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HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
Sunil Hali, J.
Reckitt Benckiser -Appellant
Versus
Union Of India & Ors. -Resopndent
OWP No. 470-08 and other connected petitions as per list appended to this order
Decided On : 23-12-2010
The principle of promissory estoppel is an equitable doctrine and it must yield when equity so requires. The State or any public authority cannot be compelled to carry out a promise which is prohibited by law or which was devoid of the authority or power of the concerned officer of the Government or the authority concerned to make such a promise. The doctrine of promissory estoppel being an equitable doctrine, as indicated above, must yield place to the equity, if larger public interest is involved. Reliance in this regard may be placed on the judgment of the Apex Court reported as Sharma Transport v. Government of A.P. and others, (2002) 2 SCC 188.
Fact of the Case:
The Central Government, on the request of the State Government, issued a notification granting 100% exemption from payment of excise duty for a period of ten years to those industrial units who established their units on or before 14th of June'02, or who undertook substantial expansion of their units by not less than 25% on or after the said date. The impugned notifications, as discussed herein supra, amended the notification dt. 14th of Nov'02, in two respects i.e.,:- i/ the exemption of the excise duty was restricted to the value addition made, meaning thereby that the actual cost incurred in manufacturing the goods excluding the inputs procured in the shape of raw material; ii/ 100% excise duty refundable in terms of the original notification restricted to a limited percentage as specified in the rate column of the table appended to the impugned notifications in respect of different goods.
Finding of the Court:
The court found that a promise was extended by the State Government to the petitioner Units by way of an incentive in the shape of 100% exemption from payment of excise duty and acting upon the said promise, the petitioners established their units within the specified areas in the State of J&K and have altered their position. Unilateral withdrawal of that promise is barred by the principle of equitable promissory estoppel.
Issues: 1. Whether the impugned notification has been issued by the respondents keeping in view some overwhelming public interest is the next question which is required to be considered. 2. Whether the exemption was granted by way of a refund mechanism.
Ratio Decidendi: The court held that the impugned notifications, which amended the earlier notification granting 100% exemption from payment of excise duty to industrial units in the State of Jammu and Kashmir, were hit by the principle of promissory estoppel. The court found that the State Government had extended a promise to the industrial units to grant them the exemption for a period of ten years, and that the industrial units had relied on this promise and altered their position by establishing their units in the State. The court held that the State Government could not unilaterally withdraw the exemption without establishing that there was an overriding public interest in doing so.
Final Decision: The court allowed the petitions and quashed the impugned notifications. The court directed the State Government to continue to grant the 100% exemption from payment of excise duty to the petitioner-units as provided in terms of the notification No.56/2002-CE dt. 14th of Nov'02.
"It is equally settled law that the promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is prohibited by law or which was devoid of the authority or power of the officer of the Government or the public authority to make. Doctrine of promissory estoppel being an equitable doctrine, it must yield place to the equity, if larger public interest so requires, and if it can be shown by the Government or the public authority for having regard to the facts as they have transpired that it would be inequitable to hold the Government or public authority to the promise or representation made by it. The court on satisfaction would not, in those circumstances raise the equity in favour of the persons to whom a promise or representation is made and enforce the promise or representation against the Government or the public authority.."
What emerges from the observations made by the Apex Court, noticed above, is that in case, the State or the public authority is able to show that the promise held out to the promisee cannot be made good as on the facts equity so demands and the larger public interest so requires, the Government cannot be made bound by the said promise. The doctrine of promissory estoppel would be displaced if the Government is able to show that during the said period, supervening public interest would be prejudiced if the promise is carried out. But in that eventuality, the court has to see the public interest as also the position of the promisee who has altered the position on the basis of the promise extended to it by the Government and a balance has to be maintained.
Not only in respect of a supervening public interest but also if the Government is able to show that the promise so made was in violation of a Statute, it will not compel the Government to act upon the promise made by it. However, the decision of the Government in this behalf has to be supported by some material indicating the facts and circumstances on account of which, the Government claims to be exempted from its liability. It cannot on some indefinite and undisclosed grounds of necessity or expediency resile itself from fulfilling the commitment made by it with the promisee in this behalf. It is for the court to decide as to whether, the facts and circumstances disclosed in this behalf are such as to render it inequitable to enforce the liability upon the Government. The Government can also resile from the promise if it is possible for the promisee to resume its original position or restore status quo ante even if the promise is not acted upon by the Government.
So, what is contemplated by the principle of promissory estoppel stated herein supra is that the decision of the Government to resile from its commitment would be subject to judicial scrutiny which will examine while balancing the two equities-one in favour of the promisee and the other in favour of the promisor, as to whether such a promise is to be carried out or not. The Government cannot become the sole judge and take an exparte decision in this regard, as this
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