9911796707
TMI Blog2019 (2) TMI 2125X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment despite the fact that the petitioners had already made large investments pursuant to the promise - rejection of application for declaration for eligibility of those petitioners who had completed their projects at either level on or before 31.03.2008 on the ground that the Policy had been withdrawn on 04.06.2007 - delay in payment to the cane farmers could be a justification for revocation of the Policy or not - revocation of incentive scheme for no valid reasons - incentives unequivocally promised and exemptions granted could have been taken back without there being any overwhelming public interest or not. HELD THAT:- Most of the issues would stand answered by the judgment of this Court in the case of Bajaj Hindustan Limited Vs. State of Uttar Pradesh [2014 (10) TMI 561 - ALLAHABAD HIGH COURT]. The said decision of this Court has merged with the Order dated 07.03.2018 of the Supreme Court in Civil Appeal Nos. 7121-7122 and C.A. Nos 7121-7122 [2018 (8) TMI 215 - SC ORDER]. The Order of the Supreme Court came to be passed in Civil Appeals after grant of leave and therefore the Judgment dated 17.09.2014 of this Court stood merged with the Order of the Supreme Court. As rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to make a reference to 'Co-generation and Distillery Promotion Policy-2013' attached by the State Government to its affidavit dated 28.11.2017 filed in this Court, which stipulated that the benefits under that policy would be available only if the company/unit has made 'timely payment' of entire cane price. If 'timely payment' was so critical element of the Policy, State Government would have employed similar language as used in the case of Distillery Policy of 2013. The contention of the delay in 'timely payment' of cane price is therefore clearly an afterthought on the part of the State. There is no quarrel with the legal proposition that the State is empowered to withdraw a Policy but if such Policy contained some unequivocal promise and assurance and someone has altered his position acting on such promise then such withdrawal shall have to pass the test of promissory estopple. There is also no quarrel with the proposition that promissory estopple must yield to overriding public interest except that the present case does not contain any such overriding public interest. Conclusion - The petitioners are entitled for consideration of all the benefits in the form of exemptions/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of ancillary industries like distilleries for manufacture of Ethanol and also for cogeneration of power. The implementation and commissioning of the new sugar mills or expansion of existing mills or establishing distillery or cogeneration facility were required to be completed within 3 years from 1.4.2004 to 31.3.2007. However, the period for implementation and commissioning of the new projects under the Policy was extended by another year from 31st March 2007 up to 31st March 2008 vide G.O. No.1965SC/18-2-2006-185/2006 dated 14th November 2006. The duration and validity of the Policy was thus extended up to 31.03.2008. 6. The promised benefits in the form of exemptions and reimbursements on the investments made for setting up of new sugar mills as well for carrying out expansion in the crushing capacities of the existing sugar mills along with the ancillary plants, are summarized as follows: Exemption/Remission (a)- Uttar Pradesh Trade Tax (now called VAT) and Central Sales Tax on Sale of Molasses (b) -Administrative Charges on Molasses (c) -Entry Tax on Sale of Non-Levy sugar (d) - Purchase Tax on Sugarcane (e) -Registration Charges and Stamp Duty onLand purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l various benefits promised under the Policy for a period of 5 years or 10 years as the case may be. The State Government through its various departments issued notifications from time to time permitting availment of benefits under the Policy to those who were declared eligible for availing such benefits. 9. The petitioners, relying and acting upon the promise of benefits made by the State Government under the Policy invested large sums of money in establishing new sugar mills or expanding the crushing capacities of the existing mills and/or establishing ancillary projects like distilleries for manufacture of Ethanol or co-generation of power facilities and irrevocably altered their positions significantly. Some of the petitioners were granted Eligibility Certificates for the level of investments made by them and such petitioners started availing the benefits promised under the Policy. The remaining petitioners, believing the validity of the Policy to be upto 31.03.2008, continued to make investments in the hope that they would be able to complete the projects and start commercial production within the validity period of the Policy; that is 31.03.2008. 10. Upon the change of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Government after deep consideration of the prevailing condition of the sugar industry in the State. The declaration of the Policy was primarily to encourage and attract fresh investment into otherwise dwindling sugar industry in the State causing distress to the cane growers as well as general rural economy. He would further submit that the preamble to the Policy stated that the Policy would on one hand promote the sugar industry in the State generating fresh direct employment to thousands of persons besides indirect employment to many more and on the other hand would also improve the prevailing financial condition of the cane growers and improve the rural economy of the State. He would further submit that the State Government had considered all aspects of the Policy including the financial burden that the Policy would initially cause to the State exchequer but also realized that State would earn higher revenue in the long run in the form of taxes and levies on the larger base after the expiry of the benefit period ie; 10 years on 31.03.2018. He contends that seen from this perspective, the State government saw the Policy to be in the larger public interest as well as huge impro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Shri Bhalla would contend that the action of the State to suddenly withdraw the Policy through a non-speaking order, without giving any reason or justification and without any notice to the petitioners is in clear violation of principle of 'promissory estopple, natural justice and legitimate expectations of the petitioners and therefore is bad in law and illegal. He contends that such withdrawal of the unequivocal promise and assurance held out by the State Government under the Policy has caused grave prejudice to the petitioners who had relied upon and irrevocable promises and have irretrievably altered their positions acting on such solemn promise. The petitioners have borrowed large amounts from the banks in the form of expensive loan to make huge investments pursuant to the Policy. According to Mr. Bhalla, promissory estopple can be the basis of an independent cause of action in which detriment does not need to be proved. It is enough that a party has acted upon the representation made. He would contend that the central principle of the doctrine of promissory estopple is that the law will not permit unconscionable departure by one party from the subject matter of an assumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court in case of 'Mohinder Singh Gill Vs. Chief Election Commissioner (1978) 1 SCC 405, that when a statutory functionary makes an order on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavits or otherwise. Finally Shri Bhalla would submit that this Policy has been the subject matter of scrutiny before this Court in Civil Misc Writ Petition No. 1853 and 1854 of 2009 in the case of 'Bajaj Hindustan Limited Vs. State of Uttar Pradesh & Others' wherein a detailed Order/Judgment had been passed by a co-ordinate Bench of this Court on 17.09.2014. Shri Bhalla has read out the following observations from the said judgment of this Court: "We are of the opinion that the attempt of the respondents in taking away the benefit of exemption with effect from 04.06.2007 and thereby deprive the benefit of the exemption for the remaining period is wholly arbitrary and unreasonable. The petitioner entered into a solemn exercise and discharged its performance pursuant to a promise made by the State Government. The petitioner acted upon the promise. The respondents cannot be allowed to act arbitrari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State exchequer or that it was not in public interest to continue with the policy was not sufficient. Something more was required to be stated to justify its stand which in the instant case was totally lacking. "……….The contention of the State that the Government can change the policy in public interest cannot be doubted. Their contention that the Government cannot be compelled to do something, which is not allowed by law or prohibited by law, again cannot be doubted. The doctrine of promissory estoppel cannot be invoked for enforcement of a promise made contrary to law because none can be compelled to act against the statute, as held by the Supreme Court in Shree Sidhbali Steels Limited and others Vs. State of Uttar Pradesh and others, (2011) 3 SCC 193. However, this contention is patently unwarranted as nothing has been brought on record to indicate that the policy was withdrawn on account of public interest or that the policy was contrary to law. In fact, according to us, the policy was issued and implemented in public interest, which has benefited not only the entrepreneurs but the public at large as well as to the State Government. In Dhampur Sugar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same time cannot unsettle the vested right that has already accrued in favour of the petitioner. The promise made in the policy was changed from a purely executive order to a legislative measure. Once a legislative enactment is made by a notification under a statute, the same cannot be taken away by an executive order by revoking the policy. Such revocation of the policy does not affect the existence of the notification which will continue to remain operative till it is revoked. The submission of the learned standing counsel appearing for the State, in this regard, cannot be accepted. So long as the notifications are in force, the petitioner would be eligible to avail the benefits available therein. The action of the respondents in not allowing the benefits under the notification and raising a demand for payment of sugarcane purchase tax is wholly illegal. So long as a statutory notification exists, the same cannot be annulled by an executive order. In the light of the aforesaid, on the principle of promissory estoppel and legitimate expectation, the action of the respondents in denying the benefits under the sugar policy and the notifications issued under various Acts is deplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Counsel urged that even though the Order dated 17.09.2014 did not quash the impugned order but given the above background, this Court should now quash the impugned order as most of the petitioners in these proceedings are not exactly placed as the petitioner in writ petition no. 1853 and 1854 and therefore it will be in the interest of justice that the impugned order dated 04.06.2007 is quashed and the petitioners are allowed and granted all the benefits that they are eligible or would become eligible including grant of eligibility certificate for the level of investment made by them if such petitioners had completed their investment and commenced commercial production from their new units under the Policy before 31.03.2008 Following judgments have been cited by the Counsel for the petitioners in support of his contentions: 1. Motilal Padampat Sugar Mills Co. Ltd Vs. State of U.P. (1979) 2 SCC 409 2. Manuelsons Hotels Private Limited Vs. State of Kerala & Others (2016) 6 SCC 766 3. State of Punjab Vs. Nestle India Ltd.,(2004) 6 SCC 465 4. Indian Express Newspapers (Bombay) Pvt Limited Vs. Union of India (1985) 1 SCC 641 5. Mohinder Singh Gill & Another Vs. Chief El ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State government was of the view that the Policy is going to succeed but later on the State experienced and wisdom dawn upon them that it is going to cause losses to the State Government and hence the Policy was withdrawn. The State Government also filed an affidavit dated 28.11.2017 stating that one of the reasons for withdrawal of the Sugar Industry Promotion Policy, 2004 was that the Sugar Mills were not paying the cane price dues regularly as and when due to the farmers causing immense hardship and suffering to them contrary to the objects of the Policy. It was further stated in the said affidavit that the decision to withdraw the Sugar Industry Promotion Policy, 2004 has been taken in the overwhelming public interest. Subsequently, by another affidavit dated 19.05.2018 filed in the case of Mawana Sugars Limited, it is stated on behalf of the State Government that inspite of the fact that the petitioner is entitled to have the benefit of the judgment and order dated 17.09.2014 the actual and net result is that the Petitioner is not entitled for any incentive/remission/ exemption since it remained in dues in respect to cane price in each quarter of the period of five years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was only upto 04.06.2007 when it was withdrawn by the state government. Mr. Dhruv Mathur representing intervener L.H.Sugar Factories submitted that the Policy causes discrimination between the those sugar mills who opt for it and those which could not and therefore is in violation of Articles 14 and 19(1)(g) of the Constitution of India. He also challenged the competence of the State Government to bring the Policy. We have considered the rival contentions of the parties and have also perused the record. The common questions of facts and law involved in these petitions are:- I) Whether the withdrawal of the Policy by the State Government vide the impugned order dated 04.06.2007 and denial of accrued benefits thereunder to the eligible petitioners suffers from breach of principle of 'Promissory Estoppel', Natural Justice and 'Legitimate Expectation'? II) Whether the benefits in the form of exemptions/reimbursements/capital subsidy as promised by the State Government under the Policy could have been suddenly withdrawn by the State Government despite the fact that the petitioners had already made large investments pursuant to the promise and assurance made by the State Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in Writ appeal No. 51212 of 2018 (AIR 2018 Allahabad 278), once the decision of this Court merged in the Order of the Supreme Court, it would not be legally permissible for this Court to consider the correctness or otherwise of the decision of this Court. This Court is thus bound by the Order of the Supreme Court dated 07.03.2018 which now included Order dated 17.09.2014 passed in case of Bajaj Hindustan Limited in writ petitions nos. 1853 and 1854. Hon'ble Supreme Court in the case of S.V.A. ReRolling Mills Vs. State of Kerala and others [(2014) 4 SCC 186] has in para 30 of the report held that: "Before laying down any policy which would give benefits to its subjects, the State must think about pros and cons of the policy and its capacity to give the benefits. Without proper appreciation of all the relevant factors, the State should not give any assurance, not only because that would be in violation of the principles of promissory estopple but it would be unfair and immoral on the part f the State not to act as per its promise." In the instant case, the petitioners made huge investment in the State of U.P. under a bona fide belief that the State Government shall grant all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by it on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it. But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual. The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society and the constant endeavor of the Courts and the legislature must, therefore, be to close the gap between law and morality and bring about as near an approximation between the two as possible." As far as the issue of payment of cane dues to the farmers is concerned, it is to be noted that this condition was not contained in the Policy as originally announced on 24th August 3004 but was brought in by subsequent amendment dated 17.12.2004 to the Policy whereby it was stipulated that 'various concessions/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deny the benefits thereunder when the petitioners had invested thousands of crore rupees acting and relying upon the solemn and irrevocable promise made by the State Government. The case of Bajaj Hindustan Ltd (Civil Misc Writ Petition No. 17118 of 2010) relied upon by Shri Ramesh Kumar Singh, learned Additional Advocate General to buttress his argument regarding 'life time of the Policy' is of no help as context of that case was entirely different and the said judgment was does not define or clarify as to what is the life time of the Policy. When the State Government itself had extended the validity of the Policy till 31.03.2008 then the life time of the Policy would be till 31.03.2008. There is no quarrel with the legal proposition that the State is empowered to withdraw a Policy but if such Policy contained some unequivocal promise and assurance and someone has altered his position acting on such promise then such withdrawal shall have to pass the test of promissory estopple. There is also no quarrel with the proposition that promissory estopple must yield to overriding public interest except that the present case does not contain any such overriding public interest. We also ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
