OLD VILLAGE INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) . The petitioner has challenged the action of the respondents in withdrawing the Cash Compensatory Support in respect of exports effected pursuant to the policy of Government of India announced on 29th March, 1978. The petitioner is exporter engaged in exporting readymade garments to various countries. Respondent No. 1 is Union of India. Respondent No.2 is Textile Commissioner, Ministry of Commerce and Industries. Respondent No.2, from year to year, announces various export incentives to which exporters are entitled on the exports made by them. Respondent No.3 is Indian Cotton Mills Federation. It entertains and examines the applications of the exporters in the prescribed manner for cash assistance and distributes the various export incentives to which the exporters are entitled. Respondent No.4 is Apparels Export Promotion Council, which inter alia has function of implementing the Government's policy as regards the exports.

(2.) . On 29th March, 1978, respondent No.2 intimated to respondent No.3 that the Government of India has decided to contribute to the export promotion fund of Indian Cotton Mills Federation from 1st April, 1978 to 31st March, 1979, the cash incentives at the rates mentioned in the said communication on the expon of cotton textile to be made during 1978-79 i.e. 1st April, 1978 to 31st March, 1979.

(3.) . The case of the petitioner is that relying on the promise held by Government of India that cash assistance will be available to the exporters on the export of readymade garments that would be exported by them in pursuance of the policy laid down by Govern- ment of India, it priced its goods for export taking into consideration the cash assistance which would be paid and entered into firm contract with various foreign buyers. A circular dated 6th January, 1979 was issued to dis-continue the existing Cash Compensatory Export Scheme, w.e.f. 1st January, 1979. The effect of the circular was that the Cash Compensatory Support to the exporters, on the export of all the items of cotton garments mentioned in the said circular, was to dis-continue from 1st January, 1979. According to petitioner the discontinuance of the Cash Compensatory Support w.e.f 1st January, 1979 is in violation of the promise held by respondents I and 2 for granting cash assistance for export of readymade garments for the period 1st April, 1978 to 31st March, 1979. The petitioner claims that it was induced to enter into firm contracts with foreign buyers on account of the policy held out by Government of India at the time when it entered into contracts with foreign buyers and which was in force on the date of entering into such contracts and the petitioner had entered into those contracts and the prices were fixed taking into consideration the Cash Compensatory Support that would be available as per the policy. The petitioner says that respondents 1 and 2 have no right to withdraw the Cash Compensatory Support and divest the petitioner from right which had vested in it on account of promise held by respondents. In the words of the petitioner the impugned circular dated 6th January, 1979 had the following consequences on its export: "The petitioner could either commit breach of the contract with the foreign buyers and not to supply goods to the foreign buyers because of withdrawal of the Cash Compensatory Support by Government of India which, in turn, would have resulted invocation with their bank guarantee already given by the petitioner for the benefit of the foreign buyers and face heavy losses on account of the purchase of raw material and also on account of having entered into contracts with the suppliers of raw- material, fabricators, processors and dyers, employed staff as well as to bring bad reputation to its business and to the country and suffer incalculable loss of goodwill with its foreign buyers which would have been a national loss. The other consequences of this illegal c54ircular was that the petitioner supply the goods to its foreign buyers at the price of confirmed order and save the reputation of the country - and goodwill of the business". The petitioner has also pleaded that writ petitions have been filed by various exporters like the petitioner, and the respondents have been assuring that in view of the said writ petitions, the petitioner would be paid its dues without going to court but with no result as yet. Particulars of the two earlier writ petitions filed in the year 1980 have been given in the writ petition.