It turns out; when you create a foreign key like this:

$table->integer('pick_detail_id')->unsigned();
$table->foreign('pick_detail_id')->references('id')->on('pick_details');

Laravel uniquely names the foreign key reference like this:

<table_name>_<foreign_table_name>_<column_name>_foreign
despatch_discrepancies_pick_detail_id_foreign (in my case)

Therefore, when you want to drop a column with foreign key reference, you have to do it like this:

$table->dropForeign('despatch_discrepancies_pick_detail_id_foreign');
$table->dropColumn('pick_detail_id');

Update:

Laravel 4.2+ introduces a new naming convention:

<table_name>_<column_name>_foreign