TMI Blog2004 (11) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the State Government, if it so chooses, shall file its further counter-affidavits before the High Court within six weeks from today indicating the reasons which warranted the withdrawal of the benefits extended. The plea of the appellants regarding legitimate expectation shall be considered by the High Court in the light of the materials to be placed by the respondents by affidavits as directed above. Another point which was specifically raised before the High Court but has not been dealt by it is the legality of the action in directing retrospective withdrawal of the benefit by a letter of the Government. Whether the same is permissible in law has to be decided by the High Court. - Civil Appeal No. 8605, 8606 of 2002 - - - Dated:- 22-11-2004 - ARIJIT PASAYAT AND THAKKER C.K. JJ. A.M. Singhvi, Prabha Shanker Mishra and A.K. Ganguli, Senior Advocates (V. Giri, Vikas Mehta, Amit Bhandari, Ms. Indu Malhotra, Ambrish Kumar, N. Prasad, Sandeep and K.K. Mani, Advocates, with them), for the appellants. R. Muthukumarasamy, Senior Advocate and Additional Advocate-General of Tamil Nadu (Subramonium Prasad, Advocate, with him), for the respondents. ---------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the files which were produced before the High Court and on which reliance was placed to hold against the appellants are not known to the appellants. In other words, there was clear violation of the principles of natural justice. The Government's letter dated December 28, 1988, refers to some decision, but in the absence of any authentication as required under article 166 of the Constitution of India, 1950, (in short "the Constitution"), the same is ineffective. In any event, the retrospective withdrawal of the benefit on the basis of an executive decision is impermissible. 3.. In response, learned counsel for the respondent-State, submitted that the appellants have failed to adduce any evidence or material to show that they were in any way induced by any governmental action to set up industries. In fact, the Government of Tamil Nadu, vide G.O. Ms. No. 1294 dated October 24, 1975, granted exemption from purchase tax on sugarcane in favour of sugar mills established in "co-operative and public sectors" in the form of annual subsidy equivalent to purchase tax on sugarcane. There was no scope for any misunderstanding that it applied to any private sector participation in the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B 130, again came up for consideration before the King's Bench in Combe v. Combe [1951] 2 KB 215. Therein the court ruled that the principle stated in High Trees case [1947] 1 KB 130, is that, where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accord- ingly, then, once the other party has taken him at his word and acted on it, the party who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relationship as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced, even though it is not supported in point of law by any consideration, but only by his word. But that principle does not create any cause of action, which did not exist before; so that, where a promise is made which is not supported by any consideration, the promise cannot bring an action on the basis of that promise. The principle enunciated in the High Trees case [1947] 1 KB 130, was also recognised by the House of Lords in Tool Metal Manu- facturing Co. Ltd. v. Tungs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumptions were deserted that led to it". The principle, set out above, was reiterated by Lord Denning in High Trees case [1947] 1 KB 130. This principle has been evolved by equity to avoid injustice. It is neither in the realm of contract nor in the realm of estoppel. Its object is to interpose equity shorn of its form to mitigate the rigour of strict law, as noted in Anglo-Afghan Agencies case AIR 1968 SC 718 and Sharma Transport Represented by D.P. Sharma v. Government of A.P. (2002) 2 SCC 188. 7.. No vested right as to tax holding is acquired by a person who is granted concession. If any concession has been given it can be withdrawn at any time and no time-limit should be insisted upon before it was withdrawn. The rule of promissory estoppel can be invoked only if on the basis of the representation made by the Government, the industry was established to avail of the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airness in action by the State, and non- arbitrariness in essence and substance is the heart beat of fair play. Actions are amenable, in the panorama of judicial review, only to the extent that the State must act validly for discernible reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualised than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and, if so, does it really satisfy the test of reasonableness. 10.. Where a particular mode is prescribed for doing an act and there is no impediment in adopting the procedure, the deviation to act in a different manner which does not disclose any discernible principle which is reasonable itself shall be labelled as arbitrary. Every State action must be informed by reason and it follows that an act uninformed by reason is per se arbitrary. 11.. This Court's observations in G.B. Mahajan v. Jalgaon Municipal Council AIR 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectation merely permits the court to find out if the change of policy which is the cause for defeating the legitimate expectation is irrational or perverse or one which no reasonable person could have made. A claim based on merely legitimate expectation without anything more cannot ipso facto give a right. Its uniqueness lies in the fact that it covers the entire span of time; present, past and future. How significant is the statement that today is tomorrows' yesterday. The present is as we experience it, the past is a present memory and future is a present expectation. For legal purposes, expectation is not same as anticipation. Legitimacy of an expectation can be inferred only if it is founded on the sanction of law. 15.. As observed in Attorney-General for New South Wales v. Quinn [1990] 64 Aus LJR 327 to strike the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism. Moreover, the negotiation of a legitimate expectation (falling short of a legal right) is too nebulous to form a basis for invalidating the exercise of a power w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration. A restriction cannot be said to be unreasonable merely because in a given case, it operates harshly. In determining whether there is any unfairness involved the nature of the right alleged to have been infringed, the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing condition at the relevant time enter into judicial verdict, the reasonableness of the legitimate expectation has to be determined with respect to the circumstances relating to the trade or business in question. Canalisation of a particular business in favour of even a specified individual is reasonable where the interests of the country are concerned or where the business affects the economy of the country. (See Parbhani Transport Co-operative Society Ltd. v. Regional Trans- port Authority AIR 1960 SC 801, Shree Meenakshi Mills Ltd. v. Union of India AIR 1974 SC 366, Hari Chand Sarda v. Mizo District Council AIR 1967 SC 829, Krishnan Kakkanth v. Government of Kerala AIR 1997 SC 128 and Union of India v. International Trading Co. See [2003] 1 RC 102 (SC). (2003) 5 SCC 437. 18.. Article 166 of ..... 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. 20.. In Shrijee Sales Corporation v. Union of India (1997) 3 SCC 398, it was observed that once public interest is accepted as the superior equity which can override individual equity the principle would be applicable even in cases where a period has been indicated for operation of the promise. If there is a supervening public equity, the Government would be allowed to change its stand and has the power to withdraw from representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. Moreover, the Government is competent to rescind from the promise even if there is no manifest public interest involved, provided no one is put in any adverse situation which cannot be rectified. Similar view was expressed in Pawan Alloys and Casting P. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of natural justice certainly were applicable, since the High Court with reference to the files recorded findings on the basis thereof. As noted above no specific grounds or reasons were indicated to justify the withdrawal in the affidavits filed before the Tribunal or the High Court, as the case may be. As the correctness of factual basis justifying withdrawal is in issue, fair play certainly warranted grant of opportunity to the appellants to present its side of the picture. 23.. Further, a definite plea was taken that there was no scope for retrospective withdrawal of benefit by an executive order. The High Court has not dealt with the issue. The same also needs to be examined. 24.. Above being the position, decision of the High Court by placing reliance on the files to hold that the withdrawal was justified, is not tenable in law and in the fitness of things, the High Court should hear the matter afresh and take a decision on those two is- sues. It is made clear that we have not expressed any opinion on those issues on the facts of the present case. 25.. It is to be noted that no privilege was claimed from production of the file as the files were produced before the Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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