1983 (8) TMI 246 - HC - VAT and Sales Tax

Issues Involved:
1. Right to issue of an eligibility certificate under a State Government scheme.
2. Applicability of promissory estoppel against the State Government.
3. Enforceability of rights under an executive scheme.
4. Violation of Article 14 of the Constitution of India.
5. Discretion of the implementing authority in issuing eligibility certificates.

Detailed Analysis:

1. Right to Issue of an Eligibility Certificate Under a State Government Scheme:
The petitions raised the question of whether the petitioners could claim a right to the issuance of an eligibility certificate under a scheme framed by the State Government. The scheme provided several incentives to small-scale, medium, and large industries to speed up industrialization. The scheme grouped Maharashtra into four groups (A, B, C, and D) based on development levels, and the petitioners were from Group C. The scheme specified that eligibility certificates would be issued effective from the date of commencement of commercial production, determined by the implementing agency based on documentary evidence. Clause 4.4 required that the application for eligibility be filed after taking initial effective steps and supported by documentary evidence. Clause 4.6 stated that no right or claim for incentives would be deemed conferred merely by fulfilling the scheme's conditions; the incentives could only be claimed upon issuance of a letter of intent/eligibility certificate.

2. Applicability of Promissory Estoppel Against the State Government:
The petitioners argued that they had an enforceable right to the eligibility certificate based on promissory estoppel. They had invested significant amounts in reliance on the scheme's promises. The court analyzed the doctrine of promissory estoppel, referencing key Supreme Court cases such as Union of India v. Anglo Afghan Agencies and Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. These cases established that the Government is bound by its promises if a party has acted on them to its detriment. It was held that the principle of promissory estoppel applies even to executive actions of the State, and the petitioners had a valid claim based on this principle.

3. Enforceability of Rights Under an Executive Scheme:
The court rejected the view that no enforceable right could arise from an executive scheme. It emphasized that the scheme's nature (executive or legislative) does not affect the applicability of promissory estoppel. The court held that if the petitioners had fulfilled the scheme's conditions and incurred expenditure based on the State's representations, they had a right to the eligibility certificate, enforceable under Article 226 of the Constitution. The court underscored that the jurisdiction of the High Court under Article 226 extends to reviewing executive actions and ensuring the Government adheres to its promises.

4. Violation of Article 14 of the Constitution of India:
The Division Bench had previously held that Article 14, being a prohibition against the State, did not confer any rights on individuals. The Full Bench disagreed, stating that Article 14 is a repository of the right to equality and any violation thereof can be challenged under Article 226. The guarantee of equal protection extends to executive orders unsupported by any statute. The court held that arbitrary actions by the implementing authority could be scrutinized under Article 226 for violating Article 14.

5. Discretion of the Implementing Authority in Issuing Eligibility Certificates:
The Division Bench had held that the implementing authority had discretion in issuing eligibility certificates even if the conditions were fulfilled. The Full Bench disagreed, stating that once the conditions of the scheme were satisfied, the implementing authority had a duty to issue the eligibility certificate. The court held that the implementing agency must act according to the scheme's mandate and could not arbitrarily refuse to issue the certificate.

Conclusion:
The court overruled the Division Bench's decision in S.K. Oil and Pulses Mill case, holding that the petitioners had an enforceable right to the eligibility certificate based on promissory estoppel. The court directed the respondents to issue the eligibility certificates to the petitioners, affirming that the principle of promissory estoppel applies to executive actions and that rights under such schemes are enforceable under Article 226 of the Constitution. The petitioners were entitled to costs in Writ Petition No. 988 of 1983, while no order as to costs was made in Writ Petition No. 989 of 1983.

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