MALHOTRA AND SONS Vs. UNION OF INDIA

JUDGEMENT

(1.) MALHOTRA and Sons and four others firms which are engaged in the business of exporting walnuts in kernel as well as in shell form from the State of Jammu and Kashmir to different countries have filed this writ petition under Section 103 of the Constitution of Jammu and Kashmir read with Article 226 of the Constitution of India seeking quashing of letter No. 12(4)/73 -EAC dated 27 -9 -1973 of the Ministry of Commerce, New Delhi, whereby the respondents to the petition have withdrawn the cash assistance scheme issued by the Government of India on 2nd Feb, 1973. The petitioners also seek a writ of mandamus for a direction to the respondents to implement the representations held out by the Government of India in their cash assistance scheme dated 2nd Feb. 1973.

(2.) THE facts as given out in the writ petition are: That the Union of India, in Feb 1973 formulated a scheme for providing incentives to registered exporters in walnut, kernel as well as in shell, with a view to increase export and to augment the foreign exchange earnings for the country. According to the Scheme the regd. exporters of the aforesaid commodities were to be given cash assistance against exports of walnut, kelnel as well as shell, at the rate of 5% of the f.o.b. value on exports made during the period from 1 -10 -1972 to 30th September, 1975 in addition to the above 5% cash assistance an additional cash assistance of 2Â 1/2% of the f.o.b. value was also to be allowed to the individual registered exporter on exports made during the period from 1 -10 -1972 to 30th September, 1973, provided the f.o.b. value of the exports during the aforesaid period exceeded by atleast 10% the f.o.b. value of the exports during the immediately preceding 12 months period i.e. 1 -10 -1972 to 30 -9 -1972. This additional 2Â 1/2% cash assistance of the f.o.b. value was also similarly to be given for the period from 1 -10 -1973 to 30 -9 -1974 provided the f.o.b. value of exports during that period exceeded by at least 10% the f.o.b. value of the exports during the immediately preceding twelve months period. On the same basis the same additional assistance of 2Â 1/2% was admissible during the period from 1 -10 -1974 to 30 -9 -1975, provided the exports during that period exceeded by atleast 10% the f.o.b. value of their exports during the 12 months immediately preceding, 1 -10 -1974. The petitioners have maintained that the petitioner firms had legitimate basis to benefit from the aforesaid scheme and relying upon the scheme and representations contained therein about the cash assistance they invested considerable sum of money and expanded their domestic business so that they could improve their performance and qualify for the cash assistance promised in the scheme. According to the petitioners the cash assistance scheme and the representation contained therein had considerable influence on the local market calculations which showed a upward trend of price of commodities aforesaid. The petitioners state that because of the incentive contained in the scheme they improved their exports between 1 -10 -1972 to 30 -9 -1973 and qualified themselves for cash assistance under the scheme and which assistance they actually received. The petitioners have given details of various amounts which have been received by them by way of cash assistance for the period ending 30 -9 -73, claiming that the petitioners firms had a reasonable basis to conclude that the incentive of cash assistance as envisaged in the aforesaid scheme would continue for the entire period mentioned in the scheme and that the respondents would fulfill their part of the promises upto the end of September 1975. The grievance of the petitioner is that after the petitioners altered their position, the respondents have unilaterally withdrawn the cash assistance scheme in relation to exports of walnut kernel and in shell and the petitioners, who had all along acted on the scheme have been gravely prejudiced. The petitioners have challenged the withdrawal of the cash assistance scheme by letter dated 27 -9 -1973, primarily on the ground that the respondents could not unilaterally withdraw the cash assistance scheme when the petitioners had acted on it and the Government of India was bound to keep up its promise and to comply with its representation held out to the petitioners firms in the cash assistance scheme. It is maintained that since the petitioners had altered their position to their prejudice relying on the cash assistance scheme, the Government is estopped from going back on that representation. It has also been averred that an equity has been created in favour of the petitioner firm and against the respondents by virtue of the promises made in the scheme which are enforceable at law on the basis of doctrine of equitable estoppel. The petitioners also filed supplementary affidavits on 23rd MaY, 1974 by which they placed on record the statements of exports made by them during the period of Oct. 1973, onwards and the period preceding October 1973 with a view to show that they had qualified for receiving the cash assistance.

(3.) REPLY to the petition was filed on the affidavit of Shri S. N. Gupta, Joint Director (Export promotion) in the Ministry of Commerce. Government of India on behalf of respondent No. 1 preliminary objections were taken to the effect that no legal or fundamental rights of the petitioners had been infringed, and the writ not maintainable. It was also maintained in the reply affidavit that the cash assistance scheme is in the nature of a concession and the same cannot be enforced by way of a writ petition. It was also stated as a preliminary objection that the petitioners had failed to show any actual loss "alleged to have been sustained by them due to withdrawal of the cash assistance scheme, and since the petitioners had raised disputed question of facts the petition was not maintainable. Another preliminary objection taken was that no estoppel can be pleaded against the Government, and it is not bound by as such an estoppel. On merits, while admitting that the scheme had been issued by the Government of India, it was explained that the same was issued to off set the losses which the respondents were going to suffer because of the unfavourable conditions in the world market. The case of the respondents, as is clear from the written statement, is that the scheme was not intended to be an additional source of profit for the exporters. It is stated that some where in July -August 1973, it came to the notice of the Government that because of world wide shortage of ediblenuts there was a considerable spurt in the international prices for walnuts resulting in considerable increase in unit value realisation on export, and since the price of walnut in kernels and in shell, in the world market had shot up considerably (figures were given in the affidavit in support of this assertion) it was felt by the Government that there was no longer any likelihood of any loss being incurred on the export of walnuts from India necessitating the continuance of the scheme of cash assistance. It has been maintained in the reply affidavit that the most cardinal principle governing the grant of cash assistance in such cases is whether continuance of such assistance is necessary to off set the losses which the exporter would otherwise incur. What is implied is that t?e scheme was introduced only to off set that losses in exporting walnut when the market trend was unfavourable. It is maintained that in view of the rise in the price of walnut kernel and shell in the world market the Government, in its sovereign, public and governmental capacity, withdrew the concession contained in the scheme with effect from 1 -10 -1973 by order dated 26 -9 -1973, after due notice to the concerned. It is also the case of the respondents, in the reply affidavit, that on account of the financial stringencies in the country, the continuance of cash assistance to exporters, specially when the price of commodities in the world market shot up thereby positively showing that the exporters would not be put to any loss, would have been unjust to the other sections of the society, for whose welfare the public money thus saved could be utilized. Such continuance, it is maintained, would have been against the principles of social justice which has come to be accepted as a just principle by the courts. It was denied that the petitioners have suffered any actual loss in the trade directly as a result of the withdrawal of the cash assistance scheme. It was also stated in the reply affidavit that due opportunity was given to the exporters, through their association M/S Upper India Exporters Association, to represent their case for continuance of cash assistance and the scheme was withdrawn after the period of filing the representation had expired. Since no meaningful representation was made it was deemed proper to withdraw the cash assistance from the beginning of the new session. The scheme withdrawn by order of the Government of India dated 26th Sept, 1973, was for the period 1 -10 -1973, onwards. It was also stated in the reply affidavit that since the cash assistance scheme is in the nature of a concession, which was entirely in the discretion of the Government it could be extended or withdrawn at any time and the petitioners cannot be allowed to make any grievance of it in a writ petition. It was denied that the petitioners have adversely suffered in view of the withdrawal of the scheme.