The Bombay High Court dismissed a batch of writ petitions challenging a May 2026 notification that prohibited sugar exports, holding that the policy decision was lawful, prospective and not arbitrary.
Background & Facts
The Dispute
The petitioners, a group of merchant exporters led by Premium Sugars Ltd., challenged Notification No. /6/2026-27 dated 13 May 2026 issued by the Directorate General of Foreign Trade (DGFT). The notification amended the export policy of sugar from “restricted” to “prohibited” with immediate effect until 30 September 2026, subject to limited exceptions. The petitioners contended that the prohibition unfairly barred them from fulfilling export contracts concluded and fully paid for before the notification’s issuance.
Key Facts
- 14 Nov 2025: DFPD issued a notification under the Essential Commodities Act allocating an export quota of 15 LMT of sugar for the 2025-26 season, to be exported by 30 Sept 2026.
- 13 Feb 2026: DFPD issued a second notification seeking willingness to export an additional 5 LMT, with a deadline of 30 June 2026 for 70 % utilisation.
- 16 Mar 2026: DFPD allocated an extra 87,587 MT of sugar to willing mills.
- 24 May 2022: DGFT issued a notification under the FTDR Act moving sugar from “free” to “restricted”.
- 12 May 2026: DFPD issued an Office Memorandum conveying the Committee of Ministers’ decision to prohibit sugar export for the 2025-26 season.
- 13 May 2026: DGFT issued the Impugned Notification prohibiting sugar export, with three specific exceptions (EU/USA CXL-TRQ, Advance Authorisation Scheme, Government-to-Government, and consignments already in the physical export pipeline).
- 14 May 2026: Petitioners filed representations seeking permission to complete contracts executed between 14 Apr 2026 and 4 May 2026 for a total of 2,511 MT of sugar, for which full advance payments had been received.
- 3 June 2026: DGFT’s Exports Cell rejected the representations via email, without providing reasons.
- 10 Oct 2022: A one-time relaxation order allowed export of sugar where advance payments had already been received (specific to the 2023-24 season).
- 10 June 2026, 29 June 2026, 22 June 2026: Affidavits-in-Reply filed by the respondents detailing production estimates (actual 308 LMT vs. estimated 343 LMT) and policy rationale.
- 13 July 2026: Judgment reserved.
- 3 Aug 2026: Judgment pronounced.
Procedural History
- 12 Jun 2026: Writ Petition (L) No. 18701 of 2026 filed by Premium Sugars Ltd. under Article 226 of the Constitution.
- Parallel writ petitions (ST 15306 of 2026, WP 8024 of 2026, WP 7850 of 2026) were consolidated for a common judgment.
- The petitioners sought quashing of the Impugned Notification, declaration of vested rights, and directions to allow export of the already-contracted sugar.
Parties' Positions
- Petitioners (Premium Sugars and other exporters) argued that the earlier notifications created a legitimate expectation and that the abrupt prohibition violated Article 14 and Article 19(1)(g). They invoked promissory estoppel and legitimate expectation.
- Respondents (Union of India, DGFT, Director General of Foreign Trade, etc.) contended that the notification was a lawful exercise of powers under Section 3 read with Section 5 of the FTDR Act, that it was prospective, and that no vested rights arose from quota allocations.
Relief Sought
The petitioners prayed for (i) setting aside the 13 May 2026 notification, (ii) allowing export of the 2,511 MT of sugar already contracted and paid for, (iii) costs and any other relief deemed appropriate.
The Legal Issue
Whether the 13 May 2026 notification prohibiting sugar export, issued under the FTDR Act, can be struck down on the grounds of arbitrariness, violation of Article 14, and infringement of the petitioners’ alleged vested rights and legitimate expectations arising from earlier quota notifications.
Arguments Presented
For the Petitioners
- The petitioners relied on Shriram Food Industry Ltd. v. Union of India and argued that the earlier notifications (14 Nov 2025 and 13 Feb 2026) created a legitimate expectation that export contracts would be honoured.
- They invoked promissory estoppel, asserting that the government could not resile from its promise without compensation.
- They claimed the prohibition was arbitrary and discriminatory, violating Article 14, because a similar restriction in 2022 had been relaxed.
- They cited Section 2(33) of the Customs Act, 1962 to argue that sugar was not a prohibited good for the purpose of their contracts.
For the Respondents
- The respondents relied on the statutory authority conferred by Section 3 read with Section 5 of the FTDR Act and the Essential Commodities Act, 1955.
- They argued that the notification was a policy decision taken after due deliberation by the Committee of Ministers, aimed at safeguarding domestic sugar availability.
- They contended that the earlier quota allocations did not create vested rights, referencing Go-Go International v. Union of India and PTR Exports (Madras) Pvt. Ltd. v. Union of India.
- They highlighted that the 2022 relaxation was a one-time discretionary measure, not a binding precedent.
- They emphasized that the petitioners had failed to obtain an Irrevocable Commercial Letter of Credit or a Let Export Order, prerequisites under para 1.05(b) of the Foreign Trade Policy, 2023.
The Court's Analysis
The Court began by noting that the petitioners’ challenge was confined to the prospective prohibition of sugar export under the Impugned Notification. It observed that the notification was issued under the plenary powers of the FTDR Act, following a Committee of Ministers’ decision communicated through an Office Memorandum on 12 May 2026. The Court held that the policy shift from “restricted” to “prohibited” was a lawful exercise of executive discretion aimed at preventing a domestic sugar shortage, as evidenced by the decline in production from an estimated 343 LMT to an actual 308 LMT.
"Legitimate expectation is not an enforceable right, more particularly in the context of a well-reasoned policy decision."
The Court rejected the petitioners’ reliance on promissory estoppel, observing that no contractual relationship existed between the petitioners and the government, and that the doctrine requires a clear, unequivocal promise, which was absent. It further held that quota allocations under the Essential Commodities Act do not confer vested rights, citing Go-Go International and PTR Exports.
Regarding Article 14, the Court found no arbitrariness. The notification applied uniformly and carved out specific exceptions (EU/USA CXL-TRQ, AAS, G2G, and consignments already in the export pipeline). The Court noted that the petitioners had not complied with any of the three conditions stipulated in paragraph 4 of the notification, such as loading the cargo before the notification’s publication or filing a shipping bill.
The Court also examined the Foreign Trade Policy, 2023, particularly para 1.05(b), which states that policy changes are prospective and that export licences or ICLCs issued before a restriction remain valid only if registered within 15 days. The petitioners failed to produce any ICLC or Let Export Order, rendering their claim of “pre-existing contracts” legally ineffective.
Finally, the Court emphasized the principle of judicial restraint in matters of policy formulation, referencing Ugar Sugar Works Ltd. v. Delhi Administration and Aravali Golf Club v. Chander Hass, and concluded that the executive’s decision was not perverse, irrational, or mala-fide.
The Verdict
All the writ petitions, including Premium Sugars Ltd. v. Union of India, are dismissed. The rule is discharged. Each party bears its own costs. The Court upheld the Notification dated 13 May 2026 prohibiting sugar export until 30 September 2026, subject to the limited exceptions enumerated therein.
What This Means For Similar Cases
Policy Decisions Remain Prospective
- Export-related notifications issued under the FTDR Act are prospective unless expressly stated otherwise.
- Quota allocations do not create vested rights; exporters must secure ICLCs or Let Export Orders before a policy change to claim protection.
Legitimate Expectation Is Not Enforceable
- Legitimate expectation is a non-justiciable concept in the context of a well-reasoned policy shift.
- Courts will not intervene merely because a policy adversely affects commercial interests, absent irrationality or arbitrariness.
Compliance With Notification Conditions Is Crucial
- Exporters must ensure that loading, shipping bill filing, or hand-over to customs occurs before the publication date of a prohibitive notification to fall within the “physical export pipeline” exception.
- Failure to meet any of the three stipulated conditions results in no exemption.
Actionable takeaways for practitioners:
- Advise clients to obtain ICLCs and register them promptly when a policy change is anticipated.
- Conduct real-time checks on the status of export licences and shipping documents before a notification’s effective date.
- Frame arguments around arbitrariness or violation of Article 14 only when there is clear evidence of unequal treatment or lack of rational basis.
