Authority: High Court of Judicature at Madras (Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan)

Order Date: 15.10.2026

Case Overview

  • Petitioners: Gimpex Private Limited (incorporated 1974, recognised Three‑Star Export House) and its director/shareholder Binod Choudhury.
  • Respondents: Union of India (Ministry of Commerce & Industry, Department of Commerce), Director General of Foreign Trade (DGFT), and Commissioner of Customs, Chennai‑II.
  • Petition seeks declaration that Notification No.12/2026‑27 (dated 17.04.2026) is illegal and that Paragraph 1.05(b) of the Foreign Trade Policy 2023 is discriminatory for excluding exporters without an Irrevocable Commercial Letter of Credit (ICLC) from transitional protection.
  • The petition also seeks a licence to export existing stock and a direction to clear shipping bills without a licence.

Factual Background

  • Gimpex bought export‑grade Baryte from Andhra Pradesh Mineral Development Corporation Limited (APMDCL) through e‑tenders. APMDCL’s tender on 13.06.2023 offered 800,000 MT Grade A and 300,000 MT Grade B; only exporters with mineral exports in at least two of the last three financial years could bid.
  • Gimpex won the tender and signed two agreements on 14.07.2023 for 240,000 MT Grade A and 60,000 MT Grade B.
  • Subsequent purchases (full payment) amounted to 2,70,005.650 MT Grade A (15.07.2023‑28.02.2026) and 3,16,725.200 MT Grade B (04.08.2023‑29.09.2025).
  • By 17.04.2026 the company held 189,500.16 MT of stock (92,683.28 MT Grade A + 96,816.88 MT Grade B) valued at approximately Rs.225 crore, stored at Chennai Port since February 2026, intended mainly for Saudi Arabian buyers. Exports halted on 28.02.2026 due to the US‑Iran conflict and disruption of shipping through the Strait of Hormuz.
  • On 17.04.2026 the DGFT issued Notification No.12/2026‑27 under Sections 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992, re‑classifying:
  • Grade A (specific gravity ≥ 4.2) – Free → Restricted
  • Grade B (specific gravity 4.10‑4.20) – Free → Restricted
  • Grade CDW (specific gravity < 4.0) – remains Free

Export of Grades A and B now requires a DGFT licence; the notification contains no transitional clause.

  • Gimpex applied online on 22.04.2026 for a restricted‑export licence for 250,000 MT of Grades A and B to honour pre‑existing orders; the application remained pending despite reminders.
  • On 10.07.2026 the Chennai Port Authority instructed Gimpex to export the cargo and vacate the port, while the company continued to incur storage and handling charges.

Court’s Analysis

  • Retrospectivity & Vested Rights (Question I): The notification applies prospectively from 17.04.2026 and does not affect exports completed before that date. Gimpex had not completed export formalities (no shipping bill or Bill of Lading) before the notification; therefore, no vested right arose. The Court rejected reliance on Kanak Exports and Asian Food Industries as inapplicable.
  • Legitimate Expectation & Promissory Estoppel (Question II): No specific promise was made by the Union or DGFT that Baryte would remain free or that a grace period would be provided. The policy itself allows for change; thus, the petitioners’ claim of legitimate expectation fails.
  • Arbitrariness & Article 19(1)(g) (Question III): The Court held that reasons need not be stated on the face of a notification issued under the Act. The restriction is based on strategic‑national‑security considerations (fall in strategic mineral reserves, oil & gas & defence sector needs). The licensing regime is a proportionate, less restrictive alternative to a ban; therefore, the notification is not arbitrary.
  • Para 1.05(b) & ICLC Condition (Question IV): The requirement of an ICLC is a rational differentiation because an ICLC is bank‑backed and irrevocable, whereas other payment modes are not. The classification is constitutionally valid; the petitioners’ lack of an ICLC disqualifies them from transitional protection.
  • Pending Licence Application (Question V): While the DGFT may hold applications pending a policy review, it cannot leave them undecided indefinitely. Section 3(2) of the Act permits restriction, not prohibition. The Court directed the DGFT to decide the pending application within four weeks, after a personal hearing, and to issue a reasoned order.

Final Outcome

  • The petition’s prayers for a declaration that Notification No.12/2026‑27 and Para 1.05(b) are unconstitutional are rejected.
  • The prayer for a direction to clear shipping bills without a licence is rejected.
  • The DGFT (second respondent) must decide Gimpex’s licence application dated 22.04.2026 for a restricted‑export authorisation within four weeks of receipt of the order, after a personal hearing, and communicate a reasoned order.
  • While deciding, the DGFT must consider: (a) procurement through APMDCL tender and full payment before 17.04.2026; (b) absence of a domestic market for Grade A & B lumps; (c) shipping delay caused by the Strait of Hormuz conflict; (d) economic hardship and mounting port fees; (e) national‑security concerns raised by the National Security Council Secretariat.
  • The pendency of the policy review does not justify leaving the application undecided; any future policy change may be taken into account, but the four‑week deadline remains.
  • No order as to costs; connected interim applications stand closed.

Topics: Export Policy, Strategic Minerals, Judicial Review