RIZWAN INTERNATIONAL Vs. UNION OF INDIA

JUDGEMENT

(1.) Petitioner is a recognised exporter. The main product of export is musical instruments part made out of red-sanders wood. The petitioner is a partnership firm and it has installed the necessary infrastructures for carrying on its export business by setting up a production facility at No. 1 Rizwan Road, Madhavasram. Red Sanders Wood is widely used by Japanese for making the musical instrument known as "Shamisan". It is used for accompaniment of two types of vocal music. Export of redsanders musical instruments and chips and powder and koto parts had been taking place for the past several years from Tamil Nadu and in the import-export policy prevailing up to 31-3-1992. The export of the said product was on the basis of the licence issued by the Chief Controller of Imports and Exports, New Delhi. In fact the policy was for the period from April 1990 to March 1993. But in March 1992 the pololicy was suddenly changed and a new policy was framed for five years commencing from 1 -4-1992 ending with 31 -3-1997. Under the new policy, a prohibition is introduced against export of red-sanders in any form. The petitioner made a representation to the authorities submitting that there is a confusion in understanding the new policy and the matter should be clarified as to whether musical instruments and other chips etc. which were being exported by the petitioner could be exported even after the coming into force of the new policy. Second respondent sent a reply on 14-5-1992 under reference No. 57 / 1/92/E.II/230. The reply is to the effect that the export of red-sanders in any form is prohibited under the new policy and the petitioner will not be entitled to continue the export. A reference is made in the letter to Serial Number 7 of Part I, Serial No. 44 of Part V of Negative List of Exports in the Export and Import Policy, 1992-97. Aggrieved thereby, the petitioner has filed this writ petition for quashing the said communication dated 14-5-1992 and for the issue of a mandamus directing the respondents to grant a licence for the value of U.S-$ 75,000/- against the letter of credit No. 41-2432445-031. The petitioner on the basis of the earlier policy had been entering into contracts with foreign buyers for sale of musical instruments parts. Under one such contract, a letter of credit was opened on 21-2-1992 by Sanwa Bank, Osaka, in favour of Indian Overseas Bank, Madras. It is an open irrevocable letter of credit and the amount mentioned is U.S. $ 1,00,000/- The date of expiry for negotiations was mentioned as 31/07/1992. But, it was subsequently extended up to the end of December 1992. As per the said letter of credit, it covers musical instruments parts made of red-sanders as approved by buyer.

(2.) There is no dispute before me as to the genuineness of the letter of credit on the correctness of the claim made by the petitioner that it had entered into contracts with foreign buyers prior to the introduction of the new policy, 1992-97.

(3.) Item No. 7 of Part I of Negative List of Exports reads thus: "Wood and Wood products in the form of logs, timber, stumps, roots, barks, chips, powder, flakes, dust, pulp and char coal". Item No. 44 of Part V is in the following words: "Processed timber of all species excluding sandalwood and redsanders wood". Though the petitioner attempted to make a distinction between "wood" and "timber" and contend before the authorities that there was a distinction between "Wood" and "timber" and that the position was not clear with regard to export of parts of musical instruments made of redsanders, such a contention is not urged before me and I do not think it necessary to go into the same. In so far as this case is concerned, it is contended by the petitioner that the principle of promissory estoppel would apply and the petitioner having acted upon the representations made by the respondents in the earlier policy which was to be in force till 31-3-1993 and suffered detriment by availing loans from financial institutions for the purpose of purchasing red-sanders and manufacturing parts of musical instruments, it is not open to the respondents to change the policy all on a sudden and prevent the petitioner from fulfilling its contractual obligations. It is also contended that the new policy is unreasonable and arbitrary in so far as it relates to red-sanderrs already out and converted into parts of musical instruments. For contra, the contention of learned Central Government Standing Counsel is that the principle of promissory estoppel will not apply to a legislative action of the respondents. According to him, the import and export policy is a result of a legislative function exercised by the Government under S. 3 of the Imports and Exports (Control) Act, 1947 (hereinafter referred to as 'the Act'). Learned counsel contends that inasmuch as the policy is legislative in character, the Court is not entitled to apply the doctrine of promissory estoppel or any kind of estoppel and prevent the respondents from enforcing the said policy during the period for which the policy is enacted.