1991 Supreme(Raj) 814
RAJASTHAN HIGH COURT
I.S.Israni, J.
Shri Laxmi Chand Agrawal - Appellant
Versus
State of Rajasthan and Ors. - Respondent
S.B. Civil Writ Petition No. 883, 844 and 1359 of 1990.
Decided On : 23-08-1991
Important Points
The doctrine of promissory estoppel can be applied to prevent a party from going back on a promise made to another party, if the latter has acted on the promise to its detriment.
Subject
Industrial Law - INDUSTRIES DEVELOPMENT AND REGULATION ACT, 1951
Headnote
INDUSTRIES DEVELOPMENT AND REGULATION ACT, 1951 - SECTIONS 2, 10, 11, 11-A, 13, 18-G - FACTORIES ACT, 1948 - SECTION 3(C) - PROMISSORY ESTOPPEL - SMALL SCALE INDUSTRIES - CANCELLATION OF PROVISIONAL REGISTRATION CERTIFICATE - DOCTRINE OF PROMISSORY ESTOPPEL - APPLICABILITY - INTERPRETATION OF STATUTORY PROVISIONS - JUDICIAL REVIEW.
Fact of the Case:
Petitioners were granted provisional registration certificates for establishing small-scale industries at Bhiwadi, Rajasthan, with certain terms and conditions. However, the General Manager, District Industries Centre, Alwar, cancelled these certificates without providing any opportunity of hearing to the petitioners. The petitioners challenged this cancellation order, arguing that the District Industries Officer had no authority to issue certificates for industries covered by the First Schedule of the Industries Development and Regulation Act, 1951 (the Act, 1951), and that the industries they intended to establish were not covered by the definition of 'factory' under the Factories Act, 1948.
Finding of the Court:
The court held that the District Industries Officer had the authority to issue provisional registration certificates, and that the industries intended to be established by the petitioners were not covered by the definition of 'factory' under the Factories Act, 1948. The court also held that the doctrine of promissory estoppel was applicable to the case, as the petitioners had acted on the assurances given by the respondents and had made heavy investments in reliance on the provisional registration certificates. Therefore, the court quashed the cancellation order and directed the respondents to allow the petitioners to establish their small-scale industries in accordance with the terms and conditions of the provisional registration certificates.
Issues: 1. Whether the District Industries Officer had the authority to issue provisional registration certificates for industries covered by the First Schedule of the Act, 1951? 2. Whether the industries intended to be established by the petitioners were covered by the definition of 'factory' under the Factories Act, 1948? 3. Whether the doctrine of promissory estoppel was applicable to the case?
Ratio Decidendi: 1. The court held that the District Industries Officer had the authority to issue provisional registration certificates, as there was no evidence to suggest that he exceeded his powers in doing so. 2. The court held that the industries intended to be established by the petitioners were not covered by the definition of 'factory' under the Factories Act, 1948, as they would employ less than 50 persons. 3. The court held that the doctrine of promissory estoppel was applicable to the case, as the petitioners had acted on the assurances given by the respondents and had made heavy investments in reliance on the provisional registration certificates.
Final Decision: The court allowed the petitions, quashed the cancellation order, and directed the respondents to allow the petitioners to establish their small-scale industries in accordance with the terms and conditions of the provisional registration certificates.
JUDGMENT
1. - In these three writ petitions a common question has been raised, therefore, they are decided by one order. It has been prayed in these petitions that the order dated January 29, 1990 (Anx. 7 passed by General Manager, District Industry Centure, Alwar, by which, the provisional registration certificate for establishment of small scale industry granted to each one of the petitioners, has been cancelled be quashed.
2. The dates and the numbers of annexures are mentioned as in WP No. 883/1990. Briefly, it has been stated by the petitioners that Government of Rajasthan with a view to develop Bhiwadi District Alwar, offered concessions to establish small scale industries at Bhiwadi, and established Officer of the District Industries Officer (for brevity 'D.I.O.) there. In order to receive applications, the D.I.O. used to go to Delhi every second Friday in a month. Keeping in view the concessions offered the petitioners approached the D.I.O. Bhiwadi on December 11,1989 gave an application form alongwith project report duly filled, for grant of provisional Registration Certificate to establish a small scale industry at Bhiwadi. The D.I.O. Bhiwadi issued a provisional Registration Certificate (Annexure-1) as small scale unit to each of the petitioners. They deposited the necessary amount for application, issue of certificate and also invested Rs. 2000/- for the purpose of National Saving Certificate. This certificate is issued to enable the petitioner to obtain all facilities/clearance for its setting up an industry. It is valid for one year only and within this period all steps have to be taken for establishing small scale industries. It is made clear in clause Nos. 6 & 7 of Annexure-1 that it shall be responsibility of the applicant to obtain all necessary facilities e.g. Finance, accommodation, machinery, approval/permission. It is also mentioned that the applicant will start taking effective steps to start the unit immediately after issuance of provisional registration certificate (for brevity 'the certificate'). The certificate of provisional registration certificate (for brevity 'the certificate'). The certificate was issued for manufacturing Ice-cream, Ghee, Butter and Skimmed Milk Power. However, vide Annexure-7 dated January 29, 1990 the General Manager, District Industries Centre, Alwar respondent No. 3 issued an order whereby the certificate issued by D.I.O. Bhiwadi was cancelled. Hence these petitions.
3. It is submitted by Shri Paras Kuhad & Shri Alok Sharma, learned Counsel that soon after grant of certificate Annexure-1, the petitioners made heavy investments as mentioned in each of the petitions, since every thing had to be completed within period of 12 months and industries had to be established failing which the certificate was liable to be cancelled. It is pointed out that petitioner in Petition No. 883/90 entered into transaction for purchase of two different units at Bhiwadi, which were at the relevant time auctioned by R.F.C. The one unit was M/s Esso Gas Product, for which, the petitioner had given highest bid for Rs. 9 lakhs & deposited Rs. 45000/- on December 21,1989 as earnest money (Anx. 2). Petitioner also took over M/s Pee Pee Cable & Conductor Industries (P) Ltd., and purchased its share capital of approximately Rs. 6 lakhs. Petitioner also gave guarantee to State Bank of India for approximately Rs. 7 lakhs being the amount of secured loan. He also paid a sum of Rs. 415000/- to the promoters or he said company towards settlement of the unsecured loan of the said company. Petitioner also advanced a sum of Rs. 3,17,000/- to M/s Kristam Engineers Pvt. Ltd. for the puchase of plant & machinery. The relevant annexures are Nos. 3 & 4 Photostat copy of the cheque issued is Annexure-5 and receipt given to petitioner is Annxure-6. It is further submitted that the dectrine of promisory estoppel will be applicable to these petitioners since they acted on the assurances given by the respondents and started
Back
