1994 (4) TMI 370 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Disbursement of interest-free sales tax loan.
2. Applicability of promissory estoppel.
3. Maintainability of writ petition under Article 226 for enforcing a contractual obligation.

Detailed Analysis:

1. Disbursement of Interest-Free Sales Tax Loan:
The petitioners, who are companies and assessees to sales tax, sought directions for the disbursement of interest-free sales tax loans as per the Government of Bihar's resolution dated September 1, 1986. The petitioners claimed that the State had sanctioned certain amounts but had not disbursed the full amounts. Despite repeated requests, the State failed to disburse the remaining sanctioned amounts, which the petitioners argued was illegal and arbitrary. The State acknowledged the sanction but cited financial constraints as the reason for non-disbursement.

2. Applicability of Promissory Estoppel:
The petitioners argued that the State was bound by the principle of promissory estoppel, having made unequivocal promises in the resolution to provide interest-free sales tax loans to industries. The petitioners had altered their position based on these promises, making significant investments in Bihar. The State, however, contended that the promise did not fall within the purview of promissory estoppel as it was a contractual obligation not based on any statute.

3. Maintainability of Writ Petition under Article 226:
The core issue was whether a writ of mandamus could be issued for the disbursement of amounts due under a contractual obligation. The State argued that such a relief could not be granted under Article 226, as the obligation was purely contractual and not statutory. The court agreed, stating that a writ of mandamus typically does not enforce a civil liability arising out of a breach of contract. The court cited precedents such as Burmah Construction Company v. State of Orissa and Suganmal v. State of Madhya Pradesh, which held that petitions for the refund of money or disbursal of amounts due from the State are not maintainable under Article 226. The appropriate remedy for the petitioners was to file a civil suit.

Conclusion:
The court concluded that the relief sought by the petitioners for the disbursement of interest-free sales tax loans could not be granted through a writ petition under Article 226. The court held that the petitioners should seek remedy through a civil suit, which is an equally efficacious remedy. The writ petitions were dismissed.