties having acted upon that representation and having. exported processed         C
iron ore during the period 1.4. I 989 to 31.3 .1990.

       8. The appellants apart from raising certain preliminary objections
regarding the maintainability of the writ petitions which were rejected by the
High Court and which have not been pressed before us did not dispute the
factual statements of facts made in paragraphs I to 8 in the writ petitions D
stating that these were matters of records. In so far as the claim of the
respondents for 20% premium it was contended that there was no application
from the party pending for entitlement of additional licence as their application
for additional licence was rejected. It wru denied that their action in rejecting
the application of the respondents for the grant of additional licence was E
contrary to law or null and void or in excess of jurisdiction. That the claim
for additional licence in subsequent year was ineligible under the new policy
although that might have been available under the old policy, which, however,
ceased to exist after 3 Ist March, 1990. Claim of respondents/writ petitioners.
that they had acquired any vested right to get an additional licence by virtue
of exports made during the year 1989-1990 was der.ied. That the amendment F
made in the policy was valid and the consequences flowing thereof were in
the public interest and, therefore, not opened to challenge. Circumstances
which necessitated the amendment in public interest were set out. According
to the appellants the export incentive was subject to changes from time to
time during the policy period. A change when it was brought in the policy G
after 30th March 1990 could thus be made and was binding upon the parties
and that the said amendment was made in.public interest particularly taking
into account that in spite of other existing financial burden on the exchequer,
incentive on iron ore was further amounting to large amount of outflow of
foreign exchange by way of additional licence and higher REP benefits. For
these reasons, according to the appellants, there did not arise any q~estion of H
     548                    SUPREME COURT REPORTS                    (2003) I S.C.R.

A    any promise having been made by the government to the Trading Houses/
     Exporters and, therefore, the principal of Promissory Estoppel could not be
     invoked and the same was not applicable to the facts of the case. It was
     maintained that the application for additional licence made by the respondents
     was rejected in accordance with the position of law as it obtained on that
     date.
B
           9. It may be highlighted that appellants did not dispute that the
     respondent's company was a recognised Trading House. The extent of export
     of processed iron ore made by the respondents between I .4.1989 to 31.3. I 990
     and the value thereof stated in the writ petition were not controverted. The
C    value shown by the respondents for the purpose of additional li'.'ence was
     also not disputed. No issue as regards the net foreign exchange earnings as
     may have been earned against the export of iron ore was raised. Except from
     contending that the respondents were ineligible for grant of additional licence
     as per the new policy it was not stated that the application for licence was
     liable to be rejected on any other ground. Issuance of the Circular 11 of 93
D    for payment of premium in the manner provided instead of additional licence
     to which the applicant may have been entitled to .1as also not disputed.

             10. The High Court by the impugned order independent of and relying
     .upon an earlier division bench judgment of its own court held that the writ
      petitioners were entitled to the grant of additional licence and accordingly
E     quashed the orders passed by the authorities rejecting their claim for the
      additional licence. Because of the coming into force of the Circular 11 of 93
      instead of directing the authorities to grant the additional licence it was
      declared that the respondents would be entitled to the payment of premium
      of 20% in terms of the relevant clause of which extracted in paragraph no.4
F     of this judgment,

            11. The short point to be decided in these appeals is: as to whether the
     respondents who were admittedly entitled to grant of additional licence under
     the old policy stand debarred from claiming the said additional licence because
     of the new import export policy which came into force from l st April, 1990
G    and further the applicability of the Circular 11 of93 dated 5th May, 1993 and
     the effect thereof.

           12. Before addressing on the controversy, the salient features of the old
     import export policy effective for April 1988-March 1991, which was
     terminated on 30th March, 1990 and was replaced by the new import export
·H   policy April 1990-March 1993, may be set out. Paragraph 21 l of the old
           U .0.1. v. CHOWGULE & CO. LTD. [ASH OK BHAN,!.)                   549

policy sets out the objectives of the scheme for registration of export houses       A
and trading houses. It states that it is to grant recognition and facilities to a
select band of efficient registered exporters who would develop a strong
marketing capability and that it is expected that they would operate as highly
specialized and dynamic institutions with a strong marketing infrastructure
and act as an important instrument for export growth. Paragraph 212 provides
that the eligibility for grant of Trading Houses/Export Houses certificate shall     B
be determined on the basis of the net foreign exchange earnings from the
exports actually made during the past period subject to the conditions set out
in sub-paragraph (2) of the said paragraph. Paragraph 215 provides for
additional licence. Thereunder the Trading Houses/Export Houses will be
eligible to additional licence on the basis of the admissible exports made in        C
the preceding licensing year and that the value of this licence will be calculated
at 10% of the Net Foreign Exchange (NFE) earnings on the total eligible
exports made in the preceding licensing year. Remaining part of the paragraph
is not material and, therefore, is not being set out. Sub-paragraph (2) laid
down that the adC!itlllnal licence shall be valid for the export of the items
listed thereunder. Sub-paragraph (8) provides that the items permissible shall       D
be those eligible under the policy on the date of issue of the licence. Paragraph
218, inter alia provides that where the application for additional licence have
not been disposed of by 31st March of the preceding licensing year, the rate
of entitlement will be the same as permissible during the licensing year to
which the applications pertained but the items to be allowed will be as per          E
the import policy on the date of the licence. Appendix 12 of the old policy
does not list iron ore as ineligible product for import replenishment licence
or additional licence.

       13. Paragraph 204 of Chapter XV of the new policy provides that in the
case of exports made prior to 1.4.1990 against which REP licence was issued          F
on or after 1.4.1990, the rate of import replenishment will be as admissible
on the date of export but subject to the conditions laid down in 1988-1991
policy book. Chapter XVI deals with deemed exports. Under paragraph 210
the deemed exports will qualify for grant of import replenishment licence.
The material provision, however, is contained in Chapter XVIII. Part-A thereof       G
deals with Export Houses!frading Houses. The objective is similar to that of
earlier policy. The eligibility criteria laid down in paragraph 218 for the grant
of export/trading housing certificate is to be determined on the basis NFE
earnings from the exports actually made in the preceding three licensing
years termed as "base period". The earnings from export of products in
Appendix 12 shall not qualify for this purpose. Paragraph 220 deals with             H
    550                    SUPREME COURT REPORTS                     [2003] I S.C.R.

A   additional licence and provides, inter a/ia, that the export houses/trading
    houses will be eligible for additional licences on the basis of admissible         k-
    exports made in the preceding licensing year and the value of the licence will
    be calculated at the rate of I 0% NFE earnings on the total eligible exports
    made in the preceding licensing year. Paragraph 222 deals with transitional
    arrangements and the same reads as under:
B
            u222. Where the applications from Export Houses/Trading Houses
            for Additional Licences for any of the preceding licencing year, have
            not been disposed of by the end of the licensing year, licences will
            be issued as per the relevant Policy provisions prevailing during the
c           period to which the Additional Licences relate, subject to the condition
            that the permissibility of the items allowed for import against such
            licences will be governed by the relevant provisions of the Import
            Policy in force, at the time of their actual import."

         14. Coming to the point raised it is to be noticed that paragraph 215 of
D the old policy is clear and provides that eligibility to the additional licence
  was to be determined on the basis of the admissible exports made in the
  preceding licensing year. Paragraph 222 of the new policy which has been
  extracted above provides that where the applications from export houses/
  trading houses for additional licences for any of the preceding licensing year,
E have  not been disposed of by the end of the licensing year, licences will be
  issued as per the relevant policy provisions prevailfng during the period to
  which the additional licences relate. Meaning thereby that if an application
  for additional licence for any preceding licensing year is pending which in
  this case shall be deemed to be pending as the controversy is still alive being
  adjudicated then the licence has to be issued as per the relevant policy
F provisions prevailing during the period to which the additional licence relates
                                                                                       ~
  which in the present case would be under the old policy. The grant of additional
  licence in paragraph 222 has been made subject to the condition that the
  permissibility of the items allowed for import against such licences will be
  governed by the relevant provisions of the import policy° in force at the time
  of their actual import meaning thereby that the items which can be imported
G would be relatable to the import policy in force, i.e., the new policy.
  Transitional arrangements stated in paragraph 222 makes it abundantly clear
  that the applications from export houses/trading houses which have not been           >---,.....,
  finally disposed of by the end of the licensing year would be -entitled to the
  issuance of the additional licence as per the relevant policy provisions
H prevailing during the period to which the additional licences related. The
                 U.0.1. v. CHOWGULE & CO. LTD. (ASHOK BHAN.!.)                   551

      entitlement of the export houses/trading houses to get the additional licence      A
      has not been taken away. The only condition to which the additional licence
      has been subjected is that the permissible items allowable for import against
      such (additional licensing) would be governed by the provisions of the import
      policy in force at the time of their actual import. Contentions raised on behalf
      of the Union of India that the respondents/writ petitioners had to lodge their     B
      right/entitlement to get the additional licence under the new policy for the
      exports made during the period when the old policy was in force cannot be
      accepted. The application for the additional licence could be made only after
      the end of the fiscal year, as only thereafter the export house could know its
      entitlement. The High Court was, therefore, right in holding that the
      interpretation put by the authorities on the new policy in declining the claim     C
      of the respondents for the grant of additional licence was unacceptable. Under
      the new policy as well, the export houses/trading houses would remain entitled
      to the additional licence for the exports made during the period when the old
      policy was in force but subject to the condition that they would be allowed
      to import against the additional licence such items which are governed by the
      policy in force at the time of the import of the goods.                            D
                                                                   •
              15. For the reasons stated above, we do not find any infirmity in the
       orders passed by the High Court in quashing the order passed by the authorities
     . rejecting the claim of the respondents for grant of additional licence.

             16. Similarly, we do not find any infirmity in the orders passed by the     E
      High Courts in the issuance of writ of mandamus directing the Union of India
      to forthwith pay to the respondents the premium of 20% instead of issuing
      the additional licence in terms of the Circular 11 of 93. Circular 11 of 93
      provides that where application for grant of additional licence are pending in
~-    respect of the exports made and export proceeds relating to the period prior       F
      to 1.3 .1992 then instead of issuing the licences, the 20% premium shall be
      paid. The order passed by the High Court is strictly in conformity with the
      Circular 11 of 93 issued by the appellants itself.

             17. Bank guarantee given by the respondents in pursuance to the Order
      of this Court dated 28.3.1994 shall stand discharged. The appeals being without    G
      any merit are, therefore, dismissed. Parties shall bear their own costs in these
      appeals.

      R.P.                                                       Appeal dismissed.