The Bombay High Court has upheld the Central Government's notification prohibiting sugar exports, rejecting a batch of writ petitions filed by merchant exporters who claimed a vested right to execute pre-existing export contracts for which they had already received advance payments from foreign buyers.

The Bench held that legitimate expectation is not an enforceable right and that the mere allocation of an export quota under earlier government notifications does not confer any vested or accrued right. The Court affirmed that private commercial contracts executed by exporters cannot override a statutory policy decision taken by competent authorities in the supervening public interest.

A Division Bench comprising Justice Suman Shyam and Justice Advait M. Sethna observed, “Legitimate expectation is not an enforceable right, more particularly in the context of a well-reasoned policy decision. The only exception, in our view, to warrant interference would be when such decision suffers from the vice of arbitrariness so as to be hit by Article 14 of the Constitution. We do not find such exception to be applicable in the cases before us”.

“We find it pertinent to note that these are cases where the legitimate expectation as pleaded by the Petitioners cannot be placed at a pedestal higher than that of the producers and consumers of sugar as far as the domestic sugar industry is concerned. Protecting the same at the relevant time appears to be the need of the hour. The Respondents being the competent authorities acting under the respective statutes are clothed with the expertise and wherewithal to take an informed decision. Having observed thus, interference by this Court, in exercise of its extra ordinary jurisdiction, would not be conducive, in the given factual complexion”, the Bench said.

Advocate Abhishek A. Rastogi appeared for the petitioner and Anil Singh, Additional Solicitor General appeared for the respondent.

The dispute stems from a May 13, 2026 DGFT notification changing sugar’s export status from "Restricted" to "Prohibited" until September 30, 2026, under Sections 3 and 5 of the FTDR Act, 1992. The policy shift followed a decision by the Committee of Ministers to safeguard domestic supply after 2025–26 sugar production dropped to 308 lakh metric tonnes (LMT), falling short of the estimated 343 LMT.

Merchant exporters who held private contracts and advance payments challenged the ban, alleging it retrospectively affected completed deals, violated fundamental rights under Articles 14 and 19(1)(g) Constitution of India, and breached principles of promissory estoppel and legitimate expectation. They further contended that denying them relaxation was arbitrary, given that a similar ban in 2022 was subsequently eased for advance payment holders.

Defending the notification, the Union of India submitted that quota allocations under the Essential Commodities Act, 1955 and export prohibitions under the FTDR Act serve distinct statutory schemes. It clarified that the 2022 relaxation was a one-time discretionary measure that set no binding precedent. Furthermore, under Para 1.05(b) of the Foreign Trade Policy 2023 and Section 51 of the Customs Act, 1962, policy transition relief requires an Irrevocable Commercial Letter of Credit (ICLC) or a Let Export Order (LEO) registered prior to the ban, neither of which the petitioners held.

Disposing of the petitions with Premium Sugars as the lead matter, the High Court dismissed the challenge and laid down the following key principles:

  • Legitimate Expectation Yields to Policy: Relying on Ram Parvesh Singh and Others vs State of Bihar and Other, the Bench held that legitimate expectation is not an enforceable right against a valid policy decision, and private advance payments cannot substitute for an ICLC (distinguishing Shriram Food Industry).
  • No Vested Right in Quotas: Citing Go-Go International another v. Union of India and another and TR Exports (Madras) Private Limited and Others vs. Union of India & Others, the Court held that mere quota allocation creates no accrued right preventing policy revisions in the public interest.
  • Prospective Operation & Limited Review: The notification took effect "with immediate effect," operating prospectively. Applying gar Sugar Works Ltd. v. Delhi Administration and Others, the Bench held that executive policies cannot be judicially altered merely due to commercial hardship.
  • Reasonable Restrictions: Rights under Article 19(1)(g) remain subject to public interest restrictions to maintain domestic supply and price stability.

Finding no arbitrariness, the Court dismissed the petitions, while permitting the exporters to sell their retained sugar stock in the domestic market subject to applicable regulations.

Cause Title: Premium Sugars v. Union of India & Ors. Writ Petition (L) NO. 18701 OF 2026

Appearances:

Petitioner: Abhishek A. Rastogi, Pooja M. Rastogi, Meenal Songire, Aarya More and Diksha Pandey, Advocates.

Respondents: Anil Singh, Additional Solicitor General, Aditya Thakkar, Vijay Kantharia, Adarsh Vyas, Advocates.

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