2005 Supreme(SC) 102

2005(1) Supreme 364
Supreme Court of India
(From Madras High Court)
Ashok Bhan & A.K. Mathur, JJ.
M/s. Larsen & Toubro Ltd. —Appellant
versus
Union of India & Ors. —Respondents
Civil Appeal No. 3025 of 2003
Decided on 18-1-2005
Counsel for the Parties :
For the Appellant : A.K. Ganguli, Sr. Advocate and V. Krishna Murthy, Advocate.
For the Respondent Nos. 1-2 : A. Sharan, Additional Solicitor General and Harish Chander, Sr. Advocate, Ms. Sandhya Goswami, V.K. Verma, S.A. Khan and Shreekant N. Terdol, Advocates.
For the Respondent No. 3 : Altaf Ahmad, Sr. Advocate, Ms. Sangeeta Mandal, Ms. Jayasree Singh, Advocates for M/s. Fox Mandal & Co. Advocates.

Important pointBefore an estoppel can arise, there must be first a representation of an existing fact distinct from a mere promise made by one party to other and that the other party believing it must have been induced to act on the faith of it and that he must have so acted to his detriment.

Headnote:Constitution of India—Articles 226 and 136—Evidence Act, 1872—Section 115—Promissory Estoppel—International Price Reimbursement Scheme—Claim of benefits of—Non compliance of conditions—Appellant obtained an export order from the Malaysian Government for construction of steel bridges in Malaysia—Units located in Free Trade Zone were entitled to some facilities and incentives—Appellant procured its requirement of steel from domestic sources—Claim filed with Government of India for reimbursement of price difference in accordance with the Price Reimbursement Scheme—Order of rejection of appellant’s claim as the raw material procured by appellant from domestic sources amounted to ‘deemed export’—Whether appellants were entitled to the benefits under the Scheme—(No)—Whether the Government is estopped from denying the benefit of reimbursement of the differential price under the International Price Reimbursement Scheme—(No).

       Held : After due deliberations on the submissions made by the learned counsel for the parties we are of the view that there is no merit in this appeal. The units located in the Free Trade Zone are entitled to certain facilities and incentives such as assured supply of power and good quality of water at reasonable rates. Simplified procedures coupled with single point clearance have been provided for them. All imports made by them into the zone were placed under the Open General Licence (OGL). Custom duty was not leviable on the imported materials. They were given exemption from central excise and other levies on the products manufactured by them. Complete tax holiday for specified number of years was made available to them. Like this, many other benefits had been extended to them as is evident from the perusal of the terms of the Scheme which have been reproduced in the earlier part of the judgment. But the IPR scheme was not extended to the units located in free trade zone. The appellant, as a matter of fact, through a number of representatives had been seeking to persuade the respondents to include the units located in Free Trade Zone for IPRS benefits, though the units had the facilities of sourcing the requirements of raw material on duty free basis. EEPC placed its argument on behalf of the appellant before the Union of India - the respondent herein, who by their letter dated 20.9.1991 extended the IPRS to the units located in Free Trade Zone with the rider that IPRS will not be admissible for “deemed export”. As benefits under IPR Scheme were extended for the first time in the year 1991 the question of claiming benefits of IPRS for export effected in the year 1985-86 under the circumstances could not arise. Even otherwise, it is evident as per the terms of the IPRS itself that it did not cover contracts for “deemed exports”. The admitted fact is that the appellant was entitled to import its raw materials from Domestic Tariff Area (DTA) for its unit located in Free Trade Zone at international price from DTA or at international price under Open General Licence (OGL). Every import of raw material from DTA to FTZ is “deemed export” as defined in para 190(g) of Import and Export Policy which provides for categories of supplies which will be treated as “deemed export” and include supplies made in India to units in FTZs. Quite plainly, therefore, the supplies of raw materials made by DTA for the units of the appellant in FTZ would be “deemed export” in terms of the definition at para 190(g) of Import and Export Policy and thus on terms of IPRS itself, the appellant will not be covered by the IPRS for the benefits under it. (Paras 12 and 13)

       This Court has held that before an estoppel can arise, there must be first a representation of an existing fact distinct from a mere promise made by one party to other; secondly, that the other party believing it must have been induced to act on the faith of it; and thirdly, that he must have so acted to his detriment. In the present case, no representation had ever been made by the Union of India that IPRS would be applicable to the units located in FTZ. On the contrary, the appellant had filed a number of representations seeking to persuade the Union of India to include the units located in FTZ for IPRS benefits. The Union of India by its letter dated 20.9.1991, for the first time, extended the IPRS to the units located in FTZ but at the same time reaffirmed that IPRS will not be admissible for “deemed exports”. This reiteration is mere restatement of what is already provided in IPRS and any modification thereof sought by the appellant was not acceptable to the Union of India. Under the circumstances, the question of promissory estoppel would not arise on the facts their inasmuch as no representation contrary to IPRS had ever been made which could mislead the appellant into altering his position to his detriment. (Para 17)

       In the present case, the appellant has failed to furnish the precise data in support of the pleas raised in the Court. What to talk of precise data, in support of its claim, the appellant has failed to furnish any data whatsoever. It has failed to set out as to how the supplies made to them were not “deemed exports” or that the supplies were not made at the international prices to them. The precise data required for their entitlement has not been given in their affidavits. Even the particulars of the exports, the amount of claim, the price difference and the price at which materials were supplied to them have not been furnished. The appellant has failed to show that any representation had ever been made to it by the Union of India contrary to what is contained in the IPRS. Since the appellant failed to show that it has acted on a representation made by the Union of India to its detriment, the appellant is not entitled to invoke the equitable rule of promissory estoppel. (Para 18)