The Hon’ble Court anchored its reasoning in paragraph 113 of Kanak Exports, where the Supreme Court had held in unambiguous terms that delegated or subordinate legislation can only operate prospectively unless the enabling statute specifically vests the rule-making authority with the power to act retrospectively. Section 5 of the FTDR Act, which empowers the Central Government to formulate and announce the export-import policy and to amend it, contains no such enabling language. The power to amend a policy, the Court reiterated, is not the same as the power to amend it with retrospective effect a distinction the Supreme Court itself had drawn while approving the Bombay High Court’s reasoning in the very same case. The Division Bench extended this logic to orders issued under Section 3 of the FTDR Act as well, holding that such orders, being equally in the nature of subordinate legislation, are similarly incapable of retrospective operation.
Having settled the retrospectivity question in principle, the Hon’ble Court turned to what is arguably the more interesting part of the judgment: applying that principle to the facts at hand. The 25.03.2022 notification, in foreclosing the Scheme, undeniably purported to take away benefits that exporters believed had accrued to them and to that extent, the petitioner’s challenge was well-founded. The Hon’ble Court reasoned that if the Government lacks the power to issue a retrospective notification, that disability applies with equal force to the 09.09.2021 notification itself, insofar as it purported to reach back and cover exports already made between 01.04.2021 and 08.09.2021 a period during which, on the Government’s own admission, no TMA Scheme existed at all.
The Hon’ble Court observed that exporters shipping chillies during that six-month gap could not have legitimately expected, at the time of export, that a scheme notified months later would retrospectively extend a benefit to them. The Scheme that had earlier covered exports up to 31.03.2021 had already lapsed; nothing in force between 01.04.2021 and 08.09.2021 could have generated a reasonable expectation of incentive. Accordingly, no right could be said to have vested in the exporters for that specific window, regardless of the language used in the subsequent notification.
On the doctrine of legitimate expectation, while acknowledging the exposition in Sivanandan C.T. that public authorities must act consistently, transparently and predictably, and that a denial of legitimate expectation which is arbitrary can attract judicial scrutiny under Article 14, the Bench found the doctrine of no assistance to the petitioner, precisely because no promise or established practice existed during the interregnum period to found an expectation in the first place. As for the respondents’ reliance on the latitude accorded to economic policy-making under Balco Employees’ Union and Ugar Sugar Works, the Court accepted that principle in the abstract but held that it could not answer the narrower and more fundamental question of statutory competence namely, whether the enabling provisions permitted retrospective operation at all.
