TMI Blog2019 (9) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... ions so that the Government may perform its duty to implement the directive principles of State Policy. The law so crystallized in relation to the status of the directive principles of State Policy would tell us that if there is any action of the State or any executive order made by the State which dilutes or abridges the mandate of the directives, the Court in exercise of power of judicial review can annul the action or the executive order. The only condition necessary for doing so would be that the executive order or the law underlying the impugned action or order should have a reasonable nexus with the directive principles or should be made for implementing the directive principles and this has to be ascertained by examining nature and character of the basic executive order or the law. Sometimes, even the basic law or order could be in derogation of the directives. The impugned order dated 10th August 2017 is hereby quashed and set aside and the Commissioner of Sales Tax or any authorized Officer is directed to specify the effective date of the Eligibility Certificate without curtailing the validity period in terms of clause 3.1(3) of the Incentive Scheme within a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for specifying the date from which the incentives to be given to the Petitioner were to take effect. The Commissioner of Sales Tax prescribed the effective date, but, while doing so, curtailed the validity period by about three years by his order passed on 10th August 2017. The Petitioner has taken an exception to such curtailment of the validity period by filing this Petition. The Petitioner has also raised another grievance in this Petition. He submits that incentives given in the Incentive Scheme have been substantially reduced by new policy prescribing new tax structure of the State and according to him, this violates principle of promissory estoppel. 6. It is the submission of the learned Counsel for the Petitioner that the curtailment of validity period is not permissible under the Incentive Scheme. It is also his submission that, even if new tax structure has come into being it would have no adverse impact on the monetory incentives given under the Incentive Scheme by virtue of the Application of the doctrine of 'Promissory estoppel'. The law consistently laid down by the Hon'ble Apex Court right from the case of M/s Motiram Padampat Sugar Mills Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may, the fact remains that the scheme had the object of making an effort for ensuring even distribution of industrial units across the State of Maharashtra so that the employment is provided to larger sections of the society and there occurs equal distribution of wealth and means of production, to the common benefit of inhabitants of State. 9. The Incentive Scheme as modified from time to time envisages giving of promotional and financial incentives. The financial incentives include the tax exemptions, cash subsidies for payment of tax interest, subsidies, various matters and other exemptions. The promotional incentives include Industrial Promotion subsidy, refund of Octroi/Entry Tax (in lieu of Octroi) and the like. The promotional and financial incentives could be availed of only upon the industry qualifying itself in terms of the eligibility conditions prescribed in the scheme. The industry is required to obtain an Eligibility Certificate from the Implementing Agency, which is defined to be the concerned District Industries Centre. The decision of the Implementing Agency as per clause 3.1(1), though subject to such directions as the Government may issue from time to ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... htful exposition of the doctrine of promissory estoppel could be found in the case of M/s. Motilal Padampat Sugar Mills Co. Ltd. V/s State of Uttar Pradesh and Others reported in (1979) 2 Supreme Court Cases 409. The observations of the Hon'ble Apex Court appearing in Paragraph No.24 are relevant and they are reproduced thus : 24. This Court finally, after referring to the decision in the Ganges Manufacturing Co. V. Sourujmull (1880) ILR 5 Cal 669, Municipal Corporation of the City of Bombay v. Secretary of State for India (1905) ILR 29 Bom 580 and Collector of Bombay v. Municipal Corporation of the City of Bombay 1952 SCR 43 , summed up the position as follows : Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen. The law may, therefore, now be taken to be settled as a result of this decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hy 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 endeavour 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. The doctrine of promissory estoppel is a significant judicial contribution in that direction. But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise an equity in favour of the promisee and enforce the promise against the Government. The doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it. When the Government is able to show that in view of the fats as have transpired s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the Court would insist on a highly rigorous standard of proof in the discharge of this burden. But even where there is no such overriding public interest, it may still be competent to the Government to resile from the promise on giving reasonable notice, which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position provided of course it is possible for the promisee to restore status quo ante. If, however, the promisee cannot resume his position, the promise would become final and irrevocable. Vide Emmanuel Avodeji Ajaye v. Briscoe. 14. Two propositions of law emerge from the above observations. Firstly, once the promise is solemnly given by the State with an intention that when acted upon, it would create a legal relation and acting on it the promisee has changed his/her position and incurred liability, the State must be held as bound by the promise, except when owing to change of circumstances or subsequent developments larger public interests demand that the promise be not enforced against the State lest ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated and the discussion made by us thus far that the doctrine of promissory estoppel clearly apply here and would forbid the Government from taking any decision of not completely implementing the Incentive Scheme or reducing the incentives to the detriment of the Petitioner and to that extent the decision would have to be held as illegal. Once a promise has been solemnly given with an intention that it would be acted upon and which has been indeed acted upon and liabilities suffered by the promisee, the State cannot be permitted to backtrack on the promise and change its position so as to cause loss to the promisee. There can be an exception to the application of the principle of promissory estoppel, but, the facts and circumstances necessary for exempting the Government from its liability do not exist on record and the reply of the State also does not convincingly point out any such exceptional facts and circumstances warranting toning down or withdrawing of its promise, much to the disadvantage of the Petitioner. If the State has to reverse its promise, it must demonstrate specifically the facts and circumstances showing that enforcing of the promise against it would be highl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds fundamental rights, such as (i) There is no disharmony between the directives and the fundamental rights, because they supplement each other in achieving the common goal and establishing a welfare of State; (ii) Fundamental rights cannot be enjoyed fully unless conducive atmosphere for their enjoyment is created, which is possible only when the directive principles are implemented; (iii) Parliament is competent to abrogate any of the fundamental rights by amending the Constitution in order to enable the State to implement the directive principles; (iv) Though the mandate of Article 37 is directed at the State, the courts are also bound by the mandate, within the parameters of the Constitution or any other statute under their consideration; and (v) The courts have a duty while interpreting the Constitution and statutes to harmonise the social objective underlying the directive principles with the individual rights. 21. In the case of Centre of Legal Research V/s State of Kerala reported in AIR 1986 SC 1322 , the Hon'ble Apex Court held that the Court may issue suitable directions so that the Government may p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards securing the Directive Principles as enjoined by Articles 39(b) and (c), the declaration would not debar the court from striking down any provision therein which violates Article 14, 19 or 31.......................................................... 24. The interpretation given by the Hon'ble Apex Court as regards the status of the directive principles of State Policy, in our considered opinion, applies to the facts and circumstances of the present case. The Incentive Scheme, as stated earlier, has been framed ostensibly to achieve one of the directives contained in Article 39(c) for ensuring equal distribution of wealth and means of production. Specific incentives to the industries have been offered and many of the industries have also availed of those incentives by setting up their industrial units situated in various parts across the State of Maharashtra. These units have been established by making substantial investment and even at the risk of increase in the expenditure on account of transportation, marketing and the like. Thus, these units have suffered liabilities with the hope that the increased cost of production would be evened out appropriately by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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