TMI Blog1989 (9) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... o only seven old established tyres Companies. Four companies belonged to multi-national group viz., Dunlop, Firestone, CEAT, and Goodyear India Ltd. The remaining three Companies viz., Madras Rubber Factory (MRF), Premier Tyres Ltd. and Incheck Tyres Ltd. had collaboration with well established Companies viz., Mansfield Tyres and Rubber Company, Uni Royal and Foreign Export Corporation of Czechoslovakia. In order to attract new investment for setting up new tyre industries as also to encourage investment in the existing tyre industries, the Govt. of India introduced an integrated excise relief scheme to give incentive to the new industries as also the existing tyre industries. This scheme was given statutory effect vide Notification No. 198/76 dated 16th June, 1976. As a result of this incentive scheme, four new Companies came into existence viz., Modi Rubber Limited, Appolo Tyres Ltd., Vikrant Tyres Ltd. and M/s. J.K. Tyres Ltd. This scheme was later modified in the year 1978 and that came to an end in the year 1980. 3. However, on the representation made by the newly established Companies, which were set up at a substantially high investment of over Rs. 30 crores per plant, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied scheme. 6. On account of this withdrawal, the petitioner (respondent Company) submitted a representation to the Government of India and held discussion with its Officers at various levels. Meanwhile, the letter of intent issued by the Central Government to the petitioner company was converted into an industrial licence and it took all possible steps to complete the project and to commence production and clearances before 31-3-1984, which was the date postulated for eligibility of relief under the original scheme. The Central Government again modified the scheme vide Notification No. 87/84-C.E. and 88/84-C.E., dated 6-4-1984 and made the exemption available to the new factories which were set up under Section 13 of the Act. This notification was withdrawn by the impugned Notification No. 159/85-C.E., dated 15-7-1985 and hence this writ petition was filed on the ground that the withdrawal of this scheme vide Notification No. 159/85-C.E., dated 15-7-1985 is totally illegal and contrary to law and the Government is estopped from doing so under the doctrine of promissory estoppel. This withdrawal was also alleged to be ultra vires of Article 19(1)(g) of the Constitution. This ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government from time to time. It was felt that the revenue interests are greatly prejudiced by continuing the exemption granted under Notification No. 88/84-CE and hence, the rescinding of the Notification No. 88/84-CE was considered by the Government as most desirable in the larger public interest. It was also contended that the petitioner was not entitled to any exemption during the period 13-11-1982 to 5-4-1984 and the petitioner could not have anticipated or contemplated in 1981 that an exemption notification will be issued in 1984 and, therefore, the withdrawal of Notification No. 88/84-CE in any case cannot act prejudicial to the interest of the petitioner nor the decision taken by them to expand the factory in the year 1981 can be adversely affected by the aforesaid withdrawal of the Notification No. 88/84-CE. It was submitted that the principle of promissory estoppel cannot be pressed into service against the Government. After hearing both the parties, the learned Single Judge came to the conclusion that this Notification No. 159/85-C.E., dated 15-7-1985 is bad and the Government cannot unilaterally withdraw this concession on account of the applicability of the prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropose to deal with this question. 12. Mr. J.P. Joshi, the learned counsel appearing for the appellant has based his arguments on three counts : (1) that the principle of promissory estoppel cannot be pressed into service against the Government in exercise of its legislative functions or powers; (2) that the petitioner-respondent has not altered the position after the issuance of Notification No. 88/84 dated 6-4-1984 to their detriment and, therefore, when nothing consequential has been done by them to their detriment after the issuance of this notification, they cannot avail the benefit of the principle of promissory estoppel against the Govt. and (3) that the principle of promissory estoppel is not applicable in cases of policy change by the Govt. in larger public interest. 13. On the first count, Mr. J.P. Joshi, the learned counsel appearing for the appellant has submitted that the powers conferred on the Govt. Under Rule 8(1) of the Central Excise Rules, 1944 are legislative in character because this rule has been framed under Section 37 of the Central Excises and Salt Act, 1944. As per Mr. Joshi, when the Govt. exercises any legislative powers as a delegatee of the parliam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pered or restricted the Govt. 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 Govt. makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why the Govt. should not be compelled to make good such promise like any other private individual." In Motilal Sugar Mills case (supra), it has been laid down that there can also be no promissory estoppel against the legislature in exercise of legislative power. The legislature can never be precluded from exercising its legislative function by resort to the doctrine of promissory estoppel. 14. This is a case of exercise of subordinate legislation as the delegatee of the parliament. It is not a case where the parliament in exercise of its legislative powers has enacted any law overriding the earlier concessions granted by the Govt. Thus, this authority fully supports the case of the respondent. 15. Mr. A.K. Desai, the learned counsel appearing for the petitioner-respondent has placed reliance on a decision of their lordships of the Supreme Court in Pournami Oil Mills v. State of Ker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (1989) 3 SCC 115, wherein their lordships of the Supreme Court observed : "that it is true that there is no estoppel against the legislature and the vires of the Act cannot be tested by invoking the plea but so far as the State Govt. is concerned, the rule of estoppel does apply and the precedents of this Court are clear." 17. A similar view has been expressed by a Division Bench of the Bombay High Court in Bharat Commerce and Industries Ltd. v. U.O.I. -1987 (32) E.L.T. 40 (Bombay), wherein it has been observed : "that it is true that the doctrine of promissory estoppel is not available against the legislature in exercise of its legislative functions. But here one is concerned with a situation where Government exercises powers conferred upon it by statute or the powers of subordinate legislation in acting contrary to the terms of a representation it had earlier made. The doctrine of promissory estoppel is that he who makes the representation is estopped from going back upon it provided he has the authority or power to make the representation good. In the M.P. Sugar Mills and the Godfrey Philips cases the representations were made by a circular and letter respectively. The S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promissory estoppel is not applicable in cases where the authority or power of the Officer of the Government or of the public authority is outside the authority or the power to make that; and (5) that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Govt. that having regard to the facts as they have subsequently transpired it would be inequitable to hold the Govt. to the promise made by it, the Court would not raise an equity in favour of the promisee and enforce the promise against the Govt. Except these exceptions, the Law is now well-settled that the doctrine of promissory estoppel is applicable against the Govt. in exercise of its governmental, public or executive functions. 19. Lord Denning, J. in his famous case Robertson v. Minister of Pensions (1959) 1 KB-227 said :- "the Crown cannot escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so as to fetter its future executive action --- the defence of the executive necessity is of limited scope. It only avails the Crown where there is an implied term to that effect or tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y estoppel. In Union of India v. Godfrey Philips India Ltd. 1985 (22) E.L.T. 306 (S.C.) = (1985) 4 SCC 369, presided over by a three Judge Bench, it was observed that we find it difficult to understand how a Bench of two Judges in Jitram case (supra) could possibly overturn or disagree with what was said by another Bench of two Judges in Motilal Sugar Mills case (supra). If the Bench of two Judges in Jit Ram case (supra) found themselves unable to agree with the law laid down in Motilal Sugar Mills case (supra), they could have referred Jitram case (supra) to a larger Bench but we do not think it was right on their part to express their disagreement with the enunciation of the law by a coordinate Bench of the same Court in Motilal Sugar Mills case (supra). Their lordships of the Supreme Court further observed as follows :- "We have carefully considered both the decisions in Motilal Sugar Mills case and Jit Ram case and we are clearly of the view that what has been laid down in Motilal Sugar Mills Case represents the correct law in regard to the doctrine of promissory estoppel and we express our disagreement with the observations in Jit Ram case to the extent that they conflict wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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." A somewhat similar view has been expressed by their lordships of the Supreme Court in Delhi Cloth and General Mills Ltd. v. Union of India (1988) 1 SCC 86, wherein it has been observed: "For invoking the doctrine of promissory estoppel what is required is that the party asserting the estoppel must have acted upon the assurance given to him or must have relied upon the representation made to him. It means, the party has changed or altered the position by relying on the assurance or the representation. The alteration of position by the party is the only indispensable requirement of the doctrine. It is not necessary to prove further any damage, detriment or prejudice to the party asserting the estoppel. It is not the question of detriment but whether it appears unjust, unreasonable or inequitable that the promisor should be allowed to resile from his assurance or representation, having regard to what the promissee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u study the cases in which the doctrine has been applied, you will see that all that is required is that the one should have acted on the belief induced by the other party. That is how Lord Cohem put it in the Tool Metal case (1955) 1 WLR 761,799 and that is how I would put it myself." In this view of the matter, we are unable to accept the second contention raised by Mr. Joshi that nothing detrimental has been done by the petitioner-respondent in pursuance of the alleged promise made by the appellant. We are definitely of the view that the petitioner-respondent has actually acted upon these assurances and has altered its position in pursuance of these assurances and the question of detriment is beside the point. What is material is that the party must have acted upon the assurance so as to alter its position and that has been amply proved by the petitioner-respondent in this case. 23. It was lastly contended by Mr. Joshi that the principle of estoppel does not operate at the level of Government policy. In this respect, he has placed reliance on a decision of their lordships of the Supreme Court in Express Newspapers Pvt. Ltd. v. Union of India (1986) 1 SCC 133, wherein it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the mere change in the policy ipse dixit is not sufficient and the burden lies on the Govt. to show that there is overriding public interest which compelled it to change its policy and to prove that contention the Courts are required to insist on a highly rigorous standard of proof in the discharge of this burden. In this case, except that there is an allegation that industries were taking undue advantage of the concessions, there is nothing else which has been mentioned in the reply and no affidavit of any concerned Officer from Finance Secretariat has been filed Jo show that how the Industrialists were taking undue advantage of this concession and, therefore, merely by alleging that there is a change in the policy as some Industrialists were taking undue advantage of this concession will not suffice to allow the Government to withdraw the concession which it has granted by Notification No. 88/84-C.E. 24. Mr. A.K. Desai, the learned counsel appearing for the petitioner-respondent has drawn our attention to a decision of their lordships of the Supreme Court in Asstt. C.C.T. v. Dharmendra Trading Co. (1988) 3 SCC 570, wherein it has been observed: "If the Govt. wants to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
