TMI Blog2009 (11) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... porters of fertilizers including Di-Ammonium Phosphate (DAP). DAP and other complex fertilizers were covered by the Statutory Price Control under the Fertilizer Control Order issued by the Government of India under the Essential Commodities Act 1955. The difference between the selling price fixed by the Government and the costs of production which was higher, was paid by the Government to the Petitioners as subsidy under the Retention Price Scheme (RPS). Likewise in the case of imported fertilizers, the difference between the controlled selling price and the cost of import and distribution was borne by the Government as subsidy. This was the position prior to 24th August 1992. 4. From 25th August 1992 onwards, the Statutory Price Control as well as the subsidy cover were withdrawn as DAP and other complex fertilizers were decontrolled. Consequently there was a sharp increase in the price of the fertilizers. It was feared that the consequent reduced consumption of fertilizers by the farmers would affect agricultural productivity. Consequently, the Government introduced a scheme of ad-hoc concession whereunder the Government fixed a selling price and if the manufacturer/importer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... op seasons; one being the kharif season for the period 1st April 1997 to 30th September 1997 and the other the rabi season between 1st October 1997 to 31st March 1998. The Petitioners state that a major part of the raw material used for production during this period had already been contracted for prior to 1st October 1997. 7. By an order dated 4th March 1997, the Government constituted an Empowered Committee under the Chairmanship of the Secretary, Agriculture Cooperation (A C). The other members were the Secretaries of the Department of Expenditure and Ministry of Fertilizers, one representative each of the FICC, the Fertilizer Association of India (FAI) (of which the Petitioners herein are members) and the BICP. The terms of the reference of the Committee were as under:- i) To indicate reasonable prices in respect of decontrolled phosphatic and potassic fertilizers (P K), whether derived from straight sources or through Complexes. ii) The Committee may decide upon marginal adjustments in the incremental concessions on P K fertilizers that may be necessary. iii) The Committee may formulate a scheme for funding the extra cost of transportation to move fertilizers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lexes. 11. On 7th October 1997, the Government announced the maximum retail price (MRP) of DAP, MOP and complexes. It was announced that the MRP for the rabi season 1997-98 would be the same as it was for the kharif 1997-98. In other words, the MRP of DAP was to remain at ₹ 8300 per tonne. It was stated that in regard to rates of concession on the above fertilizers, orders will issue shortly . 12. According to the Petitioners, on account of depreciation of the rupee and corresponding increase in the price of Naptha and fuel oil, they were expecting an increase in the rate of concession. However, on 3rd February 1998, nearly four months after the announcement of the MRP for the rabi season, the Government announced the reduction in the concession on DAP, MOP and complexes. The concession on indigenous DAP which was ₹ 3,750/- per tonne and imported DAP which was ₹ 2,200/- per tonne was reduced to ₹ 3500/- and ₹ 200/- per tonne respectively during the rabi 1997-98 season, i.e., from 1st October 1997 to 31st March 1998. The reduction was made applicable retrospectively with effect from 1st October 1997. The on account payment was also stopped. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entation. However, in order to succeed, the Petitioners had to show that they had altered their position to their detriment prior to the announcement of the new rates on 3rd February 1998. 16. The learned Single Judge concluded that the reduction in the rates of concession both in respect of indigenous DAP as well as imported DAP could not be said to be merely marginal. Consequently it was held that up to 03.02.1998 when the impugned circular was issued, the petitioners would be entitled to claim concession on the rates notified on 05.03.1997 provided they establish detriment as a fact. However, after 03.02.1998 the petitioners would be only entitled to the reduced rates of concession as notified in the circular of 03.02.1998 . The Respondents were, therefore, directed to process the petitioners claims for concession and to make the payments thereof, if any, along with interest thereon @ 7% from the date on which they became due till the date of payment . The said claims had to be cleared within eight weeks. 17. The Union of India is aggrieved by the impugned judgment since according to it the Petitioners were not entitled to invoke the doctrine of promissory estoppel at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. Further with effect from 1st April 1998, the rates of concession had again been revised from ₹ 3,750/- per tonne to ₹ 4400/- for DAP and for indigenous DAP from ₹ 2,250/- per tonne to ₹ 2000/- per tonne for the year 1997-98. It is inconceivable that within these two months the parameters again changed so much as to give rise to enhancement of the rates of concession. It has been submitted that there was no need for the Petitioners to show that they suffered detriment of the rates of concession originally announced on 5th March 1997. It is submitted that relying on the statement of the Minister of Agriculture made on 21st February 1997 on the floor of the Parliament, the Petitioners had placed orders for import for the year 1997 and therefore had altered their position with effect from that date. In any event, there was no need to prove detriment. The reliance was placed, apart from the decision in Motilal Padampat Sugar Mills (supra), on the decisions in MRF v. Assistant Commissioner (2006) 8 SCC 702; Pawan Alloys Castings Pvt. Ltd. v. UP State Electricity Board (1997) 7 SCC 251 and State of Punjab v. Nestle (2004) 6 SCC 465. 19. Mr. A.S. Chand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, now be taken to be settled as a result of this decision that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is elementary that in a Republic governed by the rule of law, no one, howsoever high or low, is above the law. Everyone is subject to the law as fully and completely as any other and the Government is no exception. It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter. It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel. Can the Government say that it is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts as have transpired, public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and after this position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies. It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it. The Government cannot, as Shah, J., pointed out in the Indo-Afghan Agencies case, claim to be exempt from the liability to carry out the promise on some indefinite and undisclosed ground of necessity or expediency , nor can the Government claim to be the sole judge of its liability and repudiate it on an ex-parte appraisement of the circumstances . If the Government wants to resist the liability, it will have to disclose to the Court what are the facts and circumstances on account of which the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 997-98 made by the Minister for Agriculture on the floor of the Parliament by the Minister of Agriculture on 21st February 1997 was a representation that was clear and unequivocal. That statement was given wide publicity and was immediately acted upon by the petitioners by placing orders for import of phosphoric acid. The circular dated 5.3.1997 was only the formal manifestation of the representation made by government through the Minister in Parliament. The text of the said statement, which has been placed on record, indicates that the Respondent had already taken the decision and that the subsequent circular dated 5th March 1998 was only a formal announcement of the said decision. The relevant portion of the statement of the Minister made on the floor of the Parliament on 21st February 1997 reads as under: Urea is the only fertilizer which is under Statutory Price Control and sold at a uniform price of ₹ 3,320/- per tonne all across the country. The decontrol of P K fertilizers resulted in decline in their consumption whereas in respect of Urea the growth in consumption has been maintained and consequent imbalance in the use of fertilizers. The NPK ratio which stood at 5.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held as under (SCC @ p.452): We do not think that in order to invoke the doctrine of promissory estoppel it is necessary for the promisee to show that he suffered detriment as a result of acting in reliance on the promise. But we may make it clear that if by detriment we mean injustice to the promisee which could result if the promisor were to recede from his promise then detriment would certainly come in as a necessary ingredient. The detriment in such a case is not some prejudice suffered by the promisee by acting on the promise, but the prejudice which would be caused to the promisee, if the promisor were allowed to go back on the promise. (emphasis supplied) 25. The above facts show that the orders for the imports for the entire year 1997-1998 were placed by each of the petitioners on 22nd February 1997 itself. The petitioners are right in contending that the reduction of the concessions as late as on 3rd February 1998 left them with no chance of unraveling the events that preceded that date. Further with only two moths to the close of the financial year, and most of the production schedule for the year nearing completion, there could be no doubt that the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtly ought to have alerted the Petitioners about the possibility of the reduction in the rates of concession. The sentence reads in regard to rates of concession on above fertilizers orders will issue shortly . There is merit in the contention of the Petitioners that due to depreciated value of rupee and the price of Naptha and fuel oil having increased, the Petitioners were, if at all, expecting an increase in the concession. 29. There is yet another aspect of the matter. If according to the Union of India there was no agreement amongst members of the Empowered Committee on what should be the revised rates of concession, and the CCEA therefore had to take a decision on this aspect, such decision had to be taken within a reasonable time. There is no justifiable explanation offered by the Respondent for the CCEA not taking a decision for about four months. Therefore, the Petitioners are justified in contending that till 3rd February 1998 there was no way they could have known that the rates of concession were going to be reduced for the period 1st October 1997 to 31st March 1998. The petitioners cannot be expected to unravel the events that had already taken place, particularly ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
