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HIGH COURT OF CHHATTISGARH
S. R. NAYAK, C. J.
HIRA INDUSTRIES LTD. - Appellant
Versus
STATE OF C. G. - Respondents
W. P. 1917 Of 1998
Decided On : APRIL 24, 2006
TRANSPORT SUBSIDY - TRANSPORT SUBSIDY SCHEME (TSS) - PAYMENT OF TRANSPORT SUBSIDY - PROMISSORY ESTOPPEL - LEGITIMATE EXPECTATION - ARBITRARINESS - UNREASONABLENESS - INVIDIOUS DISCRIMINATION - INTEREST ON DELAYED PAYMENT - WRIT PETITION ALLOWED.
Fact of the Case:
The petitioner, Hira Industries Limited, established a cement plant in Bastar district of Chhattisgarh, a backward area, taking advantage of the TSS floated by the government to promote industrial growth in the region. The petitioner commenced commercial production on 18-10-1986 and was entitled to transport subsidy for a period of five years. The government, vide its order dated 16-12-1994, directed payment of transport subsidy to the petitioner. However, the government subsequently cancelled this order on 23-6-1999, contending that the earlier order was issued in violation of the Rules of Business and that the TSS had come to an end on 25-11-1989.
Finding of the Court:
The court held that the government's order dated 23-6-1999 was arbitrary, unreasonable, and violative of the principles of natural justice and fair play. The court also held that the government was estopped from going back on its promise to pay transport subsidy to the petitioner, as the petitioner had acted upon the representation made by the government and established the cement plant. Further, the court held that the petitioner had a legitimate expectation that it would be paid transport subsidy, and that the government could not deny this expectation without a fair hearing. The court also found that the government's refusal to pay transport subsidy to the petitioner amounted to invidious discrimination, as the government had paid transport subsidy to another company, M/s. Rudra Cement Ltd., which was similarly situated.
Issues: 1. Whether the government was estopped from going back on its promise to pay transport subsidy to the petitioner? 2. Whether the petitioner had a legitimate expectation that it would be paid transport subsidy? 3. Whether the government's refusal to pay transport subsidy to the petitioner amounted to invidious discrimination?
Ratio Decidendi: 1. The court held that the government was estopped from going back on its promise to pay transport subsidy to the petitioner, as the petitioner had acted upon the representation made by the government and established the cement plant. The court relied on the principles of promissory estoppel and legitimate expectation to arrive at this conclusion. 2. The court held that the petitioner had a legitimate expectation that it would be paid transport subsidy, as the government had made a representation to that effect and the petitioner had acted upon that representation. The court also held that the government could not deny this expectation without a fair hearing. 3. The court held that the government's refusal to pay transport subsidy to the petitioner amounted to invidious discrimination, as the government had paid transport subsidy to another company, M/s. Rudra Cement Ltd., which was similarly situated.
Final Decision: The court allowed the writ petition and quashed the government's order dated 23-6-1999. The court also directed the government to pay the petitioner Rs. 34,90,704/- with interest at the rate of 9% per annum from 17-10-1991 till payment.
( 2 ) THE facts of the case, in brief, are as follows : the petitioner-Company is engaged in manufacture and production of cement. The petitioner-Company was initially doing its business in the name and style of "jai Bajrang cement Pvt. Ltd. " That name of the petitioner-Company was subsequently changed as Hira Industries Ltd. in the year 1991. The districts of Bastar and Surguja in the undivided State of Madhya Pradesh and now part of the newly-formed chhattisgarh State are industrially most backward districts having mainly tribal population. The Government with a view to promote and develop these districts industrially through the Department of Commerce and Industries, in the year 1978, floated a scheme called "transport Subsidy Scheme" (TSS) dated 1-4-1978 to promote establishment of industrial units in Bastar and surguja districts. For establishment of industrial units the basic amenities like raw-materials and transport facilities by Rail were not available in these districts. The government, therefore, under the TSS promised to provide subsidy on transportation charges. This was done as an incentive to the industrial units if they are established in the backward areas. In terms of the TSS, the transportation charges which were incurred by the Industrial Units for a distance between the Industrial Unit and the Railway head are to be reimbursed by respondents 2 to 4 Authorities. The petitioner-Company taking advantage of the TSS and incentive offered by the respondents established its Cement Plant in Pandripani village, tahsil Jagdalpur, District Bastar, and the nearest Railway Head under the TSS as mentioned in Clause (4) of Rule 6 of the rules for Transportation Subsidy Scheme is Raipur.
( 3 ) THE petitioner's Unit commenced its commercial production on 18-10-1986. After commencement of commercial production, the petitioner-Company was eligible for transport subsidy for a period of five years, that is to say, up to 17-10-1991, as per the tss Rules. After commencement of the commercial production, the petitioner-Company raised its claim for transport subsidy before the respondents 2 to 4. Initially, the respondents 2 to 4 released the amount of transport subsidy in part and that too only in respect of goods transported within the undivided state of Madhya Pradesh. The petitioner-Company under the circumstance made a representation to the General Manager, district Industries Centre, Jagdalpur, the 4th respondent herein, for release of subsidy for transportation of goods outside the State also. The 4th respondent, having appreciated the legitimate claim of the petitioner-Company, recommended to the commissioner, Department of Commerce and industries, the 3rd respondent herein, for grant of subsidy for transportation of goods outside the State also. The 3rd respondent accepting the recommendation of the 4th respondent, in his letter to the Government dated 16-9-1994, recommended for grant of subsidy to the petitioner-Company for transportation of goods outside the State. The government of undivided State of Madhya pradesh, the 1st respondent herein, represented by its Secretary, Department of Finance, the 2nd respondent herein, in the light of the recommendations of respondents 3 and 4, accepted the claim of the petitioner -Company for grant of subsidy for transportation of goods outside the State and directed payment of transport subsidy to the petitioner-Company vide its order dated 16-12-1994. Accordingly, the 2nd respondent directed the 3rd respondent to pay the trans
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