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TMI Blog2006 (3) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... d:- 10-3-2006 - S.B. Sinha and P.K. Balasubramanyan JJ JUDGMENT: Manjeet Singh, Mrs. Vivekta Singh, Harikesh Singh, Harikishan Kataria and Ms. Kavita Wadia, Advocates, for the respondents. S. Ganesh and Mahabir Singh, Senior Advocates (S.P. Singh Chauhan, Ms. Madhusmita Bora, S. Srinivasan, Nikhil Nayyar and Ankit Singhal, Advocates, with them), for the appellants. S.B. Sinha, J : Leave granted in S.L.Ps. Applicability of promissory estoppel and/or the extent thereof is in question in these appeals which arise out of a judgment and order dated 22.04.2005 passed by a Division Bench of High Court of Punjab and Haryana in Amended Civil Petition No. 15025 of 1997. The basic facts are not in dispute. The Appellants are owners of solvent extraction plants. The State of Haryana announced an Industrial Policy for the period 1.4.1988 to 31.3.1997 wherein inter alia incentive by way of sales tax exemption was to be given for the industries set up in backward areas in the State. The State enacted Haryana General Sales Tax Act, 1973 (for short "the Act"). Section 64 of the Act provides for rule making power. The said provision was amended by inserting sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es provide for a negative list of the industries and/ or class of industries which were not to be included therein. Solvent extraction plant was admittedly not included in the list. On or about 3.1.1996, notice was given as regards the intention of the State to amend the rules in respect whereof a draft was circulated for information of persons likely to be affected thereby so as to enable them to file objections and suggestions thereto. Amendments in the terms of the said draft rules were notified on 16th December, 1996 substituting Schedule III appended to the Rules whereby and whereunder the solvent extraction plant was included therein. Note 2 appended thereto reads as under: "The Industrial units in which investment has been made upto 25% of the anticipated cost of the project and which have been included in the above list for the first time shall be entitled to the sales tax benefits related to the extent of investment made upto the 3rd January, 1996. Only those assets will be included in the fixed capital investment which have been installed or erected at site and have been paid for. The anticipated cost of the project will be taken on the basis of documents furnished to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad, District Rohtak with an investment of Rs. 252.70 lakhs. Commercial production commenced on and from 17.1.1991. The unit of the Appellant falls in a backward area. On 7.8.1993, the Appellant carried out expansion with an additional investment of Rs. 181.83 lakhs and added another 250MT in the production capacity in its unit wherefor eligibility certification/ exemption certification was issued in its favour. The Appellant also got itself registered with the Sales Tax Department for the expanded unit under the Act and under the Central Sales Tax Act, 1956 with effect from 4.12.1993. On 16.11.1995, the Appellant also applied for additional licence which was required for the product manufactured by it. On 3.2.1997, the Appellant was registered with the Government of India. Furthermore, on 7.9.1997, an additional licence was granted to it by the Central Insecticides Board. After receipt of the same, the Appellant applied to the Director of Agriculture, Haryana for addition of new items in the manufacturing licence and the Appellant commenced its commercial production in its expanded unit on 28.4.1998. By 16.12.1996, they had invested about 80% of the total project cost. The Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision or proceedings of such Committee on any ground indicating arbitrariness, bias, mala fide or any such like reason." (iii) In view of certain decisions of this Court, the benefit of exemption can be withdrawn in public interest. (iv) "There is no allegation of exercise of such power to include solvent extraction plant is actuated by any mala fides, fraud or lack bona fide. It is a matter of fiscal policy of the State Government as to which industries should be granted exemption." (v) Mahabir Vegetable Oils Pvt. Ltd. only invested Rs. 4,44,000/- in the land and purchased machinery worth Rs. 16,90,000/- on 14.12.1996. (vi) "Thus, we hold that there is no representation on behalf of the State Government that the scheme of granting incentives by way of exemption or deferment will not be modified amended or varied during the operative period. There cannot be any restraint on the State Government to exercise the delegated legislative functions within the parameters laid down by the statute#." In the case of Bharat Rasayan Ltd., the judgment rendered in Mahabir Vegetable Oils Pvt. Ltd. was followed without considering the factual aspect therein. In the writ petition file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (2A) of Section 64 came into force in the year 2001. (viii) The State in its return filed in the High Court did not raise any contention that there existed a larger public interest in withdrawing the exemption notification. Mr. Manjeet Singh, learned counsel appearing on behalf of the State, on the other hand, submitted that: (a) draft rules having been published by the State by way of a notification dated 3.1.1996 all the prospective entrepreneurs were aware that the said rules may be amended. (b) There was no reason for the Appellants' being misled by reason of the existing rules. (c) As on the date of final notification, the Appellants did not commence commercial production, they did not acquire any legal right to obtain any exemption. (d) The State has the requisite jurisdiction to make amendments with retrospective effect. (e) In any event, the right of the entrepreneurs being not an indefeasible right, the same could be withdrawn before commencement of production. It is not in dispute that when the Appellants herein started making investments, Rule 28A was operative. Representation indisputably was made in terms of the said Rules. The State, as noticed he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir industries in the State of Kerala and with a view to boosting of industrialisation, exemption from sales tax and purchase tax for a period of five years was extended as a concession and the five-year period was to run from the date of commencement of production. If in response to such an order and in consideration of the concession made available, promoters of any small scale concern have set up their industries within the State of Kerala, they would certainly be entitled to plead the rule of estoppel in their favour when the State of Kerala purports to act differently. Several decisions of this Court were cited in support of the stand of the appellants that in similar circumstances the plea of estoppel can be and has been applied and the leading authority on this point is the case of M.P. Sugar Mills. On the other hand, reliance has been placed on behalf of the State on a judgment of this Court in Bakul Cashew Co. v. STO. In Bakul Cashew Co. case this Court found that there was no clear material to show any definite or certain promise had been made by the Minister to the concerned persons and there was no clear material also in support of the stand that the parties had altere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meerut v. U.P. State Electricity Board and Others [(1997) 7 SCC 251] holding: "As a result of the aforesaid discussion on these points the conclusion becomes inevitable that the appellants are entitled to succeed. It must be held that the impugned notification of 31-7-1986 will have no adverse effect on the right of the appellant-new industries to get the development rebate of 10% for the unexpired period of three years from the respective dates of commencement of electricity supply at their units from the Board with effect from 1-8-1986 onwards till the entire three years' period for each of them got exhausted. This result logically follows for the appellants who have admittedly entered into supply agreements with the Board as new industries prior to 1-8- 1986." The question came up for consideration before this Court recently in State of Punjab v. Nestle India Ltd. and Another [(2004) 6 SCC 465] wherein this Court surveyed the growth of the said doctrine. In that case the State, pursuant to its promise, did not issue any notification. The High Court, in the writ petition filed by the Respondent therein was of the opinion that the State was bound by its promise to abolish p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be sufficient to press into aid the doctrine. The courts are bound to consider all aspects including the results sought to be achieved and the public good at large, because while considering the applicability of the doctrine, the courts have to do equity and the fundamental principles of equity must for ever be present in the mind of the court." It is true that the State issued a notification on or about 3.1.1996 expressing its intention to amend the rules. By reason thereof, however, the State neither stated nor could it expressly state, that the rules shall stand amended. It is now well-settled principle of law that draft rules can be invoked only when no rule is operative in the field. Recourse to draft rules for the purpose of taking a decision in certain matters, can also be taken subject to certain conditions. [See Union of India Through Govt. of Pondicherry and Another v. V. Ramakrishnan and Others, (2005) 8 SCC 394, para 23 and 24] The promises/representations made by way of a statute, therefore, continued to operate in the field. It may be true that the Appellants altered their position only from August, 1996 but it has neither been denied nor disputed that dur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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