Chowgule & Company Limited vs. Assistant Director General of Foreign Trade & Others
Background
The appellant, an exporter of processed iron ore, had relied on the Exim (export-import) Policy of 1988-91 while entering an export contract, under which only "unprocessed" ore was ineligible for an export incentive called an "additional licence." By the time the actual exports happened (April 1990 to March 1991), a new Exim Policy of 1990-93 had come into force, under which "processed" iron ore too became an ineligible item. The exporter's claim for the additional licence was repeatedly rejected by trade authorities, and after a long litigation history including an earlier round before the Supreme Court, the Bombay High Court (Goa Bench) ultimately dismissed the exporter's writ petition, holding the export was governed by the new, less favourable policy.
Decision Breakdown
The Supreme Court held that since the actual export occurred during the period the new Exim Policy 1990-93 was in force, and the appellant never challenged that new policy, the exporter was bound by it and was correctly held ineligible for the additional licence. On the exporter's promissory estoppel argument, the Court held that an export incentive is a policy benefit, not a vested right, and the government is free to modify or withdraw such incentives from time to time; promissory estoppel does not apply to prevent the government from validly changing policy. The Court also rejected the argument that denial was discriminatory merely because other exporters may have wrongly received the same benefit, holding there is no right to "negative equality" that perpetuates an illegality. The appeal was dismissed, upholding the High Court's decision.
Lesson Learnt
A government policy incentive (like an export licence benefit) is not a vested contractual right. It can be validly changed or withdrawn, and the doctrine of promissory estoppel cannot be used to freeze a policy in place, nor can a party claim the same benefit merely because it may have been wrongly extended to someone else.