The Bombay High Court has dismissed a batch of petitions challenging the Centre’s decision to prohibit sugar exports during the 2025–26 sugar season, holding that private export contracts and advance payments received from overseas buyers do not create a legal or vested right capable of overriding a subsequent government policy issued in the larger public interest.
The Bench of Justice Suman Shyam and Justice Advait M. Sethna has observed that private commercial interests and resulting hardship cannot undermine a policy decision taken lawfully in the supervening public and national interest. It invoked the maxim “salus populi est suprema lex”, meaning that the welfare of the people is the supreme law.
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The central legal issue before the Court was whether exporters who had entered into private contracts with foreign buyers and received advance payments before the export prohibition could claim a right to complete those transactions despite the subsequent change in export policy.
The Court answered the issue against the exporters, holding that the Government was entitled to alter its export policy in the face of overriding public and national interest, particularly where the commodity involved was an essential agricultural commodity intended for mass domestic consumption.
The petitions arose from the DGFT’s May 13, 2026 notification, which amended the export policy for raw, white and refined sugar under ITC (HS) Codes 1701 14 90 and 1701 99 90.
The policy was changed from “Restricted” to “Prohibited”, with immediate effect until September 30, 2026, or until further orders, whichever was earlier. The notification, however, contained specific exceptions for exports under EU and US CXL/TRQ quotas, the Advance Authorisation Scheme, Government-to-Government exports and consignments already in the physical export pipeline.
The notification was issued after a May 12, 2026 Office Memorandum of the Department of Food and Public Distribution communicated the Committee of Ministers’ decision that sugar exports could be prohibited with immediate effect during the sugar season.
The Government justified the measure by citing concerns over domestic sugar availability and the need to maintain adequate closing stocks for domestic consumption and price stability.
The dispute acquired significance because the Government had earlier permitted substantial sugar exports during the same 2025–26 season.
On November 14, 2025, the Department of Food and Public Distribution had allocated an export quota of 15 lakh metric tonnes (LMT) for the season, with exports permitted up to September 30, 2026.
A further notification dated February 13, 2026 sought willingness for an additional 5 LMT of sugar to be exported. Under that arrangement, sugar mills exporting at least 70% of their allotted quantity by June 30, 2026 could export the balance by September 30, 2026. Subsequently, on March 16, 2026, an additional quota of 87,587 MT was allocated to willing sugar mills.
The exporters contended that they had acted on these government notifications and entered into commercial arrangements with overseas buyers before the sudden change in policy.
In the lead case, Premium Sugars claimed that it had entered into several export contracts between April 14 and May 4, 2026, covering approximately 2,511 MT of sugar, and had received full advance payments from the foreign buyers.
The petitioner argued that the subsequent prohibition could not be applied so as to frustrate contracts that had already been concluded and substantially acted upon.
According to the petitioner, approximately 540 MT had already been exported or shipped in around 20 containers, while another approximately 1,971 MT was in the process of loading, transportation and shipment when the May 13 notification came into force.
The exporters therefore invoked principles including legitimate expectation, promissory estoppel, vested rights, Article 14 and Article 19(1)(g) of the Constitution.
The petitioners argued that the Government’s conduct amounted to an unfair policy “flip-flop”.
They relied on the November 2025 and February 2026 notifications permitting exports and contended that exporters had relied upon those permissions while entering into binding commercial contracts and accepting foreign remittances.
They further pointed out that during an earlier sugar export restriction in 2022, the Government had subsequently issued a relaxation permitting completion of certain transactions where advance payments had already been received from overseas buyers.
According to the petitioners, denying similar protection in 2026 was arbitrary and discriminatory. They also argued that the prohibition interfered with their right to carry on trade and business under Article 19(1)(g).
The Union Government opposed the petitions, maintaining that the May 13 notification represented a policy decision taken after assessment of domestic sugar production and consumption requirements.
The Government pointed out that sugar production for the 2025–26 season had initially been estimated at approximately 343 LMT, but actual production had fallen to around 308 LMT.
The Government further informed the Court that international sugar prices had reached levels above Indian ex-mill prices, creating an export incentive that could reduce domestic closing stocks. According to the Government’s case, closing stocks could fall below 40 LMT, whereas ordinarily around 50–60 LMT would be maintained at the end of a sugar season.
The issue had been considered by an Inter-Ministerial Committee, the Committee of Secretaries and ultimately the Committee of Ministers, which decided that sugar exports should be prohibited with immediate effect.
The Government maintained that the decision was therefore neither arbitrary nor a knee-jerk response but a considered policy measure intended to ensure sufficient sugar availability for domestic consumers and price stability.
The High Court accepted the Government’s explanation.
The Bench rejected the argument that the May 13 notification was an impulsive decision merely because it followed the May 12 Office Memorandum by one day.
According to the Court, the decision had followed deliberation and consultation at the highest level and was taken in the interest of the domestic sugar market and consumers. The Court specifically found no irrationality, irregularity or illegality in the issuance of the Office Memorandum or the DGFT notification.
The Court emphasized that judicial review does not permit courts to substitute their own assessment for that of the executive on matters of economic and trade policy merely because a policy causes commercial hardship.
One of the most significant findings concerned the exporters’ reliance on private contracts.
The Court held that the execution of bilateral contracts with overseas buyers could not, by itself, confer a legal right enabling exporters to override a subsequent notification issued by the competent authority under the Foreign Trade (Development and Regulation) Act, 1992.
In other words, a private commercial agreement between an exporter and a foreign buyer cannot supersede the prevailing statutory export policy.
The Court noted that although Premium Sugars had entered into six contracts and had received payments from foreign buyers, those circumstances did not establish a legal right to export contrary to the May 13 notification.
The Court’s interpretation of Paragraph 1.05(b) of the Foreign Trade Policy, 2023 proved particularly important.
The provision recognizes that when an import/export policy changes from free to restricted or prohibited, transactions already completed before the change are protected. It also provides a mechanism for exports after the policy change where the exporter has an Irrevocable Commercial Letter of Credit (ICLC) established before the restriction.
The petitioners admittedly did not possess such an ICLC before the May 13 notification and had not made the required registration application.
The Court consequently rejected the argument that advance payments received under private contracts could be treated as equivalent to an ICLC.
It distinguished the Bombay High Court’s earlier decision in Shriram Food Industry Ltd. v. Union of India, noting that the earlier case involved ICLCs issued before the relevant restriction. In the present batch of cases, that essential factual foundation was absent.
The Court also rejected the claim that the earlier allocation of sugar export quotas created vested or accrued rights in favour of exporters.
According to the Bench, the November 2025 and February 2026 notifications merely allocated quotas and prescribed the modalities under which exports could take place. They did not create an irrevocable entitlement immune from subsequent policy changes.
The Court therefore held that there was no vested right from which the petitioners could be said to have been subsequently divested.
The Bench relied upon Supreme Court and Delhi High Court precedents recognizing the Government’s authority to revise or withdraw policy in public interest, provided the decision is not vitiated by arbitrariness, mala fides or irrationality.
The petitioners also sought to invoke the doctrine of promissory estoppel.
The Court, however, found that the necessary factual foundation had not been pleaded.
The Bench observed that the petitioners had failed to demonstrate how the Government’s earlier notifications had resulted in a material alteration of their legal or vested rights. In the absence of sufficient pleadings and supporting material, the plea of promissory estoppel raised during oral arguments could not succeed.
The Court similarly rejected the exporters’ reliance on the doctrine of legitimate expectation.
Referring to Supreme Court precedent, the Bench emphasized that legitimate expectation is not itself a legal right. It represents an expectation of a benefit or relief that may ordinarily flow from a promise or established practice, but it is not enforceable as a vested entitlement.
The Court further held that the Government is not prevented from evolving a new policy merely because an earlier policy may have generated expectations among traders or businesses.
The Bench also stressed the principle of judicial restraint, observing that courts should ordinarily avoid encroaching into the executive’s policy-making domain.
The exporters had argued that the prohibition was manifestly arbitrary and violated Article 14 because the Government had treated similarly situated exporters differently from those who had benefited from the 2022 relaxation.
The Court rejected the argument, finding that the earlier relaxation was a one-time discretionary measure pertaining to a different sugar season.
According to the Court, conditions affecting every sugar season can differ, and the Government cannot necessarily be compelled to repeat a relaxation granted during one particular season in subsequent years.
The Bench therefore found no arbitrary or discriminatory exercise of power in the present case.
The Court also considered the petitioners’ argument under Article 19(1)(g), which protects the freedom to carry on trade or business.
The Bench observed that the export prohibition operated prospectively and was introduced in the context of sugar being an agricultural commodity of mass consumption.
Domestic availability and sugar pricing, the Court noted, have a direct bearing on production, manufacture and consumption of an essential commodity.
The Court therefore found a clear element of supervening national and public interest, holding that Article 19(1)(g) is subject to reasonable restrictions and is not an absolute right.
A particularly significant observation came in the Court’s discussion of the commercial consequences faced by exporters.
The petitioners had argued that they could potentially face arbitration proceedings from overseas buyers because they were unable to honour their contractual commitments following the export prohibition.
The Court refused to treat such potential commercial consequences as sufficient grounds for striking down or diluting a public-interest policy.
The petitioner sought to distinguish its case partly on the basis that it claimed to have obtained an Irrevocable Commercial Letter of Credit. However, the Court found that the ICLC had not been obtained before the issuance of the impugned notification, as required under the applicable policy framework.
The Court therefore held that the same reasoning applied to Sucden India as well as to the other connected petitions.
The Bombay High Court concluded that the petitioners had failed to establish any legally enforceable right that could override the Government’s May 13, 2026 export prohibition.
The Court summarized its position by holding that legitimate expectation is not an enforceable right, particularly in the context of a well-reasoned policy decision, and that judicial interference would be justified only where the policy suffers from arbitrariness attracting Article 14. The Bench found no such arbitrariness in the present cases.
The petitions were accordingly dismissed, the Rule was discharged and the parties were directed to bear their own costs.
The Bench observed that quantities of sugar retained by the petitioners could be sold or disposed of in the domestic market, subject to the governing law, the applicable Sugar Control Orders and compliance with all legal requirements.
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