Delhi High Court
All India Garments Non. Quota ... vs Union Of India And Ors. on 13 May, 1996
Equivalent citations: ILR1997DELHI433
Bench: Y.K. Sabharwal, D.K. Jain
JUDGMENT Y. K. Subharwal, J.
(1) The challenge in this writ petition is to a press release issued by the Government of India, Ministry of textiles on 28th November, 1995 announcing New Garment Quota Policy for 1996-98. After the issue of the press release the Government has also issued requisite notification. Under this new changed policy, it was announced that (he garment quotas would be allotted under the following system : 1. Past Performance Entitlement (PPE)-80% 2. First Come First Served Entitlement (FCFS)-20% (2) Under the long-term policy fur Garment export for !994-96 published in notification of Government of India, Ministry of Textiles dated 4th September, 1993, the allotment of quotas was as under: A. Past Performance Entitlement (PPE)-70% (of which high value entitlement)--10% B. Manufacturer Exporter Entitlement (MEE)"20% (of which Mee for newcomers)--2% C. Non-Quota Exporters Entitlement (NQE)-10% (of which Noe for handloom garments)-2% (3) The new policy is under challenge to the extent that it has abolished Mee and Nqe quota.
(4) The case of the petitioners is that though Nqe and Mee quotas have been abolished in midst stream of the policy allegedly on the ground of coming into force of Agreements on Textile and Clothing (ATC) of the Uruguay Round, but in fact, Uruguay Round negotiations have no applicability for the purpose of variation or abolition of quotas. It has been contended that on the basis of the long-term policy announced by the Government petitioners had altered the position to their detriment by incurring heavy costs on installation of machinery and other equipments so that they could reap the benefits in 1996. It has also been claimed by the petitioners that they had made exports to non-quota countries and fixed the prices keeping in mind that quota under 1994-96 policy would be grantee.', which has now been. abolished. Thus the petitioners have invoiced Doctrine of Promissory Estoppel. They say that the respondents are stepped from affecting the petitioner's to the extent they have altered their position. The Doctrine of Legitimate Expectation has also been invoked Further the petitioners have contended that. the new policy is totally? arbitrary and illegal. According to petitioners, the real competition is in the export to non-quota Countries and to quota countries for non-quota items, where the exporters have to compete against international competition in quality, price and marketing, which is of a very high level. They say that to increase exports of this category the exporters have to show their business acumen but the respondents instead of encouraging the exporters by giving them quota under Nqe category has abolished it and increased the quota entitlement under Ppe category, which is discriminatory, illegal and arbitrary. The petitioners say that they had acted on the representation of the respondents as contained in the export entitlement policy of the year 1994-96 and altered their position and the respondents are estopped from taking away the benefits of export quotas under Nqe and Mee category. It is claimed that on the basis of the existence of Mee quota petitioners had altered then position and installed more machines with the object to increase their capacity to export. They point out that the requirement of minimum number of machines which was 75 was increased to 150 for the year. 1996. This the petitioners say amounted to making a representation that the exporters should make further investment to avail Mee quota and acting on this representation, huge investments were made and new machines were purchased by the petitioners before submitting applications for Mee quota which respondents are now stopped from abolishing.
(5) The petitioners say that Gat T came into force w.e.f. 1st January, 1995 and Uruguay round talks were also finalised by 4th September, 1993 which Was the date of notification of long term policy for the year 1994-96 and, therefore, the ground that the new policy was announced with a view to implement in long run the agreements arrived at as a result of Uruguay round talks is non-existent. According to Uruguay round complete abolition of quota has to be achieved w.e.f. 1st January, 200. That being the position the petitioners say that in fact object of the policy should be to provide incentives to the exporters who export to non-quota countries or to quota countries of non-quota items, so that when quotas are abolished by the end of 2004, the exports of the country are not effected. It has also been pointed out that the policy for yarn and fabric has not eliminated Nqe or Mee quotas. It is submitted that the alleged rationale for abolition of these quotas is without any basis and is arbitrary and also that the garment exporters are being discriminated. Tt has been urged that there is no rationale with the object sought to be achieved (6) The petitioners seek issue of writ of mandamus directing" quashing of the abolition of Nqe and Mee quotas from garments export entitlements policy 1994- -96 and direction to the respondents to continue for 1996, the quotas as were prevalent in 1995.
(7) The respondents in their counter-affidavit have set-out the background of export activities of garments in the international .market and have claimed that the policy has been amended in public interest. Textile and garment industry is spread out throughout the world and developed and developing nations are involved in exports and imports of garments. The export of readymade garments from India to other countries is substantially on the basis of the bilateral agreements arrived at between Government of India and Government of importing countries. The importing countries in order to protect their domestic industries producing similar goods and for various other reasons placed restrictions on importing of garments and textiles from various countries including India. Bilateral agreements have been entered into by virtue of which a particular commodity is permitted to be imported by importing countries from India. The concept of non-quota entitlement was brought into the quota policy in 1987 and it was provided that in lieu of export carried out to )non-quota countries or to quota countries of non-quota items, additional benefits of issue of quotas were introduced for export to quota countries. Another system under the concept of Mee was brought in under which manufacturer exporters were put in a special category and were given additional benefits for distribution of particular percentage of quota. Uruguay round of negotiations to which Government of India is also a party took a decision to phase out in stages the quotas by the end of 2004. The 1993 end ultimately Uruguay round agreement was finalised in 1994 1993 and ultimately Uruguay round agreement was finalised in 1994 which resulted in creation, of World Trade Organisation (WTO). The Wto agreement incorporates separate agreement for various sectors inclusive of textile, and garments and the agreement on textile and clothing (ATC) provides for phasing out quota system in phased manner during the period from 1995 to 2004. Under this agreement the whole world would be open for international market without any restriction on import and export of textile and garments and on the end of 2004 there will be no quota. Atc is incorporated in Uruguay round agreement.
(8) The case of the respondents further is that it was decided to eliminate the quota system in stags; As a first step, this amendment was brought in by policy under challenging in this petition. They say that after the abolition of quota system, it would be open and free international market in which large number of big industries, viz., multi millionaire international companies would also be in the filed. Therefore, it was though fit that Indian exporters may also establish large establishments to produce quality goods so as to meet the competition in the international field in quota free world after ten years. It has been explained that 20% quota under Fcfs has been introduced so as to give encouragement to new entrepreneurs or to existing one, to provide opportunity to new exporters to enter the market so that they will have sufficient time for establishing big industries by the time the quota", are abolished. If has been claimed that the Government of India with intention to make Indian exporters fit to meet the challenge came out with the policy after having full study on the subject and after having the benefit. of expertise available, it was thought fit in public interest to take steps to implement the Atc agreement. Thus, it was decided to eliminate quota under Mee and Nqe system. They also say that the Government of India in its wisdom thought it tit that phasing out of quota system is to be made in such a manner, which may not affect domestic industry and also the export of textile and readymade garments, which presently is resulting in earning of foreign exchange to the tune of about 14,000 to 15,000 cross of rupees. Thus the Government thought that by first eliminating Nqe and Mee quotas, the garment experts and resulting foreign exchange earning of the country would not be affected and, therefore, in public interest, the present policy was introduced (9) According to 1994-96 policy only genuine manufacturers were entitled to Mee quota on fulfillment of various conditions including the mini mum capacity in terms of sewing machines and workers to be eligible for allotment under Mee system. The allotment in Mee was in respect of goods manufactured in the factory of the owner only and for goods manufactured elsewhere, quotas could not be availed. Mee was not transferable In order to ensure that allotment under Mee is availed of by genuine manufacturers, their units could be inspected with a view to check their installed capacity and other requirements. According to respondents Mee was being mostly mis utilresed in various manners like misdeclaration of production capacity, because of difficulty to supervise every declaration in regard to existence of machinery and manpower. The respondents further say that manufacturer exporters had been making third party exports ie goods manufactured by others were being exported on the strength of Mee quota. Various complaints were received which showed misutilisation of Mee quota in a large scale. All this was resulting in great hardship to genuine exporters and it was not found possible or feasible in the very nature of things to check this mal practice. They were spread all over the country and their number was more than thirty thousand. Because of the aforesaid reasons besides the implementation of ATC. it was decided in public interest to abolish MEE.
(10) Regarding Noe respondents have explained that this quota was introduced with a view to provide incentive to exporters so that non-quota exports would increase and would result in export of large quantities to non-quota countries and to quota countries oF non-quota items. According to respondents, the export under this category was not found commensurate with the quantum of quota that was being distributed for encouraging the exporters. They say that when this system was established in 1987, non-quota exports constituted 42% of total exports of Government of India. While 1'% of (sic) was actually increased and brought to 13% in 1994 and 15% in 1995. They point out that as against this increase, the total increase of iH)ii-qiiuti.i exports was only 7% in span of 7 years. In 1987 when there was no inequit for Nqe category, the export to non-quota comities was 42% whereas in 1994 it increased lip to ^9% whereas the distribution of quota under Nqe system was increased by 15 times i.e. from 1% to 15%. Therefore, according to the Govern- ment such increase was not considered commensurate with huge quantity of quota earmarked for Nqe as the same could not achieve the purpose for which this system was introduced. Thus taking in view the overall circumstances and to carry out Uruguay round of negotiations, it was decided in public interest to abolish Nqe as it would not in any manner result in substantial reduction of export of garment to non-quota countries would otherwise remain profitable business even w.fthout non-quota entitlement.
(11) The policy announced for the year' 1994-96 provides that Government of India in the Ministry of Textiles has the right to allocate entitlements in variation with the percentage of quotas men- tioned ir the policy in case it is considered so desirable in view of cha.nges in demand pattern and ether relevant considerations. The policy also postulates that the Government has the right to make amendme.nis to any of the provisions of thr. policy as may be found necessary without giving prior notice and also that Government has the right to amend the policy as necessary depending upto the out- come of Uruguay round of negotiations and the future of multi fibic arrangement. (Clause 21 of Notification dated 4th September', 1.993). According to the notification the phrase "base period" for an allot- ment year wherever appearing in the notification shall mean the calendar year preceding the year immediately before that allotment year. The "base period" for the year 1994 shall be the year 1992 and so on and so forth. Thus ths exporters for the exports made under Mee or Nqe category in the year 1994 would have been entitled in 1996 to quotas of this respective categories in case the policy had not been changed, and these quotas had not been abolished. The Government's right to change the policy cannot be doubted and if is also so specifically provided in 1994-96 policy. The exporters have been put to notice that the policy can be changed as is evident from Clause 21 of Policy of 1994-96. It has been urged strenuously bv the respondents that the change of the policy was in public interest. They have also contended that Principles of Promissory-Estoppel and Legitimate Expectations, assuming these arc applicable here, !'ave to yield in favour of larger public interest. Tt has further been contended that the impugned policy is statutory in nature and for tT is reason too the Doctrine of Promissory Estoppel and T.c"iniatip Expectations invoked by the petitioner? will have no appi'- Association & Ors. Vs. Union of India & Ors. applicability. The respondents have supported the policy and have denied that it is in any manner unjust, arbitrary and illegal.
(12) Various applications for being imp leaded as parties were filed by the exporters and Garment Exports Associations to contest the writ petitions and support the policy under challenge. Without formally impleading the applicants as parties to the writ petitions, we permitted them to assist the Court as inter venors. We have been given a.ble assistance by learned counsel appearing for the inter venors and also by learned counsel for the parties.
(13) We may first notice settled principles governing Government's power of formation of policies particularly in economic field. Such a policy can be made and also changed from time to time in accordance with the needs of the economy. Such a policy is not open to judicial review unless it is malafide, arbitrary or against any settled principles. In case the policy satisfies the test of reasonableness, the Court would not strike it down merely because in the opinion of the Court another policy decision would have been better. The Court would interfere only if the policy is patently arbitrary, discriminatory or malafide.
(14) In economic matters, unlike matters concerning violation of fundamental human rights, greater latitude may be given to the Government which may make experiments by trial and error method so long as it is bonafide and within the limit of the authority. In a field where even experts may have genuine difference of opinion, the Court is certainly ill equipped to sit over judgment of the experts. We may also notice what has been recently said by the Apex Court while dealing with National Telecom Policy in (1) Delhi Science Forum and Others Vs. Union of India and Another . The Apex Court says : "WHAT has been said in respect of legislations is applicable even in respect of policies which have been adopted by the Parliament. They cannot be tested in Court of Law. The courts cannot express their opinion as to whether at a particular juncture or under a particular situation prevailing in the country any such national policy should have been adopted or not. There may be views and views, opinions and opinions which may be shared and believed by citizens of the country including the representatives of the people in the Parliament. But that has to be sorted out in the Parliament which has to approved such policies. Privatisation is a fundamental concept underlying the questions about the power to make economic decisions. What should be the role or the State in the economic development of the nation? How the resources of the country shall be used? How the 442 goals fixed shall be attained ? What are to be the safeguards to prevent the abuse of the economic power? What is the mechanism of accountability to ensure that the decision regarding privatisation is in public interest ? All these questions have to be answered by a vigilant Parliament. Courts have their limitations because these issues rest with the policy makers for the nation. No direction can be given or is expected from the courts unless while implementing such policies, there is violation or infringement of any of the Constitutional or statutory provisions. The new Telecom Policy was placed before the Parliament and it shall be deemed that Parliament has approved the same. This Court cannot review and examine as to whether said policy should have been adopted. Of course, whether there is any legal or Constitutional bar in adopting such policy can certainly be examined by the Court."
(15) In these petitions the contentions of the petitioners can be categorised into three heads '.-
(I)Applying Doctrine of Promissory Estoppsi, the policy is illegal qua the petitioners.
(II)Petitioners cannot be deprived of their legitimate expectations and the amended policy is malafide, arbitrary and discrimintory.
(III)Policy of 1994-96 creates a vested right in the petitioners, which cannot be taken away.
(IV)-Promissory Estoppel (16) There can be no discussion on the question of Promissory Estoppel without reference to decision of Supreme Court in the case of M/s. Motilal Padampat Sugar Mills Co. Ltd. Vs. The. State of Uttar Pradesh and 0thers(2) . The Doctrine of Promissory Estoppel has been evolved by equity to avoid injustice. In Motilal Padampat Sugar Mills, the Supreme Court says :- "THE true principle of promissory estoppel, therefore, seems to be that where one party leas by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is infact so acted upon by the other party, the premise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequit table to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any pre-existing relationship between the parties or not."
(17) After noticing various jurists, the decisions of English Courts, and that of Supreme Court including the decision in the case of (3) The human of India and Others Vs. M/s. Indo Afghan Agencies etc. Air 1968 Sc 718, the Supreme Court in M.P. Sugar Mills case has held: "THE law may, therefore, now be taken to he settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promiseand, in fact, the promises, acting in reliance on it, alters his position, the Govt. would be held bound by the promise and the promise would be enforceable against the Govt. at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Art. 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one howsoever high or low, is above the law. Every one is subject to the law as fully and completely as any other and the Government is no exception. It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation or the law is concerned the former is equally bound as the latter. It 's indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel? Can the Government say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of "honesty and good faith"? Why should the Government not be held to a thus "standard of rectangular rectitude while dealing with its citizens". There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations. but, let it be said to the eternal glory of this Court, this doctrine was emphatically negatived in the Indo-Afghan Agencies case (AIR 1968 Sc 718) and the supremacy of the rule of law was established. It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promiserind the promisewould alter his position relying upon it. But if the Government makes such a promise and the promiseacts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private Individual. The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society and the constant endeavour of the Courts and the legislatures must. therefore, be to close the gap between law and morality and bring about as near an approximation between the two as possible. The doctrine of promissory estoppel is a significant judicial contribution in that direction."
(18) Another aspect of this decision may also be noticed, particularly because it is relevant in the context of submissions urged for the respondebnts. that the Promissory Estoppel Doctrine being a Doctrine of Equity has to yield in favour of larger public interest. The Supreme Court say? that if the Court is satisfied, on proper and adequate material placed by Government, that overriding public interest requires that the Government shall not be held. bound by promise but should be free to act unfettered by it, the Court would refuse to enter the promise against the Government.
(19) The contention of learned counsel for the petitioners is that relying upon the representation mode by the Government as given in its policy of 1994-96. that Mee and Nqe quota, would be given to them on fulfillment of conditions stipulated in that policy, the exporters have altered their position and, therefore, the Government is estopped from changing the policy and abolishing the said quota.
(20) For considering aforesaid contentions, we would assume that the' exporters had altered their positions and as noticed above purchased more machines to become eligible for Mee quota and also that exports to non-quota countries or to quota countries of non-quota items were made in base year 1994 and prices fixed keeping in view that in 1996, they would get quota. All this, however. to our mind is inconsequential because policy of 1994-96 itself stipulates variation of quota and right of Government to amend the policy. In earlier years quota has been varying. The exporters were told that the policy is liable to change any time. It has to be taken as year to year policy. The systems of allotment under Garment Export Entitlement Policy (1994-96) stipulates quantities for export in each allotment year. Thus it is clear that quota entitlement was on annual basis. No promise was made that the policy would not be changed prior to the year 1996. Therefore, we reject the first contention. (ii)-Legitimate Expectation and Arbitrariness of Policy.
(21) It was contended that exporters like the petitioners made all their an deavours in ths relevant year 1994 in the hope of earning entitlements in the year 199'6. They submit that the respondents even from their subsequent actions represented to the exporters that the policy of 1994-96 would be continued. Such subsequent actions of the respondents include (i) inviting applications for Mee & Nqe quotas prior to 28th November, 1995 (ii) inviting applications for Mee till 15th December. 1995 in terms of their Circular dated 22nd November, 1995, (iii) accepting the fees, and (iv) increasing the requirement of machines from 75 to 150 tor Mee category. The petitioners say that it is not open to the Government to suddenly change the policy. a week after Circular dated 22nd November, 1995 by issuing Press Release dated 28th November, 1995. The petitioners claim that they had this legitimate expectations to get quota entitlements in year 1996.
(22) Regarding the applicability of Principles of Legitimate Expectations, we may refer to two decisions of Supreme Court.
(23) In Food Corporation of India Vs. M/s. ..Karndhenu Cattle Feed Industries , the highest tender was not accepted by Fci and instead Fci invaded all tenders to participate in the negotiations. The highest tenderer refused to revise its rate. In negotiations Fci was offered excess amount of Rs. 20 lakhs. In the writ petition filed by highest tenderer, which was allowed by the High Court, it was contended that since FCI. had chosen to invite tenders, it could not, thereafter dispose of the stocks by subsequent negotiations rejecting the highest tender on the ground that a higher bid was obtained by negotiation. The Supreme Court allowed the appeal of Fci and held :
"IN contractual sphere is in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non arbitrariness is a significant facet. There is no unfettered discretion in public Law : A Public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is 'fairplay in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities with this element forming a necessary component of the decision 446 making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by ths decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review, THE more reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness. a necessary concomitant of the rui'c of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public Interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non arbitrariness and withstand judicial scrutiny. The doctrine of egitimatel expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent."
(24) Petitioners reliance on Kamdhenu decision is on the basis that there are no cogent reasons for amending the policy and. therefore amendment is arbitrary. On the other hand while disputing the non-existence of cornet reasons, the respondents also relive on the decision in support of their contention that the amended policy under challenge is in larger public interest, namely, achieving quota free world after 2004 and meanwhile amending the policy by stares so that the exports and foreign exchange earning of the country is no affected.
(25) Reference may also be made to (5) Madras City Wine Merchants' Association and another Vs. State of T.N. and Ano. . By Government order retail selling of liquor was permitted; licence holders were entitled to renewals as well; on licence holders representations bars came to be permitted and the members of Wine Merchants Association spent considerable amounts for acquiring the adjoining premises to locate the bar in accordance with Bar Rules. It was in the hope that bar licence will be renewed for subsequent years as well. The petitioners invoked the plea of legitimate expectations contending that raising a hope in the retail vendors that they would be allowed to carry on vending in bars, renewal being matter of course, suddenly lo deny that privilege is arbitrary. The case of State Government was that it received various complaints and that the drinking in the bars led to law and order problems and the change of policy was a larger public interest and that the policy was one step marching towards the total prohibition. On these facts, considering entire case law including decision of Apex Court in the case of (6) Union of India and Others Vs. Hindustan Development Corporation and Others. , in Tamil Nadu Liquor case it was held :
"FROM the above it is clear that legitimate expectation may arise-
(A)if there is an express promise given by a public authority: or (B)because of the existence of a regular practice which the claimant can seasonably expect, to continue;
(C)Such an expectation must be reasonable. However, if there is a chance in policy or in public interest the position is altered by a rule or legislation, no question of legitimate expectation would arise."
(26) Reverting now to facts here, it seems, that the afoie said subsequent actions had to be taken since the matter of amendment of the policy was still at the consideration stage. The procedure and formalities for allocation of quotas could not have been stopped during the period when the Government was considering whether it was necessary to change the policy or not. It is, not possible to read in the said Circular any representation by the Government to the effect that it would continue the policy of 1994-96 and it would not amend the same. The policy document of 1994-96 contains a specific Clause to the effect that the Government could change the allocation and entitlements and also that it could amend any provisions of the policy without prior notice and also reserves the right to amend the policy as necessary depending upon the outcome of Uruguay Round of Negotiations and the future of multiform arrangements. By issuing the Circulars as noticed above and relied upon by the petitioners. if cannot he said that the Government had given up its right to amend the policy, (27) We find it difficult to accept the contention that Uruguay Round of Negotiations were set up only as a camouflage to support the public notice impugned in. the petition. According to respondents, in view of the Uruguay Round of Negotiations and to achieve the no quota target by the end of 2004, the first step was taken by the amendment of policy by the impugned notification since according to the understanding of the Government by amendment of the it was not likely that there will be any substantial full of export !o non-quota countries and it would help the industry to with open competition on complete abolition of quota on 1st January, 2005. According to government its foregin exchange earning by exports was not likely to be effected by abolition of Nqe and MEE. On facts before us it is not possible to sit over this judgment and reverse the decision of the government.
(28) The facts regarding misutilisation of Mee quota have been set out earlier. According to the stand of the Government (here were about thirty thousand such exporters who were scattered through out the country and it was not possible to properly and effectively inspect their establishments for verifying compliance of conditions of eligibility of installed capacity etc. We do not find any arbitrariness in the approach of the Government and. are also .unable to accept the contentions that the Government had not given cogent reason? and material to alter the policy. The Government had considered both the view points one against abolishing Mee Quota and the other fori it. It had also considered representations of (i) Garments Exporters Association: (ii) Clothing Manufacturers Association of India; (iii) Apparrel Handloom Association and (iv) Apparrel Exporters & Manufacturers Association and then decided to abolish the quota.
(29) In respect of Nqe, although the consideration by the Government in files is not as much in detail as in case of Mee but it cannot be held that there has been no consideration before decision was taken to abolish Nqe quota. The concerned Minister in a detailed note took the decision that the way to boost exports to non quota countries lies elsewhere and not by giving Noe quota allocator. The exports to non-quota countries were made because of contacts and experience of Exporters and also than quota a11oc3.tion procedures need to be simplified and there be only two categories : Ppe and FCFS. We have already noticed earlier that as per figures supplied by Government, m span of 7 years, after introduction of Noe quota. the increase of exports to Non Quota Countries was nominal and margnal. and also that these exports were not likely to be affected by abolition of Noe auota. We are therefore, unable to accept the contention that the amended policy is arbitrarv. On facts it cannot be held that extraneous matters were taken into consideration or relevant matters were not taken into consideration.
(30) It may be useful to notice that 'the Supreme Court in 'Kamdhenu case' has also held that large!.- public interest can outweigh the claim based on Legitimate Expectation. The question whether the expectation is reasonable or legitimate is a question of fact in each case and whenever such question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have the legitimate expectation of the claimant'. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The DoctOr in of Legitimate Expectation get assimilated in. the rule of law and operates in our legal system in this manner and to this extent." The larger public interest shown here is the steps to be taken in stages to achieve quota free economy by the end of 2004. This approach cannot be held to be arbitrary. Reliance- has also been placed upon a decision of one of us (Y. K. Sabharwal, J) in the case of Inter craft Ltd. Vs. Union of India and others CWP. No. 291133 decided on 30th April, 1993, and upheld by a Division Bench in the CJ..se of Un'on of India & Others Vs. Cosmique International and others 54(1994) Dlt 2117). In case of 'Inter craft' it was held that the discontinuance of Cash Compensatory support (CCS) w.e.f. 1st Janupry, 1979 was contrary to tie doctrine of Promissory Estoppel business the petitioners acting on the promise held by the respondents entered into firm contracts with foreign buyers and priced the goods keeping in view the amount payable under the said scheme and altered their position. That was a case of no return. The respondents had not filed the counter-affidavit though the writ petition was pending for more than a decade and had not shown any good reason or equity or any supervening public interest that may justify the conduct of the Government in resiling from its representation. In the present case, the Government has explained the circumstances as noticed above which show that it was in the larger public interest to amend ths policy. Tie decision in 'Inter craft' does not rendered any assistance on the facts of the case in hand.
(31) According to petitioners no public interest was being served by change of the policy, which was dons only with a view to gave a special favourable treatment to Ppe category of exporters and to create & monopoly in their favour. The context in v¯'hich and the purpose for which the policy has been changed does not lend support to the aforesaid contention. As noticed earlier, according to respondents, the policy was changed with a view to take first step to male the trade face free quota in the international market on the beginning of 2.005 and to suport the trade to achieve it. Further, according to the Government there was no likelihood of fall cf export and consequent sequent earning of foreign exchange by abolition of Nqe or Nqe (32) The petitioners say that in order to achieve no quota international market the respondents ought to have increased competition by allowing more quota to Nqe rather than to eliminate it, if they have to enforce Uruguay settlement. The petitioners have also placed on record the opinions and papers written by experts on the subject supporting the view point urged by the petitioners. This may be one of the possible way to achieve no quota international market by 2005 but cannot be said to be only method. It is not for us to say which method is better the one adopted by Government or the one suggested by the petitioners. We cannot hold on the facts presented before us that the methodology adopted by the Government is mala fide or arbitrary. It is not for this Court to weigh, decide and substitute its opinion for that of the Government as reflected in the amendment of the policy.
(33) In the writ petitions no specific allegations of malafides have been made. The petitioners have only vaguely pleaded that the Government appears to have acted to support the exporters who are not manufacturing themselves and thus are not entitled to Mee and have nut been exporting to non-quota countries or of non-quota items to quota countries where competence is required and further that the Government appears to have bowed to illegal lobbying by certain exporters who want to enjoy the benefit of quota premium without competing in international market or making any investment towards manufacturer of garment exports. The allegations of malafides have to be specific and supported by cogent material. Tt is not so here. In this view the half-hearted and not seriously urged plea that the Government acted malafide deserves outright rejection.
(34) The plea that Mee and Nqe quota has been continued in case of textiles and not in case of garments and, therefore, the policy is discriminatory, has to be rejected as the textile policy is not relevant for considering the legality of the 'present policy. The second contention is thus rejected. (iii)- Vested Right :
(35) It was contended for the petitioners that vested right, under 1994-96 policy, has been created in their favour in the base year 1994 ;iiid thus they could not be deprived of quota in the year 1996. The relevant date would be when policy of 1996 is announced and not what is done in 1994 or when application for quota is made. In this regard we may refer to a recent decision of Supreme Court in S.B. International Limited Etc. Vs. Assistant Director General of F. T. and Ars. etc. Jt 1996(1) Sc 588(8). It was held:- "THE first question In these appeals is whether a vested light accrued to the appellant for issuance of advance licences as per the value addition norm in vogue on the date of filing of the said applications the moment it made those applications and whether any subsequent change in policy effected before the issuance of licences, is not applicable to such licences. For answering this question, one has to look to the Policy itself, the material clauses of which have already been set out. The said provisions make it clear that the object behind the scheme is to enable the exporter to import raw materials, components etc. required for the purpose of producing goods for export. It is a facility provided by the Government-an incentive. There is no right to advance licence apart from the Policy. No citizen has a fundamental right to' import, much less import free of duty. By granting the advance licence the licencing authority tells the licence "I am permitting you to import raw material, components etc. of a particular value free of duties but you must export goods of a particular value (determined as per value addition norm in vogue on the date of licence) within a particular date. If you fail to do so, you will be liable to levy of penalties and other action according to law". The duty free import of raw materials etc. is permitted to enable the exporter to sell his goods abroad at a more competitive price, thereby fetching precious foreign exchange for the country. Mere making of an application does not create any right in the applicant since he has no pre-existing right to such licence. His right is only that which is given by the Policy. The situation could have been different if the Policy had said that a person exporting goods of a particular value shall be entitled to an import licence of n particular value ; in such a case, the export of goods can be said to create a right in the applicant to get an import licence of the specified value. Here is a case, where one has to ask for an import licence promising to export goods of a particular value within a particular time. It is difficult to appreciate how can it be said in such a situation that mere tiling of an application creates a vested legal right to obtain a licence according to the value addition norm in vogue, on the date of the application. It is the date of licence that is relevant and not the date of application therefor. It is obvious that the norm (value addition norm) in vogue on the date of grant of licence shall govern the licence. The mere fact that the authorities have a discretion to take into account the exports made after the date of application for advance licences makes no difference to this position ; it is in the nature of yet Another concession. What is relevant is that the licence granted under Chapter-VII of the Policy is an advance licence. It is granted in advance of export- rather to enable the export. The theory of a vested right accruing to the applicant to get a licence as per the norms in force on the date of application is inconceivable in such a situation-unless, of course, the Policy itself says so".
(36) In our view, the decision in the case of Kasinka Trading and another Vs. Union of India and another, , also does not advance the case of the petitioners.
(37) There is no substance in the plea that the petitioners have a vested right to get the quota.
(38) We accept the plea of the Government that the policy under challenge is in larger public interest to achieve quota free goal by stages so that the exports and foreign exchange of the country is not adversely affected and those in trade have opportunity to prepare themselves to meet the competition by end of the year 2004. We also accept the plea of the Government that the main considerations for the policy are to achieve modernisation and higher exports. We may also notice that validity of the impugned policy has also been upheld by Madras and Calcutta High Courts (sec Cwp 17744 of 1995-M/s. Tehzeeb Katari Vs. Government of India and others and CWP. No. 2311 of 1995-Kariwala Exports Private Ltd. and another Vs. Apparel Export Promotion Council and another respectively.) (39) The policy had to be formulated by the Government and the Director General of Foreign Trade had only to follow the procedure to implement the policy. The contention that the policy was required to be formulated by Director General and was illegal since it was not formulated by Director General, is misplaced.
(40) In the end we may say that individual hardships in such matters are inevitable. The individual hardships arc sub servent to public interest.
(41) The result of aforesaid discussion is that the writ petitions are dismissed leaving the parties to bear their own costs.