Saturday, 26 September 2015

When doctrine of promissory estoppel is not binding on govt?


 In M/s Motilal Padampt Sugar Mills Company supra, this
Court, on an exhaustive survey of the law pertaining to the doctrine
of promissory estoppel held that the same was an equitable doctrine
that would yield when equity so required. While propounding that
the same had been evolved to avoid injustice where it is
demonstrated that a party acting on the words or conduct of
another, amounting to clear and unequivocal promise and intended
to create legal relations or effect legal relationships to arise in the
future had altered his position, then the promise would be binding
on the promisor and he would not be permitted to renege therefrom
unless it would be inequitable to compel him to do so. While
extending this doctrine to the Government as well, it was
enunciated that if it can be shown that having regard to the facts as
had subsequently transpired, it would be inequitable to hold the
Government to the promise made by it, the Court would not raise
the equity in favour of the promisee and enforce the promise against
the Government. Their Lordships held that the doctrine of the
promissory estoppel would be displaced in such a case, because on
the facts, equity would not require that the Government should be
held bound by the promise made by it. That aside overriding public
interest against enforcement of the doctrine qua the Government, it
would be still competent for it to depart from the promise on giving
reasonable notice which need not be a formal one, affording the
promisee a reasonable opportunity of resuming his position was
underlined. We consider it inessential to dilate on the other
decisions cited on behalf of the respondents on this theme as these
are in essence in reiteration of the above proposition.
 {REPORTABLE}
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 3962 of 2011
UNION OF INDIA & ORS. ……APPELLANTS
 Vs.
SHRI HANUMAN INDUSTRIES & ANR. ….RESPONDENTS
Citation: 2015VI AD (S.C.) 644, (2015)4MLJ470(SC), 2015(6)SCALE185, (2015)6SCC600
Amitava Roy, J.

1. All these appeals seek to impeach the decision rendered by the
Guwahati High Court (Shilong Bench) in a batch of Writ Appeals
preferred amongst others by the respondents herein being aggrieved
by the dismissal of their respective writ petitions, questioning the
refusal of the appellants to sanction financial assistance to them
under the “Scheme of Promotion of Industries in North East”
(SPINE) on the ground of delay and laches. By the determination
made in the appeals, the grievance of the respondents has been
redressed primarily on the basis of the adjudication made earlier by
the same High Court in Writ Petition(C) No. 279 (SH) of 2007 since
affirmed by this Court by Order dated 01-05-2009 rendered in
SLP(C) 9578-9584/2009.
2. We have heard Dr. Abhishek Atrey, learned counsel for the
appellant and Ms. N. Saikiya, learned counsel for the respondents.
3. The individual facts qua the respondents marginally vary and
do not demand separate dilation in the face of the common issues
that need to be addressed. Common arguments have also been
advanced. The pleadings pertaining to Civil Appeal No. 3962/2011,
Union of India and Ors. vs Shri Hanuman Industries & Anr. would,
therefore, be outlined for the factual foundation of the debate.
3.1 In the year 1997, a policy decision was taken by the Planning
and Development Department, Government of India for promotion
of industries in the North East Region, during the period of 9th Plan
by providing inter alia a package of incentives to create an
entrepreneurial environment. With this objective, a scheme
nomenclatured SPINE, as above, was launched by the Ministry of
Development of North Eastern Region, North Eastern Council,
Shilong (for short DONER). In terms of the scheme, The NorthPage 3
3
Eastern Council (NEC) was to provide to the newly set up industries
to the extent of 25 per cent of the project cost or Rs. 50 lacs,
whichever was less as deemed proper by the recommending
authority on the fulfillment of the conditions stipulated therein.
The Union of India, represented by the Ministry of DONER and the
NEC were entrusted with the role of implementing the scheme.
4. In response to this scheme, which was apparently akin to a
State policy, the respondents on various dates submitted their
applications accompanied by necessary documents for setting up
their industries as mentioned therein inter alia disclosing the
investments made even by obtaining financial accommodation from
banking institutions and otherwise. According to the respondents
though their applications remained pending and they were made to
understand that the same were being processed as per the norms
applicable, it was noticeable, that the implementing authorities
were adopting pick and choose methods in the matter of
disbursement of the financial assistance to a selected few by
overlooking their worthy claims. Page 4
4
5. It is a matter of record that another set of such applicants with
the similar grievance had meanwhile instituted writ proceedings
registered as WP(C) 279 (SH) to 285 (SH) of 2007 and eventually as
adverted to hereinabove a Single Bench followed by a Division
Bench of the Guwahati High Court had entertained the challenge
made therein and the implementing authorities of the scheme were
directed to process the applications of the said writ petitioners for
grant of subsidy under it (SPINE) in accordance with law and for
sanctioning the same to each of them, within a period of ninety
days from the receipt of the copy of the judgment and order. To
reiterate, this Court by its Order dated 01-05-2009 passed in
SLP(C) 9578-9584/2009, declined to interfere with this
adjudication.
6. Be that as it may, a learned Single Judge of the same High
Court by judgment and order dated 07-10-2009, rejected the writ
petitions filed by the respondents herein on the ground of delay and
laches, the decision in the earlier proceedings notwithstanding. This
determination, however, was reversed in the appeals filed by the
respondents, by the common judgment and order impugned herein,Page 5
5
whereby the direction, in the earlier proceedings to the
implementing authority for processing the applications for
investment subsidy under SPINE in accordance with the law was
reiterated vis-à-vis the present respondents. Being aggrieved, the
Union of India and the NEC are before this Court.
7. At this juncture, the admitted facts need be noted. As per the
procedure prescribed, the applications submitted by the
respondents along with the accompanying documents were to be
routed through the Department of Industries of the respective State
Governments to be forwarded to the NEC by the Planning
Department of the State concerned and that no proposal was to be
received directly by the NEC.
8. While the said applications were thus pending a letter dated
05-02-2007 was issued by the Secretary, Ministry of Development
of North Eastern Region etc. New Delhi, addressed to the Secretary
North Eastern Council, Shilong referring to various
correspondences mentioned therein pertaining to request for
reports in respect of alleged financial irregularities in the
disbursement of Grant-in-Aid under SPINE qua each unit forPage 6
6
inquiry. It was underlined in the said letter that the report had been
sought for to positively reach the issuing Ministry by 15-02-2007.
It was in clear terms mentioned that in view of the pending inquiry
and decisions in connection therewith, further
sanction/disbursement of Grant-in-Aid particularly under SPINE
should be stopped forthwith. The letter also contained a caveat that
in case the report was not submitted by the deadline of time given,
the matter would be forwarded for investigation.
8.1 The records reveal that thereafter in the meeting of the
Ministry of DONER to review the scheme of the NEC with particular
reference to SPINE held on 21-02-2007, it was resolved amongst
others that a committee would be constituted to monitor and
evaluate projects before release of funds under the SPINE.
Subsequent thereto, the Deputy Secretary, NEC addressed a letter
dated 23-2-2007 to the Commissioner and Secretary, Planning
Department of the North Eastern States as named therein
intimating about the receipt of a letter from the Secretary, Ministry
of DONER, recommending discontinuance of SPINE immediately.
The letter further required that a review of the liabilities bePage 7
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undertaken and submitted for necessary decision by the Chairman,
NEC. That this view of the Ministry of DONER, had also been
shared with the State Governments, was mentioned. The addressee
was requested to ensure that no new proposal for consideration
under SPINE be forwarded to NEC.
8.2 It is noticeable, that with effect from 01-04-2007, the
Government of India, Ministry of Commerce and Industry,
Department of Industrial Policy and Promotion did approve a
package of fiscal incentives and other concessions for the northeast
region named “Northeast Industrial and Investment Promotion
Policy (NEIIPP) 2007”. Parallely by a communication dated
04-09-2007, the Government of India, Ministry of DONER reiterated
its request to the Industries and Commerce Department of
Government of Assam to get the industries in the list appended
thereto, inspected and reports submitted to the NEC as per the
format enclosed. The letter disclosed that a formal meeting of the
Committee in this regard would consider and recommend further
release to the said industries. It was thereafter that the same
Ministry i.e. of DONER vide its letter dated 01-10-2007 addressedPage 8
8
to the Commissioner and Secretary, Planning and Development,
Assam while referring to its earlier letter dated 23-02-2007,
conveyed that as the proposals pending at the time of closure of
SPINE could no longer be processed, it had been decided that the
same be returned to the State Governments. Thereby a list of the
pending proposals, State-wise, was forwarded with the observation
that the Units concerned could take the benefit of Northeast
Industrial and Investment Promotion Policy 2007(NEIIPP – 2007). It
was assured that the relevant papers would be returned at a later
date. The list appended amongst others contained the names of the
respondent units involved in the present proceedings. It is thus
apparent from the communication dated 01-10-2007 and the
annexures thereto that at the time of the issuance thereof
indicating the closure of SPINE, the proposals vis-à-vis these units
had remained pending and were not processed as per the procedure
prescribed. In the contemporary context, the media also flashed the
decision of withdrawal of SPINE at or about the same time. Prior to
these developments, the working group on NEC while deliberating
upon the related issues for the 11th Five Year Plan held on
22-06-2006, however, had recommended continuance of SPINEPage 9
9
with improved guidelines to block loopholes, increase opportunities
for generating local employment and expedite industrialisation of
the region. This recommendation, however, needless to mention,
has to be construed in the backdrop of the decision for closure of
SPINE as was taken and communicated vide the letters dated
23-2-2007 and 01-10-2007 alluded hereinabove.
9. Exasperated by the delay in the grant of the incentives under
SPINE, to reiterate, several similarly situated industrial units had
meanwhile approached the Guwahati High Court with a series of
writ petitions seeking judicial intervention. By common judgment
and order dated 20-06-2008, the petitions were allowed by the
Single Judge of that Court directing the implementing authorities to
process the applications of the writ petitioners for grant of subsidy
under SPINE in accordance with law for sanctioning the same to
each of them without being influenced by the letter dated
05-02-2007 of the Secretary, Ministry of DONER within a period of
ninety days from the receipt of the copy of the judgment and order.
In pronouncing this verdict, the learned Single Judge inter alia
recorded that relying on the assurance under the scheme, unitsPage 10
10
concerned had materially altered their positions by investing huge
amounts for setting up their respective new industrial units even by
obtaining secured and unsecured loans and that denial of the
financial assistance under the scheme would result in their closure
observing that the letter dated 05-02-2007 did not indicate
withdrawal of the scheme and that only enquiry into some
irregularities was comprehended. The learned Single Judge noted
as well that meanwhile the concerned industries had made their
units functional. The minutes of the meeting dated 21-02-2007
was also taken note of in expressing this view. The learned Single
Judge entertained the plea of promissory estoppel as well in issuing
the operative directions.
9.1 This decision was taken in appeals before a Division Bench of
the Guwahati High Court by the Union of India and NEC which
were dismissed on 27-11-2008. Admittedly, the present
respondents were not parties in the earlier round of litigation. This
adjudication undertaken by the Guwahait High Court, attained
finality by the order dated 01-05-2009 passed by this Court in SLP
No. 9578-9584/2009, whereby the same was left uninterfered.Page 11
11
10. Close on the heels of this affirmation by this Court, the
respondents herein on 27-08-2009 filed their writ petitions claiming
the same relief seeking parity of treatment. The learned Single
Judge of the Guwahati High Court by judgment and order dated
07-10-2009 dismissed all the petitions analogously heard on the
ground of delay and laches. Observing with reference to the
relevant decisions of this Court that the benefit of a judicial verdict
in a case cannot automatically be extended to another more
particularly in the face of unexplained and/or unsatisfactory
explanation of delay in between, the learned Single Judge declined
the relief holding that the exercise of powers under Article 226 of
the Constitution of India was primarily equitable in nature.
According to the learned Single Judge, in the attendant facts and
circumstances, the respondents were not only aware of the decision
of the concerned authorities to wind up SPINE by refusing financial
assistance thereunder as intimated by the letter dated 05-02-2007,
it was held as well that the respondents without joining the writ
petitioners in the earlier outing had deliberately chosen to await the
outcome thereof and thus were really fence sitters to avail the
benefit of a favourable verdict, if forthcoming. The learned SinglePage 12
12
Judge was of the view that the passive conduct of the respondents
herein tantamounted to sleeping over their rights for over two years
to wake from their feigned slumber after the decision of this Court
on 01-05-2009, to agitate their perceived rights. That having regard
as were, to the financial implications that would ensue in case the
inordinately delayed claim of the respondents is/was by
entertained, thus adversely impacting upon public exchequer, the
learned Single Judge declined the relief sought for.
11. By the decision impugned in the present proceedings, a
Division Bench of the same High Court reversed these findings and
granted the relief prayed for by the respondents in the same terms
as sanctioned earlier to the otherwise equally placed industrial
units. The Division Bench adverted inter alia to the letters dated
05-02-2007 and 04-05-2010 issued by the Ministry of DONER
apart from heavily relying on the decision in the earlier lis and
returned a finding that SPINE had continued till the issuance of the
notification/letter dated 04-05-2010. Their Lordships held the view
that as the respondents had set up their industrial units during the
validity of the scheme and their claims were pending in coursePage 13
13
thereof, the appellants, the implementing authorities were obliged
to consider the same. That the view taken by the learned Single
Judge was inconsistent with the one taken in the judgment and
order dated 20-6-2008 was also noted. It was held as well that
apart from the fact that there was no prescribed period of limitation
to invoke the writ jurisdiction under Article 226 of the Constitution
of India, as under the Limitation Act 1963, it was in any case, three
years, their writ petitions could not have been dismissed on the
ground of delay. In any view of the matter, it was observed that, the
time lag in filing the writ petitions could not have been reckoned
from 05-02-2007 where the SPINE was not closed. That the
implementing authorities did not at any point of time communicate
to the respondents the rejection of their claims was also recorded.
The aspect of financial implications was also dismissed as
inconsequential. Relying on the determination made in the earlier
proceedings, the appellants herein were directed to process the
application of the respondents for investment subsidy under SPINE
in accordance with the law and without being influenced by the
letter dated 05-02-2007 for sanctioning the same within a period of
ninety days. In another words, the operative directions containedPage 14
14
in the judgment and order dated 20-06-2008 in the earlier batch of
writ petitions was replicated vis-à-vis the respondents.
12. In the backdrop of this factual matrix, Dr. Atrey the learned
counsel for the appellants has insistently argued that it being
apparent on a combined reading of the letters dated 05-02-2007,
20-3-2007 and 04-05-2010 that a conscious decision had been
taken by the concerned authorities to discontinue SPINE with effect
from 23-2-2007, the writ petitions of the respondents, who had
admittedly not joined the earlier set of industrial units had been
rightly rejected by the learned Single Judge on the ground of
unexplained delay , laches and inaction on their part. Referring to
the letter dated 04-05-2010 in particular, he has urged that it being
evident therefrom that SPINE had been discontinued with effect
from 23-02-2007, an advance indication to that effect being
disclosed in the letter dated 05-02-2007 preceding thereto, and
conveyed by the one dated 23-2-2007, it is apparent that the
respondents herein had not approached the Guwahati High Court
in time, to take a gambling chance later on and to cash upon any
favourable verdict in the earlier litigation. As the approach of thePage 15
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respondents lack in bonafide and as they cannot be construed to
have invoked the writ jurisdiction of the High Court in time, their
claim had been rightly rejected by the learned Single Judge in the
exercise of the equitable prerogative, he urged. The learned counsel
maintained that as the claim of the respondents had not been
allowed during the pendency of SPINE, they have no vested right to
insist for a direction to sanction the incentives thereunder and thus
the impugned judgment and order in the prevailing facts and
circumstances ought to be interfered with. He further argued that
not only on the closure of the scheme in 2007, as conveyed by the
letter dated 23-2-2007, the pending proposals including those of
the respondents herein had been returned to the respective State
Governments, in absence of any challenge to the said decision, the
respondents even otherwise are not entitled to the benefit under it.
According to the learned counsel, the respondents are not entitled
to the benefit of the earlier adjudication and that if their claim is
entertained it would not only signify unwarranted premium on their
speculative inaction but also would severely impinge upon the
financial resources of the State qua an unworthy cause.Page 16
16
13. As against this, Ms. N. Saikia has emphatically argued that
the respondents being similarly placed with the writ petitioners in
the earlier proceedings, they had been rightly extended equal
treatment and thus the impugned judgment and order is
unassailable in law and on facts. As admittedly by the letter dated
05-02-2007, the scheme had not been withdrawn and in fact no
decision rejecting their claim thereunder had ever been conveyed to
the respondents, the action of the appellants in endeavouring to
deny the benefit thereunder is patently arbitrary, whimsical and
unconstitutional, she urged. In any view of the matter, according to
the learned counsel, as the implementing authorities were generally
sloth in processing the applications, taking about four/five years’
time to complete the process, the respondents could not have been
non-suited on the purported ground of delay and laches. While
asserting that the scheme was in force when the writ petitions were
filed Ms. N. Saikia insisted that the respondents having altered
their position in view of the incentives promissed thereunder, the
action of the appellants in declining them the same is violative of
the doctrine of promissory estoppel. According to the learned
counsel, as others similarly placed with the respondents have been
extended the benefits under the scheme, the denial to the
respondents was discriminatory as well. The following decisions
were relied upon to buttress the above assertions:
AIR 1979 SCC 621 M/S Motilal Padampt Sugar Mills Co. –Vs- The
State of Uttar Pradesh & Ors., (2004) 6 SCC 465 State of Punjab –VsNestle
India Ltd., (2006) 8 SCC 702 MRF Limited Vs Assistant
Commissioner Sales Tax., (2004) 1 SCC 139 State of Orissa & Ors Vs
Mangalam Timber Products Limited., (2009) 6 SCC 791 Basanti
Prasad Vs Chairman, Bihar School Examination Boards & Ors.,
(2010) 6 SCC 786 Improvement Trust, Ludhiana VS. Ujagar Singh &
Ors., (2013) 12 SCC 649 Esha Bhattacharjee Vs. Raghunathpur
Nafar Academy & Ors.
14. The pleaded facts and the competing arguments have received
our due attention. To start with, it is not disputed that the writ
petitioners in the earlier round of adjudication were applicants
under SPINE alike the respondents herein. They being appalled by
the delay in the grant of their receivables thereunder and being
faced with the letter dated 05-02-2007 whereby pending receipt and
scrutiny of the reports as called for, further sanction/disbursement
of Grants-in-Aid under the said scheme was stopped, did promptly
approach the Guwahati High Court with a batch of writ petitions in
the year 2007 itself and as narrated hereinabove were favoured with
a direction to the implementing authorities for consideration of their
application for the investment subsidy in accordance with law
without being influenced by the said letter. Admittedly, the
respondents herein elected not to join them and instead, soon
thereafter this Court affirmed the above verdict on 01-05-2009,
staked their claim on 27-08-2009. There is evidently thus a time
lag of more than two years by which the respondents’ challenge was
delayed.
14.1 It is a matter of record, that by letter/notification dated
04-05-2010 issued by the Secretary, Ministry of DONER, NEC,
Shillong, confirmation of the decision of withdrawal and closure of
SPINE with effect from 23-02-2007, was notified. A plain perusal of
the contents of this document would reveal in no uncertain terms
that the withdrawal and closure of SPINE had been effected by an
Order of Government of India vide NEC/PLAN/ii-23-2-2007. Thus
the letter/notification dated 04-05-2010, did relate back toPage 19
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23-02-2007 for all intents and purposes. Therefore the scheme,
SPINE stood withdrawn and/or closed on and from 23-02-2007. As
a corollary, on a cumulative reading of the letters dated
05-02-2007, 23-02-2007 and 04-05-2010 as well as the resolution
dated 21-02-2007 it is indubitable that SPINE stood withdrawn
and/or closed with effect from 23-02-2007. As adverted to
hereinabove, by letter dated 01-10.2007, as a consequential step,
the proposal which had remained unprocessed as per the standard
procedures of the scheme were returned to the State Governments.
The list of proposals remitted back admittedly included those
amongst others of the respondents herein. It is thus patent that on
such date i.e. 01-10-2007, the claims of the respondents had not
been accepted and in view of the closure of the scheme, were
returned to the respective State Governments. In this pronounced
backdrop, the plea of the respondents that at the institution of the
writ petitions in 2009, no decision had been taken rejecting their
applications fades into insignificance, as those by implication had
not been entertained under the scheme.Page 20
20
14.2 The letters dated 04-08-2006, 04-09-2007 and 12-09-2007
to which our attention has been drawn in course of the arguments,
suffice it to mention, do not contain any assurance on the part of
the implementing authorities promising grant of the subsidy
allowance under the scheme or any other incentive to the
respondent. No reference has been made before us of any other
document qua the other respondents. We are thus constrained to
hold that there was no promise on the part of the public
functionaries in charge of implementation of SPINE to the
respondents to extend benefits thereunder, inspite of the decision to
withdraw or close the same with effect from 23-02-2007.
15. In M/s Motilal Padampt Sugar Mills Company supra, this
Court, on an exhaustive survey of the law pertaining to the doctrine
of promissory estoppel held that the same was an equitable doctrine
that would yield when equity so required. While propounding that
the same had been evolved to avoid injustice where it is
demonstrated that a party acting on the words or conduct of
another, amounting to clear and unequivocal promise and intended
to create legal relations or effect legal relationships to arise in the
future had altered his position, then the promise would be binding
on the promisor and he would not be permitted to renege therefrom
unless it would be inequitable to compel him to do so. While
extending this doctrine to the Government as well, it was
enunciated that if it can be shown that having regard to the facts as
had subsequently transpired, it would be inequitable to hold the
Government to the promise made by it, the Court would not raise
the equity in favour of the promisee and enforce the promise against
the Government. Their Lordships held that the doctrine of the
promissory estoppel would be displaced in such a case, because on
the facts, equity would not require that the Government should be
held bound by the promise made by it. That aside overriding public
interest against enforcement of the doctrine qua the Government, it
would be still competent for it to depart from the promise on giving
reasonable notice which need not be a formal one, affording the
promisee a reasonable opportunity of resuming his position was
underlined. We consider it inessential to dilate on the other
decisions cited on behalf of the respondents on this theme as these
are in essence in reiteration of the above proposition.
16. The gravamen of the authorities pertaining to delay highlight
in unison that the same has to be explained by cogent convincing
and persuasive explanation to justify condonation thereof. The
legal diktat being so fundamental that a detailed treatment of the
decisions relied upon by the respondents in this regard is not
warranted.
17. Noticeably, in the earlier round of litigation, there was no
scope to examine the purport of the contents of the letter dated
04-05-2010, which to reiterate only affirmed the decision of
withdrawal and closure of SPINE with effect from 23-02-2007. The
contents of the said letter to repeat disclose in unequivocal terms
that even prior thereto a decision to that effect had been taken on
and from that date. This decision as referred to hereinabove
amongst others also received media coverage. The plea that the
respondents had no knowledge of the withdrawal/closure of SPINE
then, is to say the least, unconvincing. We see no weighty or cogent
reason for the respondents to wait till the earlier Special Leave
Petition was dismissed on 01-05-2009 by this Court to embark
upon their pursuit for redress in similar terms. Their writ petitions
dated 27-08-2009 also do not evince that the same were filed after
the letter/notification dated 04-05-2010. In our considered opinion
therefore, the respondents were deliberately bidding time to seek
judicial remedy in case their co-applicants under the scheme
emerged successful in their adjudicative enterprise. As the initial
decision conveyed by the letter dated 05-02-2007 to stop further
sanction/disbursement of Grant-in-Aid under the scheme pending
scrutiny of the report of the industrial units involved did eventually
metamorphosise in the closure/withdrawal of the scheme, there is
an apparent correlation between the intervening developments
conveyed from time to time eventuating in such a conclusion. The
merit of the factums leading to this decision however has not been
questioned or impeached.
18. On a consideration of the totality of the aspects involved, we
are thus of the unhesitant view that the respondents herein in view
of their deliberate laches, negligence and inaction have disentitled
themselves to the benefit of the adjudication in the earlier lis. In
the accompanying facts and circumstances in our comprehension,
it would be iniquitous and repugnant as well to the public
exchequer to entertain the belated claim of the respondents on the
basis of the doctrine of promissory estoppel which is even otherwise
inapplicable to the case in hand.
19. For the foregoing determination, we are constrained to interfere
with the impugned judgment and order which is hereby set aside.
The appeals are allowed. No cost.
………………………J.
( M.Y.EQBAL)
 ……..…………..….J.
 (AMITAVA ROY)
NEW DELHI
Dated: May 08, 2015
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