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Tapti Oil Industries and anr. Etc. Vs. State of Maharashtra and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtMumbai High Court
Decided On
Case NumberWrit Petn. Nos. 988 and 989 of 1983
Judge
Reported inAIR1984Bom161; (1984)86BOMLR67; 1984(2)ECC307; 1984MhLJ321
ActsEvidence Act, 1872 - Sections 115; Constitution of India - Articles 14 and 226
AppellantTapti Oil Industries and anr. Etc.
RespondentState of Maharashtra and ors.
Appellant AdvocateM.N. Kothari and;N.Z. Khapra, Advs.
Respondent AdvocateV.H. Gumaste and;A.C. Agrawal, Advs. and;M.F. Saldhana, Asst. Govt. Pleader
Excerpt:
constitution of india - writs under constitution--promissory estoppel--exemption--new industrial unit--state government announcing package scheme of incentives for new industries in state--issue of notification under section 41 of sales tax act to give effect to scheme for sales tax exemption--scheme providing that unit completing initial and final effective steps not automatically entitled to incentive--letter of intent/eligibility certificate to be obtained for availing of benefit of scheme--whether implementing agency vested with complete discretion to reject prayer for letter of intent/eligibility certificate on ground that no right was vested in applicant-unit to get eligibility certificate--whether state government can be compelled by court in writ petition to grant eligibility.....chandurkar, actg. c.j.1. these two petitions, in each of whi(air 1968 sc 718)ch petitioner no. 1 is a partnership firm and petitioner no.2 is a partber, raise a question as to whether the petitioners can claim a right to issue of an eligibility certificate under a scheme framed by the state government under which several incentives were promised to small scale, medium and large industries with a view to speed up the pace of industrialisation of the developing industries in the state. the petition was required to be heard by the full bench because on the construction of the said schemes division bench of this court at aurangabad held that even though the required steps under the scheme are completed, an industry is not entitled to enforce any right for the issue of an eligibility.....
Judgment:

Chandurkar, Actg. C.J.

1. These two petitions, in each of whi(AIR 1968 SC 718)ch petitioner No. 1 is a partnership firm and petitioner No.2 is a partber, raise a question as to whether the petitioners can claim a right to issue of an eligibility certificate under a scheme framed by the State Government under which several incentives were promised to small scale, medium and large industries with a view to speed up the pace of industrialisation of the developing industries in the State. The petition was required to be heard by the Full Bench because on the construction of the said schemes Division Bench of this Court at Aurangabad held that even though the required steps under the scheme are completed, an industry is not entitled to enforce any right for the issue of an eligibility certificate under the scheme under Art. 226 of the Constitution of Inida.

2. A scheme of incentives comprising mainly incentives in the nature of refund of sales tax, relief in electricity duty, octroi duty etc. has been in force in Maharashtra since 1964 . That scheme was modified and the period of the scheme, as modified from 1st Aug 1966, expired on 31st Oct. 1979. The Government having applied its mind to the question of revising and integrating the scheme having applied its mind to the question of revising and integrating the scheme and making it more broad-based formulated a modified scheme of incentives with effect from 1st Aug. 1979 for the period 1st Aug 1979 to 31st March, 1983. Under this scheme the area of the State of Maharashtra was grouped under four groups A,B, C and D with reference to the nature of the development that had already taken place. The petitioners in Writ Petition No. 988 of 1983 are from Bhusaval in Western Maharashtra and they are in Bombay Division, District Jalgaon being in Group C. The scheme notified that incentives under it would be available to eligible units in the private sector also along with the state public sector/joint sector and the co-operative sector. Clause 2.1 of the scheme dealt with the ''ate of effect of eligibility under Part I' of the 1979 scheme would be issued effective from the dated of commencement of commercial production and the said date would be determined by the implementing agency on the totality of the documentary evidence led by the eligible unit in this behalf as also such other information, details etc. required or called for inconnection electricity consumption bills over a period, first sale bill, excise licence, extract of excise register or of production register, etc. Effective steps for the purposes of the 1979 scheme were classified into ' initial effective steps'. And 'final effective steps' in paragraph 2.3 of the scheme . Under Explanation II to this clause it was provided that based on the documentary evidence led by the eligible unit in this regard, the implementing agency shall determine the date on which all the effective steps both initial and final . are completed. The scheme gave capital investment, local sales tax law and other terms appearing in the scheme . Under clause 2.12 the period of eligibility under Part I of the scheme in regard to the eligible unit was to be three years, five years, seven years, nine years or 13 yearss, as the case may be, depending on the nature and location of the eligible unit, during which the sales tax incentive could be available to the unit subject to fulfilment of the conditions of the scheme. The implementing authority nominated under the scheme was the state Industrial and Investment Corporation of Maharashtra Ltd. For each of the four regions of the State of Maharashtra , there was a development corporation. Clause 44 of the scheme referred to application for eligibility and since the whole dispute in the petition is whether this application made by the petitioners could be granted or not, we reproduce the said paragraph:-

'4.4 The application for eligibility under the 1979 scheme shall be filed by the eligible unit after it has taken the initial effective steps. Any application filed earlier will nto be entertained by the implementing Agency concerned. The application for eligibility should be supported by documentary evidence in regard to the initial effectives steps taken by the Unit'.

Clause 4.5 of the scheme provided that for claiming eligibility under the 1979 scheme. The eligible unit should not only file the application for eligibility but should also complete all the effective steps (that is both initial and final effective steps before making the application for eligibility. Clause 4.6 which is headed 'claim for Incentives' reads as follows.-

'4.6 No right or claim for any incentives under this scheme shal be deemed to have ben conferred bny the scheme merely by virtue of the fact that he unit has fulfilled on its part the conditions of the scheme. The incentives under the scheme cannot be claimed unless the letter of Intent/Eligibility Certificate has been issued under the Scheme by the Implementing Agency concerned and the unit has complied with the stipulations conditions of the Letter of Intent / Eligibility Certificate.'

Clause 5.1 to 5.10 deal with sales tax in centive part-I and clauses 6.1 to 6.6 deal with sales tax incentive Part-II . then there are other incentives such as special capital incentives. M. I. D. C. incentive subsidy on industrial housing and other incentives specified in Clause 11.1 and 11.2 . We are not concerned with the details of these incentives and it is, therefore, not necessary to produce the relevant clauses.

3. Now admittedly a notification under S.41(1) of the Bombay sales Tax Act, 1959, has been issued by the state Government which has the effect of amending an earlier notification dated 28th December , 1959 issued under the same provision. By this new notification dated 5th July, 1980 with a view to give effect to the scheme for sales tax exemption, Entry 136 has been added as follows:-

'(a) Sales, by a Registered dealer, being an industrial unit set up in the developing regions of the stated of Maharashtra and certified by the State Industrial and Investment Corporation concerned , as an eligible unit and to whom a certificate of entitlement has ben granted nby the commissioner for the purpose of this entry, of goods, manufactured in the said unit, made during the period covered by the certificate of entitlement.

(b) Sales on any goods by a registered dealer to a registered dealer being an eligible industrial unit referred to in clause (a).

(c) Purchase of any goods by a Registered dealer, being an eligible industrial unit referred to in clause (a), from an unregistered dealer, during the period covered by the certificate of entitlement'. The exemption in respect of goods under clauses (a) and (b) is 'whole of tax' and under clause (c) the exemption is 'whole of purchase tax'.

4. Now, according to the petitioners, they made an application for eligibility certificate, as contem,plated by the 1979 scheme , to respondent No.2 after having completed the initial and final effective steps, on which an officer of respondent No. 2 by name Mr. Pendo had visited the factory premises and had actually reported to respondent No. 2 that all the initial as well as the final effective steps have been completed. According to on behalf of the respondents -a letter also intent dated 22nd October . 1982 was also issued by respondent No.2 mentioning that the implementing agency under the 1979 scheme is prepared to issue an certificate for the establishment of the manufacturing unit as survey No. 199/3, Varangaon Road, Bhausawal in the developing region of the State of Maharashtra. Clause 2 of this letter of in ent says:

'The Eligibility Certificate for the New Unit will be issued only on your fulfilling the conditions/stipulation/ requirements as set out in the 1979 scheme and the procedure framed thereunder and also as detailed in the annexure here to.'

5. According to the petitioners, they have commenced production on 27th October ,1982 and thereafter by letter dated 16th Decemeber. 1982 asked for issue of the eligibility certificate under the scheme. An averment has been made in the petition that the eligibility certificate has been withheld by respondent No. 2 on account of pressure being exerted by old and established oil mills who have not taken kindly tone units being started/ It is also stated in the petition that some oil mills have already been granted eligibility certificates and such certificates have been given to the new units in other industries also. A list of such industries to whom eligibility certificates have be3n issued is filed along with the petiton as Ex. H, in which reference is made two oil mills at Jalgaon. According to the petitioners, relying on the representations madein the 1979 incentive scheme, they have invested a large amount of Rs. 1.95.000/- for the establishment of the oil mill at Bhusawal and for commissioning the same, which they would not have done but for the promise of incentives contained in the incentive scheme. The petitioners have , thererfore, filed this petition under Art. 226 of the Constitution, in which the prayers is that a writ should be issued to the respondents directing them to issue to petitioner No. 1 eligibility certificate in respect of the oil mill of petitioner No. 1 at Bhusawal for a period of 7 Years effective from 27th October , 1982 under the 1979 scheme of incentives. A prayer is also made that the respondent should be directed to grant to petitioner No. 1 all applicable incentives under the said scheme as well as an entitlement certificate contemplated by Entry 136 of the schedule to the Government Notification issued under S. 41 of the Bombay Sales Tax Act for a period of f 7 years effective from27th October , 1982 in respect of purchases and sales for their oil mill at Bhusawal.

6. This petition was filed on 11th March, 1983. A very sketchy return has been filed on behalf of the respondent in which a reference has been made to the Division Bench decision of the respondent in which a reference has been ,made to the division Bench decision of the Aurangabad Bench of this Court in S..K . Oil and Pulses Mill v. State of Maharashtra (Writ petition No. 770-A of 1982) decided on 5th April , 1983. The stand taken is that in this decision the Division Bench has held that no right was created in favour of any industrial unit under the package scheme of incentives unless the letter of intent/eligibility certificate was issued to ti under the scheme and, therefore, such units cannot claim incentives under the scheme as a matter of right/. Reference was also made in the return to a Government Resolution dated 16th June 1983 which was issued consequent upon the decision of the Division Bench in the S.K. Oil and Pulses Mill case by which the 1979 scheme was amended and,.according to the State Government, all the oil mills who have completed all effective steps before 31st March 1983 were allowed to avail of incentive under the scheme only by way of sales tax deferral for the correspondent eligibility period, that is 5/7/9years in B/C/D area and the quantum of sales tax benefit to the extent of 100% of the fixed capital investment made by the units in the back ward areas. The case of the Government was that in view of the said government Resolution . the petitioners' grievance did not survive any longer and the petitioner was liable to be rejeected.

7. When this matter came up for hearing before the Division Bench and naturally reliance was placed on behalf of the State Government on the decision in S. K. Oil & Pulses Mill case1983 Mah LR 305, the petitioners took a stand that the decision of the Division Bench needed reconsideration. We shall refer to the view taken by the Division Bench which needed reconsideration a little later. But as it was found that the view taken by the Division Bench with regard to the nature of the right created under the 1979 scheme and on the question of enforceability of the right under the scheme under Art. 226 of the Constitution of India, as well as the view taken on a similar grievance made by the petitioners in the Aurangabad case with regard to the violation of the right. Under Art. 14 of the Constitution, because there also a grievance was made that the petitioners have been discriminated against, needed reconsideration, the petition it self was referred to the Full Bench by the order of reference dated 14th July, 1983 . that is how this petiton is now being heard by this Full Bench.

8. The claim of the petitioners in this petition is now restricted to a claim for grant of eligibility certificate under the terms of the 1979 scheme. It has not been denied that the petitioners have completed the initial and the final effective steps which are contemplated by clause 2.3 of the scheme and they have prayed for granting the eligibility certificate. Under cl 4.6 which we have reproduced earlier, it is clearly laid down that the incentives under the scheme cannot be claimed unless the letter of intent/eligibility certificate has been issued under the scheme by the implementing agency itself and the unit has complied with the stipulation conditions of the letter of intent/eligibility certificate. The possession of an eligibility certificate is, therefore, a condition precedent for claiming incentives under the scheme. It is not necessary for us to go into question as to whether the petitioners' claim for eligibility certificate is valid or not because it has been fairly conceded by Mr. Gumaste appearing on behalf of the respondents that if the petitioners have an enforceable right to ask for eligibility certificate and such right can be claimed on the basis of promissory estoppel and if the decision in S.K. Oil and Pulses Mill case 1983 Mah LR 305 does not lay down the correct law, then the petitioners will be entiled to the eligibility certificate. Indeed Mr. Gumaste has gone to the extent of making a statement before us that the respondents have no objection and indeed are willing to grant the eligibility certificate to the petitioner straightway. However, since the learned counsel for the petitioners has argued the he is relying on the principle of promissory estoppel on which the petitioners want to spell out a right in their favour to get an eligibility certificate and the promissory estoppel arising out of the representations made in the 1979 scheme and the co9nsequent. Acting upon those representations by the petitioners in incurring a large amount of expenditure by setting up an oil mill and the petitioner want the promissory estoppel to be enforced as a cause of action, it has become necessary to consider whether the view taken by the Division Bench in S.K. Oil and Pules Mill case that the scheme creates no enforceable rights in favour of an industrial units which has acted upon the representations made in the incentive scheme is correct or not.

9. It is, therefore, necessary to briefly refer to the decision in S.K.Oil and Pulses Mill case 1983 Mah LR 305. The scheme under which the petitioners in that case were also claiming eligibility certificate was the 1979 incentive scheme in question in the present case. The petitioners in that case had obtained a provisional registration a small scale industry from the Director of Small Scale Industries and had completed all the therefore , applied for the eligibility certificate on 18th February , 1981. The petitioners in that case had alleged that they had also obtained sanction for the grant of a loan fo Rs . 14,42,00/- and had commenced production on 26th January , 1982 . The respondent having failed to grant them the eligibility certificate , they had filed a petition under Article 226 of the Constitution of India , which came to be heard by the Aurangabad bench of this Court. The main stand taken by the Government before the Aurangabad bench was that the incentives under the scheme could not be claimed as a matter of right unless the letter of intent/ eligibility certificate had been issued under the scheme by the implementing agency concerned and the unit had complied with the stipulations /conditions of the letter of intent/ eligibility certificate. The Government had also taken the stand there was a mushroom growth of oil mills and the government therefore, wanted to ensure that only genuine oil mills were brought into the purview of the 1979 package scheme. Therefore, the authorities were asked to make the necessary recommendations and the intention of the Government in constituting the Maharashtra State Oilseeds Commercial and Industrial Corporation was to ensure encouragement to the genuine oil industries and that is why the said Corporation was asked to make its recommendations. The Corporation was asked to process the applications and scrutinise the various proposals given by the units. The Government had, therefore, taken the stand that it had no intention to delay the issue of the eligibility certificate but that their bona fide intention was to ensure that the benefits were conferred on legitimate units.

10. After exhaustively setting out the details of the scheme the Division bench referred to the contention of the petitioners that they were not claiming any right under any statue or under the law buth that they were claiming the right on the principle of promissory estoppel as enunciated by the Supreme court in several decisions. The Division Bench then went on to exhaustively refer to the authorities in which the concept of the authorities in which the concept of promissory estoppel was discussed. Reference was mad e to the decision in Century Spinning and . and Anr. v. The Ulhasnagar Municipal Council and Anr. : [1970]3SCR854 , Motilal Padampat Sugar Mils co. Ltd. v. State of U.P. . : [1979]118ITR326(SC) , Jit Ram shiv Kumar v. State of Haryana : [1980]3SCR689 , and after a resume of these decisions , in paragraph 35 of he judgment, the division bench summarised the principles of promissory estoppel as follows:-

'(1) The principle of promissory estoppel can be attracted even in the case of the Government acting in its executive capacity;

(2) There must be sufficient representation made; and

(3) The person must have acted on that representation to his detriment on the faith of the represention, then the doctrine of promissory estoppel becomes applicable irrespective of the fact whether the Government is a party to the transaction.'

It may be pointed out that while referring to the decision in the Anglo Fghan Case AIR 1968 SC 718 , the Division Bench observed that the scheme in that case was made under the provisions of the Imports & Exports (control) Act and that it was based on this Act. The division bench also made a reference to the decision of the Gujarat High court in Kothari Oil Products Co. v. Govt. of Gujarat : AIR1982Guj107 and a general observation was made with reseed to all the cases cited that 'after having gone carefully through all the judgments, including the judgment of the supremen Court in Jit Ram's case : [1980]3SCR689 it is not possible to hold that these cases have gone into the particular provisions of the particular schemes as were challenged before the Courts and which were Considered by the courts.' (Paragraph 36) The Division Bench, therefore, found that the decisions in Motilal Padampat's case : [1979]118ITR326(SC) and the decision in the Gujarat case were distinguishable on facts and could not assist the petitioners.

11. It appears that it was argued before the Division Bench on Behalf of the State that he doctrine of promissory estoppel was not available against the Government acting in its executive capacity relying on the decision in Jit Ram's case/ This contention was negatived by the Division Bench by observing that 'The fact whether the Government is bound by its promises made in executive capacity or not is now put beyond doubt by the judgments of the Supreme Court'. (Paragraph 40) The Division Bench therefore, clearly rejected the contention advanced on behalf of the State Government that the principle of promissory estoppel was not available when the Government acts in its executive capacity.

12. The Division bench, However further took the view that even assuming that the petitioners were entitled to rely on the doctrine of promissory estoppel the court was not in a position to assist them because the scheme, 'which is the backbone of the claim of the petitioner made in this petition, is not framed under the provisions of any statute or law and , therefore, it cannot be said that it has the force of law and the right of the petitioners is enforceable thereunder as being legal.' It may be pointed out that these observations were p[receded earlier by the observations that the scheme in the Anglo Afghan case AIR 1968 SC 718 was of a legislative character and not of an executive character. Therefore, one of the grounds on which the petitioners were held disentitled to relief was that the 1979 scheme was not framed under any statute or law. (See paragraph 43) When reliance was placed on behalf of the petitioners on the decision of the privy council in Alcock Ashdown & co Ltd. ************** Bombay AIR 1923 PC 138, the Division Bench once again retreated that the ratio of that decision would not be attracted because the Division Bench was dealing with an executive scheme. What was argued on behalf of the petitioners before the Division Bench was that the petitioners having satisfied the requirements for an eligibility certificate the power to grant the eligibility certificate has now turned into a duty to grant the certificate to the unit.

13. The Division Bench then referred to clause 4.6 and on a construction of that clause 4.6 and on a construction of that clause took the view that the clause clearly indicated that ' no right or claim will be conferred on any unit even if such a right frame into existence'. In other words, the Bench took the view that even if a right had accrued because of the fulfilment of the conditions required for getting the certificate of eligibility because of the clear provision in clause 4.6 the petitioners were not entitled to claim any right whatsover in cluding the right to claim the incentive or any claim for incentive. In paragraph 46 of the judgment, the Bench positively took the view that Assuming that the principle of promise stopple is attracted and available to the petitioner, however , in view of the provisions of the scheme especially those contained in clause 4.6 , it is difficult for us to grant any relief to the petitioner in this case as claimed by him'. The division Bench further took the view that the implementing agency under the scheme was the final authority for deciding the dated of commencement of the effective steps and it is that agency alone which is competent to grant the leigibility certificate and it was not possible to say that the discretion and the power of the implementing agency is qualified or fettered by the unilateral actions of the units which were required to fulfill certain conditions or certain formalities before they apply for the eligibility certifocate. The division Bench made it clear that since the Bench had reached the conclusion that no right arises in favour of the petitioners , they had not thought it necessary to examine the contents of the representations which were relied upon for invoking the doctrine of promissory estoppel.

14. The contention that there was a violation of Art. 19(I)(g) of the Considering the plea of violation of Art. 14 of the Constitution, the Division Bench took the view that since the Government was not acting under any law which deprives a person of equality before law and even though it was shown that certificates of eligibility were granted to some other units, 'The fact that certain units have ben granted the eligibility certificate is of no significance when it cannot be said that the Government is acting under any law', and that there was no discrimination within the meaning of Art. 14. In the course of the judgment, the Division Bench observed:

'Article 14 commands the State not to act discriminatorily and it is not an article which confers any right on citizens like Art. 19. Having regard to these facts, it cannot be said that the action of the Government can be challenged on the ground that it is violative of Article 14'.

Having taken thee view which we have referred to above, the Division Bench rejected the petition.

15. Substantially thee conclusion of the Division Bench can be summarised as follows:-

The incentive scheme of 1979 is a scheme made in thee exercise of executive power of the State.

It does not create any right in favour of the petitioners which can be enforceable under Art. 226 of the Constitution.

The fact that other units have been given eligibility certificates does not enable the petitioner to invoke the provisions of Art. 14 of the Constitution be cause Art. 14 is only a mandate to the State not to act discriminatorily and confers no rights on citizens.s

16. By the mere satisfaction of the conditions laid down in the scheme, automatically no right accrues in favour of the manufacturing unit to get the eligibility certificate.

(5) The satisfaction of the conditions under the scheme does not necessarily require the implementing authority to grant the certificate, which has a discretion in the matter.

17. Each one of these findings has been very vehemently challenged on behalf of the petitioners in this petition.

18. It has been contended before us by Mr. Kothari that the fact that the Scheme is not made under any law does not prevent the petitioners from contending that there is an enforceable right because the principle of promissory estoppel is available against even executive action of the State. In other words, it is contended that it is not necessary for invoking the doctrine of promissory estoppel to trace the right to any action of the Government under legislative enactment and even an executive action of the State could in given circumstances give rise to a right which a person is entitled to enforce under Art. 226 of the Constitution of India.

19. Now, so far as the principle of promissory estoppel is concerned, it is really too late in the day to contend that it cannot provide a cause of action to a person if there is sufficient material which shows that on certain representations made by the State or by the authority of the State, a person has changed his position and this must necessarily result in preventing the State from going back on its representations. We need not go back to the leading authority on the concept of promissory estoppel in the Anglo Afghan case AIR 1968 SC 718 But it is necessary to point out that thee question of promissory estoppel arose in that case out of a dispute as to whether the provisions of the Export Promotion scheme of 1962 declared by the Textile Commissioner created rights in favour of the Anglo Afghan Agency, which could be enforced against the Textile Commissioner, Under the Export Promotion Scheme, which was extended to exports to Afghanistan, the exporters were invited to get themselves registered with the Textile Commissioner for exporting woolen goods and it was represented that the exporters would be entitled to import raw material fo the total amount equal to 100% of the F.O.B value of the exports. Under the Scheme the Textile Commissioner had an authority, if it was found that a crapulent export was made to secure an import in excess of the true value of the goods exported to reduce the import certificate. Thee Anglo Afghan Agency, which was a firm dealing in woolen goods at Amritsar, exported woollen goods of the value of Rupees 5,03,471.73. However, the Textile Commissioner issued to the firm an import entitlement certificate only for Rupees 1,99,459/- The Anglo Afghan Agency, therefore moved a petition under Article 26 of the constitution for an order directing the Union of India, the Textile Commissioner and the joint Chief controller of Imports and Exports, Bombay, to issue an import licence of the amount equal to the value of the export minus the value of the certificate granted. The writ petition was allowed and the Union of India filed an appeal before the Supreme Court. While dismissing the appeal, the Supreme Court observed in paragraph 23 as follows:-

'Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an exparte appraisement of the circumstances in which the obligation has arisen.'

The scope of the concept of promissory estoppel was once again considered by the Supreme Court in Motilal padampat Sugar Mills Co.Ltd. v. State of U.P., : [1979]118ITR326(SC) . The scheme in that case was also similar to the scheme in the present casee. There was a news item which appeared in newspaper National Herald in which it was stated that the State of U.P. had decided to give exemptions from sales tax for a period of three years under S.4A of the U.P. Sales Tax Act to all new industrial units in the State with a view to enabling them to come on firm footing in developing stage. This news item itself was based upon a statement made by the Secretary in the Industries Department of the Government. The M.P. Sugar Mills on the basis ;of this announcement addressed a letter to the Director of Industries stating that in view of the Sales Tax Holiday announced by the Government, they intended to set up a Hydrogenation Plant for manufacture of Vanaspati and sought for confirmation that this industrial unit would be entitled to sales Tax holiday for a period of three years from the date it commences production. The Director of Industries specifically stated in re3ply that there would be no sales tax for three years on the finished product of the proposed Vanaspati factory from the date it gets power connection for commencing production. There was a further letter from the Chief Secretary himself dated 23rd January, 1959 that the proposed Vanaspati factory would be entitled to exemption from U.P.sales tax for a period of three years from the date of going into production and that ths would apply to all Vanaspati sold during that period in Uttar Pradesh itself. The Supreme Court held that the letter of 23rd January, 1959 clearly showed that the representation was made in the capacity of Chief Secretary of the Government and it was, therefore, a representation on behalf of the Government. It was pointed out that the M.P.Sugar Mills had on the basis of the representation borrowed moneys from various financial institutions and purchased plant and machinery and, therefore, the facts necessary for invoking the doctrine of promissory estoppel were, therefore, clearly present. It was held that the Government was bound to carry out the representation and exempt the M.P.Sugar Mills from payment of sales tax in respect of sales of Vanaspati effected by it in the State of Uttar Pradesh for a period of three years from the date of commencement of the production.

20. Stating the Indian law with regard to promissory estoppel, the Supreme Court in paragraph 19 observed as follows:-

'When we turn to the Indian law on the subject it is heartening to find that in India not only has the doctrine of promissory estoppel been adopted in its fullness but it has been recognized as affording a cause of action to the person to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise. The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived.'

It may be pointed out that the defence of executive necessity has not been urged before us by Mr. Gumaste on behalf of the respondents Referring to the decision of the Anglo Afghan Agencies a case AIR 1968 SC 718 the Supreme Court in paragraph 23 pointed out that that case laid down that a party who has, action in reliance on a promise made by the Government, altered his position, is entitled to enforce the promise against the Government, even though the promise is not in the form of a formal contract as required by Article 299 and that the Article does not militate against the applicability of the doctrine of promissory estoppel against the Government. The Supreme Court further observed in paragraph 24 as follows:-

'The law may, therefore, now be taken to be settled as a result of this decision (reference is to Anglo Afghan Agencies case), that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government, at the instance of the promisee, not with standing that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as require by Art. 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one, howsoever high or low, is above the law. Every one is subject to the law as fully and completely as any other and the Government is no exception. It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter.'

In the same decision, it was pointed out that if the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. It was pointed out that the burden would be on the Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the Court would insist on a highly rigorous standard of proof in the discharge of this burden, Here it may be pointed out that it is not the case of the Government that there was supervening public interest which required that the eligibility certificate should not be issued to the petitioners.

21. So far as the detriment is concerned, the Supreme Court has clearly pointed out in the M.P.Sugar Mills case : [1979]118ITR326(SC) that in order to invoke the doctrine of promissory estoppel, it is not necessary for the promisee to show that he suffered detriment as a result of acting in reliance on the promise. But it was pointed out that if by detriment was meant injustice to the promisee, which would result if the promisor were to recede from his promise, then the detriment would certainly come in as a necessary ingredient. These two authorities, in our view, are sufficient to show that if certain representations are made by the State Government, the question as to whether those representations are made in the exercise of its executive power or not is not relevant and if the promisee has acted on those representations and altered his position, then it will not be permissible for the State to resile from its promise or representation to the prejudice of the person who has acted under that promise.

22. It is undoubtedly true that in Jit Ram Shiv Kumar v. State of Haryana : [1980]3SCR689 , the limitations on the applicability of the doctrine of promissory estoppel have ben laid down, but that decision does not dilute the authority of the decisions of the Supreme Court in the Anglo Afghan Agencies case AIR 1968 SC 718 and the M.P. Sugar Mills case : [1979]118ITR326(SC) . If we refer to the observations of the Supreme Court in Jit Ram's case in paragraph 50, it will be clear that that decision does not lay down anything different from the two earlier decision of the Supreme Court paragraph 50 it is observed as follows:-

'On a consideration of the decisions of this Court it is clear that there can be no promissory estoppel against the exercise of legislative power of the State, So also the doctrine cannot be invoked for preventing the Government from acting in discharge of its duty under the law. The Government would not be bound by the act of its officers and agents who act beyond the scope of their authority and a person dealing with the agent of the Government must be held to have notice of the limitations of his authority. The Court can enforce compliance by a public authority of the obligation laid on him if he arbitrarily or on his mere whim ignores the promises made by him on behalf of the Government. It would be open to the authority to plead and prove that there were special considerations which necessitated his not being able to comply with his obligations in public interest.'

Now, it is true that in Jit Ram's case : [1980]3SCR689 , it has clearly been laid down that there can be no promissory estoppel against the exercise of legislative power of the State and though at one stage Mr. Gumaste has relied on those observations, he has fairly conceded before us that the determination of the question as to whether on the facts of a given case a person who applies under the scheme for an eligibility certificate has satisfied the requirements specified in the scheme or not, is not a matter which involves the exercise of any legislative power. Such a function is clearly an executive function. When the scheme lays down certain conditions and the only question is whether those conditions have been satisfied or not, we fail to see how the concept of invoking any legislative power can really be brought in.

23. The Division Bench has held that the petitioners were not entitled to rely on the decision in Jit Ram's case : [1980]3SCR689 . This however, does not apear to be correct. Jit Ram's case clearly lays down that in the casee of a promissory estoppel, the Court can enforce compliance by public authority of the obligation laid on him if he arbitrarily or on his mere whim ignores the promises made by him on behalf of the Government. If on the basis of promissory estoppels certain rights under 1979 scheme can be claimed by the petitioners and if there is a corresponding obligation on the implementing authority and if the implementing authority arbitrarily declines to discharge its obligations, then it is obvious that the right claimed by the petitioners could be enforced under Article 226 of the Constitution of India.

24. We are unable to unable to endorse the view of the Division Bench that the scheme being executive in character, no enforceable right can be spelt out on the basis of the scheme in favour of one who complies with the requirements of the scheme and, therefore, claims that he is entitled to the benefits of the scheme. Admittedly excepting the exemption claimable in respect of sales tax which could be referable to the provisions of s. 41 of the Bombay Sales Tax Act, the State Government was not exercising any powers regarding the other exemptions under any statutory law, but the absence pf a statute did not prevent the State government from granting other benefits which it thought necessary to great for the purpose of development of the backward regions of the State. Such an action was clearly executive in nature. When some representations are made by the State Government that unless a manufacturing unit complied with the conditions specified in the Scheme, it would not be entitled to certain exemptions or certain benefits, the manufacturing unit or a person interested in entitled to take these promises and representations at their face value and set upon it. The Scheme is really being gien effect to by the State Gobvern,ment itself because it is not in dispute that in the case of the implementation of the Scheme, the eligibility certificates and incentives have been made available to other persons who have claimed those benefits expressly under the scheme. If the petitioners acting on the representation made in the Scheme in cur expenditure, set up a manufacturing unit in the hoe that the State Government will abide by its word and act according to its representations, we fail to see why even while acting in its executive capacity and not under any legislative powers ,the State Government cannot be compelled to abide by the representations made by ti. The jurisdiction of the High court under Article 226 of the Constitution is not restricted only to review of the actions of the State Government under statutory enactments. With the everwidening field of judicial review of administrative actions and executive decisions of the State and in the light of the extended applicability of the doctrine of promissory estoppel, of which the whole object is to see that the Government sticks to its promise and abides by it it is now too late in the day to contend that such a scheme does not vest any right in a person who acted upon those representations and changed his position. The mere fact that the scheme is of an executive nature is by itself not conclusive of the determination as to whether a right is created in favour of a person who acts upon the representations made by the State. It will be too broad a principle to lay down that no executive action of the State Government confers any right on an individual. We are, therefore, unable to concur with the view taken by th4e Division Bench that the scheme being executive in nature, the petitioners are not entitled to invoke the jurisdiction of this Court under Article 226 of the constitution even assuming that the petitioners are entitled to invoke the principle of promissory estoppel.

25. In so far as the view taken by the Division Bench that article 14 of the constitution is merely a prohibition against the state and does not confer any right on an individual inconcerned, it is difficult to endorse that view. Undoubtedly though Article 14 is worded as to read in the form of a pr0hibitiopn against the state,. There can hardly be any controversy today that it is a repository of a very valuable right of equality created by the Constitution in favour of a citizen. Merely because it is worded so as to indicate that there is a prohibition against the State, it cannot be read as indicating that it does not vest any right in a citizen or a person. As observed in constitutional law of India by H. M. Seervai, 3rd Edition , at page 279.

'Article 14 confers a right by enacting a prohibition which in for,. At least, is absolute.'

26. The right of equality under Article 14 is a very valuable fundamental right and any violation thereof can be challenged under Article 226 of the constitution of India. The Guarantee of equal protection clearly extends to purely executive or administrative order unsupported by any staute. (See Satwant singh v. Assistant Passport Officer, new Delhi : [1967]3SCR525 ) . Any arbitrary exercise of power or discretion is clearly challengeable under Article 226 of theConstitution of India. As observed by the Supreme court in Bihar Eastern Gangetic Fishermen Co-operative Society Ltd. v. Sipahi Singh : [1978]1SCR375 , the claim in the case of Anglo Afghan agencies was itself founded upon the equity which arose in their favour as a result of the representation made on behalf of the Government in the scheme in question and yet such a claim was held to be enforceable.

27. We may also point out that the division Bench Seems to have taken the view that the representation for the purpose of invoking the principle of orinussirt estoppel must be accompanied by specific assurance to a specific individual. Undoubtedly, the Division Bench went on to observe that the representation, in order that it may constitute an assurance under the doctrine of promissory estoppel, must be accompanied by some specific assurance to a specific individual. Now, it is true that the scheme is contained in a Govern,enmt Resolution. The Government resolution is one of General applicability. Being a Resolution of General applicability, in a case, like the present one, where it invites industrial units to locate themselves into the backward areas, on a representation that if they do so they will get certain incentives indicated in the scheme it will be no answered to a plea of promissory estoppel that no promise had been made to any particular individual person. The decision of the government to give certain incentives if the conditions laid down are satisfied contained in government Resolution has necessarily to be read as a representation on which the Government expects the people to act. Such representation is enough to induce the persons concerned to act in accordance with that resolution and on the representations made in that Resolution on the assurance that the Government will act in accordance with the representation made in the Resolution. On the assurance that the Government will act in accordance with the representation made in the Resolution. Under the scheme the industrial unit has to a provision small Scale Industries Registration from the Government of India of from the State Government. In the case of the large scale unit covered by the Industries Development and Regulation Act, the unit has to apply for D.G.T.D. registration . thus under the provisions of the scheme , Government deals with these industrial units at individual levels. It is obvious that such units and the Government were both acting on the assumption that their mutual right and obligations would be governed by the provisions of the scheme. Though, therefore, , it will be necessary for a person, who seeks to rely on the destine of promissory estoppel, to shoe that certain promissory estoppel, to show that certain promises or representations were made to him it , is not necessary that these promises or representations must be made expressly only in a communication addressed to that individual. The government had expressly of incentives was being offered with a view to achieve dispersal of industries outside the Bombay-Thane-Belapur belt and if a person satisfies the conditions laid down in the scheme and has acted on the promises and the representations made in such scheme, they could validly be relied upon for the purposes of invoking the principle of promissory estoppel.

28. Coming to the nature of the scheme, it is also difficult for us to agree with the view of the Division Bench that no right is created under clause 4.6 of the scheme and that the implementing authority has still discretion, even, if all the conditions are satisfied , not to issue the eligibility certificate. Clauses 4.6 provides that no right or claim for any incentives under this scheme shall be deemed to have been conferred by the scheme merely by virtue of the fact that the unity has fulfilled on its part the conditions of the scheme., The clause then proceeds further to say that the incentives under the letter of intent eligibility certificate. The division Bench has laid great stress on the use to the word 'deemed' and pointed out that intent of the scheme seems to be that no right is conferred on any unit even if the unit fulfills on its part the conditions of the scheme and in that context observed that the words 'merely by virtue of the fact that the unit has fulfilled on its part' assume importance. The learned counsel for the petitioners has seriously of challenged the further observations of the Division Bench in Para 46 in which they have said:

'The fact that the unit has fulfilled on its part the conditions of the scheme does not make it eligible or gives no right to it to claim eligibility and it appears to us that by introducing this fiction , if any such right would have been imagined to have in existence and even if it existed, the words used in clause 4.6 in the scheme clearly show that no right or claim will be conferred on any unit even if such a right came into existence.'

With great respect to the division Bench we have to point out that such a construction is contrary to the purpose and intent of the scheme and the purpose of clause 4.6. The effect of the several provisions of the scheme is that after the completion of the initial effective steps, the unit has to make an application for eligibility (clauses 4.4) . Clauses 4.5 provides that for claiming eligibility under the 1979 scheme, the eligible unit should not only file the application for eligibility but also complete all the effective steps, that is both the initial and final effective steps on or before 31st March, 1983. The matter before the Division Bench as well as in the petition before us did not relate to a stage where a claim for incentives could successfully be canvassed. The petition before the Division as well as the petition before us relate to a much prior stage where the prayer of the petitioners is that they are entitled to an eligibility certificate. A question of claiming incentives before completing the final effective steps does not arise at all because the application for an eligibility certificate of the final effective steps though the further requirement of the grant of the eligibility certificate is that the final effective steps must also be completed before the 31st March, 1983. The effect of clause 4.6 and the effect of introducing the fiction is obviously to rule out a claim that merely because the conditions of the scheme have been fulfilled, the industrial unit would be entitled to incentives. The object of the deeming fiction is a very limited object and the use of the deeming fiction is only to rule out the claim which could have been made by an industrial unit for incentives without obtaining eligibility certificate on the grounds in that he has satisfied on the all the conditions in the scheme. As a matter of fact the eligibility certificate and the claim for incentives are two different things as contemplated in the scheme itself. Incentives are given after the grant of eligibility certificate because the latter part of clause 4.6 makes it very clear that incentives under the scheme cannot be claimed unless the eligibility certificate has been issued under the scheme and the unit has complied with the stipulation or condition or in the eligibility certificates. It is difficult for us to read this clause 4.6 as vesting a complete discretion in the implementing authority to reject a prayer for letter of intent or eligibility certificate on the ground that no right was vested in the industrial unit to get an eligibility certificate . If the scheme has to be implemented, then it is obvious that on completion of the initial and final effective steps before 31st March, 1983, if there is no default on the part of the industrial unit, the industrial unit , the industrial unit will be entitled to contend that a right has vested in it to get the necessary eligibility certificate and that right can be enforced under Art 226 of the constitution.

29. The division Bench has also referred to the provisions of clause 2.1 and the Explanation 2 to clause 2.3. Under clause 2.1 a duty is cast on the implementing agency to determine the date from which the eligibility certificate will be effective. That date is the date of commencement of commercial production and this has to be determined by the implementing agency on the totality of the documentary evidence led by the eligibility unit in this behalf as also other information . It also provides that on the documentary the date on which all the effective, steps both initial and the final, are completed and the decision of the implementing agency in this regard is made final and binding. A bare reading of these clause will indicate that there is a duty cast on the implementing agency firstly to determine on which date the effective and the final steps have been completed and secondly to determine the date of commencement of commercial production and once these dates there determined, then the implementing agency is to issue the eligibility certificate on the application made under clause 4.4 The whole scheme, therefore, is that the implementing agency has to act according to the mandate of the scheme itself . If a particular industrial unit has satisfied the implementing agency that it has complied with the requirements of the scheme, we do not see what other alternative the implementing agency that it has complied with the requirements of the scheme, we do not see what other alternative the implementing agency has except to grant the eligibility certificate unless it is able to give any valid grounds on which it declines to issue the eligibility certificate. The adoption of any other course by the implementing any other course by the implementing agency would clearly amount to acting arbitrarily and once again such a conduct of the implementing agency would be subjected to scrutiny under Art. 226 of the Constitution as being the conduct of a public authority.

30. In view of what we have said above, we must overrule the decision of the Division Bench in s.K. Oil and Pulses Mill case 1983 Mah LR 305.

31. Before us the State Government has totally relied on the decision of the division Bench in s.K. Oil and Pulses mill case. None of the grounds on which the claim of the petitioner in the S. K Oil and Pulses Mill case was rejected is, as already pointed out, sustainable. Mr. Gumaste was, therefore, not in a position to resist the contention that the rights claimed by the petitions for an eligibility certificate were enforceable on the ground of promissory estoppel . As already pointed out, nothing has been shown on behalf of the Government as to why the petitioners would not be entitled to a writ directing respondents Nos. 1 and 2 to issue the eligibility certificates to them. The final and effective steps have been completed before 10th January, 1983, the application for certificate of eligibility has been made long before 31st March , 1983 and, in our view, the petitioners have substantiated their right to get the eligibility certificate as contemplated by the 1979 scheme. Accordingly the petitioners are entitled to the relief.

32. The petitioners will, therefore, be entitled to a writ directing respondents Nos. 1 and 2 to issue eligibility certificate in respect of the Oil Mill of petition No. 1 at Bhusawal. The petitioners will be entitled to costs of this petition.

Writ Petition No. 989 of 1983.

33. It is in dispute that the decision just rendered in Writ Petition No. 988 of 1983 will also govern this case,. In view of that decision , the petitioners will be entitled to a writ directing respondents Nos. 1 and 2 to issue to petitioner No. eligibility certificates in respect of the oil mill Satana in Nasik District. However, there will be no order as to costs of this petition.

34. Order accordingly.


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