CWP No.7292 of 2011 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.7292 of 2011 Date of Decision: 25.5.2011 M/s Modern Dairies Limited ....Petitioner Versus Union of India and others ….Respondents CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Akshay Bhan, Advocate for the petitioner. Adarsh Kumar Goel, ACJ. 1. This petition seeks quashing of notification dated 18.2.2011, Annexure P.1 issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (‘the Act’) read with Foreign Trade policy 2009- 2014, prohibiting export, inter-alia, of Casein, caseinates, other casein derivatives and casein glues. Casein is a pure form of milk proteins obtained from skimmed milk by coagulation using Commercial Acid or Rennet Enzyme. Further prayer is to quash public notice dated 24.1.2011 (P.3) withdrawing benefit of Duty Entitlement Pass Book (DEPB) on export of casein in respect of shipment made after 25.1.2011. 2. Case of the petitioner is that it is engaged in production of milk and milk products including casein and other items covered by the impugned notification. The petitioner started manufacturing of the said 1 CWP No.7292 of 2011 items keeping in view export market and the export policy permitting export of such items. For the said export, fiscal incentives in the shape of DEPB were also available. The petitioner invested a sum of Rs.110 cores. However, there is a change of policy in the form of withdrawing the benefit of DEPB vide notification dated 24.1.2011 and prohibition of export vide impugned notification dated 18.2.2011 which affects fundamental right of the petitioner to carry on business as also legitimate expectation of the petitioner that policy of export and grant of export incentives for the goods in question will continue. 3. We have heard learned counsel for the petitioner. 4. Learned counsel for the petitioner submits that the restriction on export was violative of fundamental right of the petitioner under Article 19(1)(g) of the Constitution. Reliance has been placed on judgments of Delhi High Court in P.V.Mohammad Baramy Sons v. Union of India and others, ILR 1979 Delhi 686 and Victory export and Import Syndicate etc. v. Union of India and others, AIR 1986 Delhi 409. In P.V.Mohammad Baramy Sons, ban on export of teak in sawn sizes was set aside and in Victory Export and Import Syundicate, restriction on export of walnut stumps was set aside. 5. Learned counsel for the petitioner submits that the product in question is not required for domestic consumption as stated in letter dated 9.2.2011, Annexure P.6 from Agricultural and Processed Food Products Export Development Authority (APEDA), Ministry of Commerce and Industry, Government of India. It is also pointed out that as per current policy, various milk products were allowed to be exported even though such products were required in domestic market. Thus, restriction on export was 2 CWP No.7292 of 2011 unreasonable and not in public interest. Withdrawal of DEPB benefit was hit by the principle of promissory estoppel. 6. We are unable to accept the submissions. Foreign trade policy is framed as per statutory provisions of the Act and decision of including or excluding different products in the list of permissible exports is a policy matter. It cannot be disputed that foreign trade can be a subject matter of regulation under Article 19(6) of the Constitution and reasonable restrictions can be imposed in public interest. If the restrictions are unreasonable or are not necessary in public interest, such restrictions can be challenged and reasonableness thereof can be subjected to judicial scrutiny. There is no abstract standard of reasonableness. The Court has to take into account nature of right infringed, purpose of restriction, urgency of evil sought to be remedied, disproportion of the imposition and prevailing conditions (State of madras v. V.G.Row, Union of India and State, AIR 1952 SC 196). In Union of India and others v. C.Damani and Co. and others, 1980 Supp (1) SCC 707, it was observed:- “8. The nation lives not for the benefit of Big Business but for conservation of its own resources, and export policy is dictated by a host of considerations ordinarily imponderable of the Court. Although its reasonableness is not beyond the power of this Court to examine when constitutionality is in issue, the zone is so sensitive, the subject is so strategic and the import and impact so intricate that judges do not rush in where administrators fear to tread…” 7. Applying the above test to the present case, the submissions raised on behalf of the petitioner cannot be accepted. Letter dated 9.2.2011, Annexure P.6 to the effect that consumption of milk for casein export for 3 CWP No.7292 of 2011 domestic market is insignificant cannot be accepted as conclusive for not restricting export. Merely on that ground, it cannot be held that restricting export will be an unreasonable restriction on the right of the petitioner. As per literature produced by the petitioner vide Annexure P.2, casein is a pure form of milk proteins obtained from skimmed milk and export thereof is bound to have adverse effect on availability of milk in domestic market. The impugned notification not only restricts casein and allied items, it also restricts export of milk, cream and other milk products. Thus, if the Central Government has taken a decision to prohibit export of milk products including casein and casein products, we do not find any ground to hold that such prohibition is unnecessary or arbitrary or beyond the power conferred under section 5 of the Act. 8. As regards withdrawal of DEPB benefits, only ground put forward is that the same is hit by the principle of promissory estoppel which we are unable to accept. Doctrine of promissory estoppel does not stand in the way of change of a policy whenever required unless it is found that a promise was held out which was acted upon and it was inequitable to allow such promise to be withdrawn. The grant of a concession does not by itself create a vested right in all situations and the same can be withdrawn. In Bannari Amman Sugars Limited v. Commercial Tax Officer and others, (2005) 1 SCC 625, it was observed:- “9.While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every state action qualifying for its validity on this touchstone 4 CWP No.7292 of 2011 irrespective of the field of activity of the state is an accepted tenet. The basic requirement of Article 14 is fairness in action by the state, and non arbitrariness in essence and substance is the heart beat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for discernible reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness.” xx xx xx xx xx 20. In Shrijee Sales Corpn. v. Union of India, (1997) 3 SCC 398 it was observed that once public interest is accepted as the superior equity which can override individual equity the principle would be applicable even in cases where a period has been indicated for operation of the promise. If there is a supervening public equity, the Government would be allowed to change its stand and has the power to withdraw from representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. Moreover, the Government is competent to rescind from the promise even if there is no manifest public interest involved, provided no one is put in any adverse situation which cannot be rectified. Similar view was expressed in Pawan Alloys and Casting (P) Ltd. v. U.P. SEB, (1997) 7 SCC 251 and in STO v. Shree Durga Oil Mills, (1998) 1 SCC 572 and it 5 CWP No.7292 of 2011 was further held that the Government could change its industrial policy if the situation so warranted and merely because the resolution was announced for a particular period, it did not mean that the Government could not amend and change the policy under any circumstances. If the party claiming application of the doctrine acted on the basis of a notification it should have known that such notification was liable to be amended or rescinded at any point of time, if the Government felt that it was necessary to do so in public interest.” 9. In the present case, if it has been considered necessary to restrict export of milk products, withdrawal of DEPB benefits on such products is merely consequential. The same cannot be held to be arbitrary or against the doctrine of legitimate expectation. 10. In view of above, we do not find any ground to interfere. The petition is dismissed. It is, however, made clear that this order will not stand in the way of the petitioner making representation for consideration of the concerned authorities. (Adarsh Kumar Goel) Acting Chief Justice May 25, 2011 (Ajay Kumar Mittal) ‘gs’ Judge 6 CWP No.7292 of 2011 7