ORDER
1. This writ petition was filed seeking declaration that the petitioner is entitled to the incentive of Interest Free Sales Tax Loan under the Scheme introduced by the first respondent in G.O.Ms. No. 224, Industries and Commerce Department, dated 9-3-1976 by holding that the provisions of A.P. Interest Free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987 (hereinafter referred to as 'the Act') does not affect the rights of the petitioner to claim the above mentioned incentive.
2. The writ petition was filed on the basis of the following facts alleged in the affidavit filed in support of the writ petition.
3. The petitioner, which is a Public Limited Company having its registered Office at Adoni, is engaged in the business of manufacture of Caustic Soda and other allied products. It was set up at Gandiparla Village, Kurnool District, which is an industrially backward area. The unit is established at a total cost of Rs. 30 (thirty) crores with the colloboration of an Italian Company-- M/s Oronzio De Nora Impaianti, Milani, Italy. Government of Andhra Pradesh in G.O. Ms. No. 224, Industries and Commerce Department, dated 9-3-1976 introduced new Scheme of State incentives for new industries to be set up in the State of Andhra Pradesh. According to the Scheme, the industries which go in to regular production on or after 1-1-1976 as well as such of those existing industries effecting substantial expansion are eligible for the incentives. One of the important incentives offered under the said G.O. Ms. No. 224, dated 9-3-1976 was Interest Free Sales Tax Loan. Entrepreneurs setting up industries will be eligible for Interest Free Sales Tax Loan , equal to the tax paid by them under Andhra Pradesh General Sales Tax Act on construction material, plant and machinery equipment, during the pre-production stage and purchase or sales tax paid by them under the said Act for a period of five years from the date of going into regular production on raw-material, components and finished goods. Each year's loan is repayable in full at the end of the 10th year from the date of drawing such loan. The life of the scheme was for a period of five years expiring by 31-12-1980. Thereafter, the Government in G.O.Ms. No. 736, Industries and Commerce (II & CP) Department, dated 28-12-1981 extended the incentives beyond 31-12-1980 till a revised Scheme is introduced.
4. It was further stated in the affidavit that by G.O. Ms. No. 375 Industries and Commerce (IA) Department dated 23-8-1985, revised package of State incentives were offered with the object of industrialisation and restricted the same to the identified three intensive industrial areas, viz., Adilabad, Srikakulam and Anantapur Districts. Kurnool District was not included in the same. Even so, by another G.O. Ms. No. 437 Industries and Commerce (IA) Department, dated 10-10-1985, the Scheme of incentives offered in G.O. Ms. No. 224 dated 9-3-1976 was extended up to 28-9-1983. Thereafter, registration of applications seeking incentives under G.O. Ms. No. 224 dated 9-3-1976 was stopped with effect from 29-8-1983. Subsequently, by G.O. Ms. 433, Industries and Commerce (IA) Department, dated 31-7-1986, registration of applications claiming the incentives offered in G.O. Ms. No. 224 dated 9-3-1976 was extended till 31-3-1984. Thereafter, A.P. Interest Free Sales Tax Loan for Industries (Imposition of Ceiling) Ordinance, 1987 (Ordinance 1 of 1987) was issued which was subsequently replaced by A.P. Interest Free Sales Tax Loan for Industries (Imposition of Ceiling) Act 20 of 1987 (Act 20 of 1987) giving retrospectivity to the provisions of the Act with effect from 1-1-1976. However, the petitioner-industry which came into existence solely basing on the various incentives and promises made by the Government in G.O. Ms. No. 224 dated 9-3-16, acquired a right to have the benefit of the Scheme. Having regard to the fact that the letter of intent was obtained in the year 1980 and civil works commenced during the year 1982 and completed before Act 20 of 1987 came into force, the right to claim the incentives accrued to the petitioner and therefore. Act 20 of 1987 is not applicable to the petitioner. It is also stated in the affidavit that, in any event, Act 20 of 1987 itself is violative of Arts. 14, 19 and 21 ofthe Constitution of India. It was claimed that the units, like the petitioner unit, which were started acting upon the incentives offered by the State Government, are protected under the principle of promissory estoppel and that the State cannot back out from its obligation having induced the enterpreneurs, like the petitioner herein, to invest huge monies, viz., Rupees thirty crores. Therefore, the petitioner is entitled for the relief prayed for.
5. A counter was filed on behalf of the respondents admitting the incentives offered in G.O. Ms. No. 224, Industries and Commerce Department dated 9-3-1976 for the industries established in the declared backward blocks/taluks, including Adoni in Kur-nool District. It was also mentioned that by G.O. Ms. No. 736 dated 28-12-1981, the validity of the Scheme of incentives introduced in G.O. Ms. No. 224 dated 9-3-1976 was extended beyond 31-12-1980 till a revised Scheme is introduced and in G.O. Ms. No. 437 dated 10-10-1985, it was mentioned that pending formulation of the new scheme of incentives, registration of applications seeking incentives under G.O. Ms. No. 224, Industries and Commerce, dated 9-3-1976 was stopped with effect from 29-8-1983. However, by G.O. Ms. No. 433, industries and Commerce (IA) Department, dated 31-7-1986 incentives offered in G.O. Ms. No. 224 dated 9-3-1976 were ordered to be continued till 31-3-1984 until a revised incentive scheme is introduced.
6. It is specifically mentioned that the petitioner never filed any application for registration to enable the petitioner to claim the incentives, either before 29-8-1983, the last date fixed in G.O. Ms. No. 437 dated 10-10-1985 or even before 31-3-1984, thedate up to which the Scheme under G.O. Ms. No. 224 dated 9-3-1976 was extended by G.O. Ms. No. 433 dated 31-7-1976 and therefore, it is stated that the claim of the petitioner is not sustainable. The contention of the petitioner unit that it was lured by atlractive incentives offered by the State Government to establish the same at Adoni in Kurnool District was specifically denied. The project profile submitted by the unit only referred to Central subsidy of rupees fifteen lakhs as the means of finance, but the facility of Interest Free Sales Tax Loan was not at all taken into account in computing the economic viability of the project. It is further stated that the industrial licence itself was obtained for the establishment of petitioner unit from the Government of India only during August, 1980. It is denied that the unit was designed and established because of the offer of the State Government in G.O. Ms. No. 224 dated 9-3-1976 giving several incentives including Interest Free Sales Tax Loan. The petitioner, according to the counter, filed an application for prior^ approval (prior registration) on 14-1-1988. In fact the unit itself went into production only on 1-12-1987 and therefore, the petitioner is not entitled to claim any relief in the writ petition and the plea on the basis of 'promissory estoppel' is not available to the petitioner. It is also stated that in view of Act 20 of 1987 which was given retrospectivity with effect from 1-1-1976, the petitioner is not entitled to claim any relief whatsoever. Whatever is claimed in the writ petition is prohibited by the provisions of Act 20 of 1987. The petitioner's claim has no relevance in view of the passing of Act 20 of 1987 by the Legislature. Therefore, the writ petition is liable to be dismissed.
7. At this stage, it is necessary to refer to Writ Petition Nos. 1861 of 1982, 13447 and 17406 of 1987 filed by similarly placed petitioners, in this Court, contending that they are entitled to the benefit of Interest Free Sales Tax Loan as per G.O. Ms. No. 224 dated 9-3-1976. In fad, Writ Petition No. 1861 of 1982 was filed at the earliest point of time invoking the principles of 'promissory estoppel'. During the pendency of the writ petition, Act 20 of 1987 came into force. The petitioner therein filed an additional affidavit raising the plea that Act 20 of 1987 was unconstitutional being violative of Arts. 14, 19(l)(g) of the Constitution of India. Writ Petition Nos. 13447 and 17406 of 1987 were filed after coming into force of Act 20 of 1987. Petitioners questioned the constitutional validity of Act 20 of 1987 in those writ petitions and also invoked the principles of 'promissory estoppel' to claim the benefit of Interest Free Sales Tax Loan offered by the State in G.O. Ms. No. 224 dated 9-3-1976.
8. The above writ petitions were dismissed by a Division Bench of this Court consisting of B. P. Jeevan Reddy and M. Jagannadha Rao, JJ. by their Judgment dated 10-3-1988, upholding the constitutional validity of Act 20 of 1987 and also rejected the plea based on 'promissory estoppel'.
9. When the present writ petition came up before a Division Bench of this Court consisting of G. Ramanujulu Naidu and Y. Bhaskar Rao, JJ. a contention was advanced before the learned Judges, on behalf of the writ petitioner, that the Judgment of the Division Bench of this Court consisting of B. P. Jeevan Reddy and M. Jagannadha Rao, JJ. dated 10-3-1988 is no longer good law in view of the subsequent decision of the Supreme Court in Vij Resins Pvt. Ltd. v. State of Jammu & Kashmir, : [1989]3SCR257 . The contention was that despite the provisions of Act 20 of 1987; the doctrine of 'promissory estoppel' would still operate against the State to enable the writ petitioner-company to obtain incentives offered by G.O. Ms. No, 224, Industries and Commerce Department, Government of Andhra Pradesh, dated 9-3-1976. The Division Bench was of the view that the questions mooted before it are of considerable importance and are likely to affect a number of entrepreneurs and, therefore, was of the opinion that the writ petition should be decided by a Full Bench and directed the papers to be placed before the Hon'ble Chief Justice for constituting a Full Bench, That is how this writ petition has come up before us for consideration.
10. Having regard to the fact that the writ petition itself is referred to us, the following points arise for consideration :
1) Whether the doctrine of 'promissory estoppel' can be invoked against the Government compelling it to act contrary to the obligation or duty imposed by statute i.e., Act 20 of 1987?
2) On the facts and circumstances, whether the plea of 'promissory estoppel' is available to the petitioner?
11. Point No. 1 : In view of the reference made to this Full Bench, we are proceeding to consider and decide this point on the assumption that on the facts and circumstances of this particular case the petitioner satisfied, on facts, the requirements of 'promissory estoppel'. This will ofcourse be subject to the finding to be recorded on point No. 2.
12. To decide the question- involved in this case and answer the reference, it is necessary to refer to the long line of decisions wherein the parameters of doctrine of 'promissory estoppel' have been considered.
13. This aspect fell for consideration before the Supreme Court in Union of India . v. Anglo Afghan Agencies, AIR 1968 SC718. The facts of this case, which are relevant for the purpose of the present discussion are as follows :
On 10-10-1962, the Textile Commissioner published a scheme called the 'Export Promotion Scheme' giving certain incentives to exporters of woollen goods. The scheme was extended to exports of Afghanistan also by a trade notice dated January 1, 1963 M/s Indo-Afghan Agencies, a firm, exported woollen goods to Afghanistan of the f.o.b. value of Rs. 5,03,471-73 ps in September, 1963. In the Export Promotion Scheme, it was specifically provided for granting certificates to import materials of the value equal to 100 per cent, of the f.o.b. value of the goods exported. Despite the fact that the firm exported woollen goods of f.o.b. value of Rs. 5,03,471-73 ps. The Deputy Director in the Office of the Textile Commissioner, Bombay issued to the firm of Import Entitlement Certificate for Rs. 1,99,459/- only instead for the full f.o.b. value of the goods exported. Questioning the same, the firm came to the Court and claimed that on the basis of the principles underlying S. 115 of the Evidence Act, the firm is entitled for Import Entitlement Certificate for the full value, viz., Rs. 5,03,471-73 ps. Their case was that the Government having offered certain incentives which amounted to a representation, on the basis of which the firm acted and altered its position, the Government is not entitled to go back on the same and will be bound to honour it on the principles of 'promissory estoppel'. While dealing with the said case, the learned Judges proceeded on the assumption that the scheme dated 10-10-1962 as extended to Afghanistan is executive in character and not legislative in character. Having proceeded on the above premise, viz., that the Scheme is executive in character, the learned Judges held that where a person had acted upon the representation made in an Export Promotion Scheme, viz., persons who export goods are entitled to the issuance of Import Entitlement Certificate for the f.o.b. value of the goods exported, his clairn for the import licence for the f.o.b. value of the goods exported cannot be arbitrarily rejected and the authorities are bound by the representation. The learned Judges held as follows (AIR 1968 SC 718, at p. 726, para 16):
'We cannot therefore accept the plea that the Textile Commissioner is the sole judge of the quantum of import licence to be granted to an exporter, and that the Courts are powerless to grant relief, if the promised import licence is not given to an exporter who has acted to his prejudice relying upon the representation.'
14. So holding the Supreme Court compelled the authorities to honour the representation made by them in the Scheme, on which the firm acted. It is significant to notice that the learned Judges clearly mentioned that they are not deciding the question whether the Scheme in question is legislative in character or not and proceeded on the assumption that it is executive in character. This is an authority for the proposition that for enforcing the representation which is executive in character, principles of 'promtssory estoppel' are available.
15. Next case which considered this point is Century Spinning & . v. Ulhasnagar Municipality, : [1970]3SCR854 . The writ petitioner therein viz., Company, set up its factory in the year 1956, within the limits of village Shahad, Taluka Kalyan, within the area known as 'Industrial Area'. At that time, no octroi duty was payable in respect of goods imported by the Company in to the Industrial Area for use in the manufacture of its products. On October 30, 1959, Government of Bombay issued a notification, wherein there was an announcement to constitute a municipality for certain villages including the industrial area wherein the Company was situate. In spite of objection by the petitioner therein and others, a notification was published constituting municipality with effect from April 1, 1960, including the industrial area. Representation were made by the petitioner-company therein and other manufacturers for excluding the industrial area. When the State of Maharashtra proclaimed that the industrial area will be excluded from the jurisdiction of the municipality, the municipality made a representation to the Government to withdraw its proclamation dated April 27, 1962 and agreed to exempt the existing factories, viz., the petitioner-company therein and other manufacturers from payment of octroi for a period of seven years etc. On that representation, Government of Maharashtra agreed to retain the industrial area within the local limits of the municipality. Then the District Municipality passed a resolution exempting the petitioner-company therein and others from payment of octroi for a period of seven years. Thereafter, on October 31, 1963, Government of Maharashtra issued a notification withdrawing the proclamation dated April 27, 1962. As a result the industrial area became part of Ulhasnagar Municipal District. Subsequently, Ulhasnagar District Municipality became Ulhasnagar Municipality, pursuant to the notification issued under the Maharashtra Municipality Act. Ulhasnagar Municipality resolved to levy octroi duty. Government of Maharashtra drew the attention of the Municipality the circumstances under which the industrial area was included in its jurisdiction and also advised the Municipality to pass a resolution granting exemption from the payment of octroi duty and honour the commitments made by its predecessor. However, the Municipality ignored the same. In those circumstances, the Company filed the application under Art. 226 of the Constitution of India in the High Court of Bombay and sought a direction to refrain Ulhasnagar Municipality from enforcing the octroi Rules. The High Court dismissed the same in limini. On appeal, the Supreme Court, while dealing with the said case observed as follows : [1970]3SCR854 :
'A representation that something will be . done in future may involve an existing intention to act in future in the manner represented. If the representation is acted upon by another person it may, unless the statute governing the person making the representation provides otherwise, result in an agreement enforceable at law;..........'
The learned Judges allowed the appeal and remanded the matter to the High Court of Bombay for decision on facts. Therefore, in this case also, the Supreme Court stated that unless otherwise provided by a statute, the principles of 'promissory estoppel' can be invoked and enforced. That means, if the statute governing the person making the representation provides otherwise, the principles of 'promissory estoppel' cannot be invoked to compel him to act contrary to the statute.
16. In a decision State of Kerala v. G. R. Silk ., : [1974]1SCR671 , the main point urged was regarding the constitutional validity of Kerala Private Forests (Vesting and Assignment) Act, 1971 (26 of 1971) which was upheld by the Supreme Court and the writ petitions were dismissed, while they were allowed by the High Court. Question of the plea of equitable/promissory estoppel was also raised in Civil Appeal No. 1398 of 1972 which was dealt with in para 23 of the report. The contention was that the writ petitioner-company established in Kerala for the production of rayon cloth pulp on an understanding that the Government would bind itself to supply the raw material. However, the Government later on was unable to supply the same and by an agreement undertook not to legislate for the acquisition of private forests for a period of 60 years in case the Company purchased forest lands for the supply of raw material. On the basis of the agreement, the Company purchased 30,000 acres of private forests. On the above facts, it was contended that the State is bound by the agreement not to legislate for the acquisition of private forests purchased by the Company. The contention was that the agreement under which the State agreed not to legislate would operate as equitable estoppel against the State. While dealing with this contention, the learned Judges of the Supreme Court stated as follows (para 23 of AIR);
'We do not see how an agreement of the Government can preclude legislation on the subject. The High Court has rightly point out that the surrender by the Government of its legislative powers to be used for public good cannot avail the company or operate against the Government as equitable estoppel.'
17. In Motilal Fadampat Sugar Mills v. State of Uttar Pradesh, : [1979]118ITR326(SC) , the applicability of the doctrine of 'promissory estoppel' was considered elaborately. The facts in the said case are as follows :
On 10th October, 1968 a news-item was published in the National Herald stating that the Government of Uttar Pradesh decided to give exemption from sales tax for a period of three years to all new industrial units. The said news item was based on the statement made by the then Chief Secretary, Industries Department of the Government of Uttar Pradesh. The appellant, before the Supreme Court, on the basis of the news item, addressed a letter on 11th October, 1968 to the Director of Industries stating that the appellant intended to set up a Hydrogenation Plant for manufacture of Vanaspati in view of the Sales Tax Holiday announced by the Government and sought for confirmation of the same with reference to its industrial unit. The Director of Industries by his letter dated 14th October, 1968 confirmed that 'there will be no. sales tax for three years' as published in the news item. Thereupon, the appellant contacted various financing agencies for setting up Vanaspati Factory. On 12th December, 1968 the appellant's representative met the 4th respondent viz., Chief Secretary to the Government who intimated to him that the appellant will be entitled to the exemption from sales tax for a period of three years from the date of commencement of commercial production. The appellant entered in to an agreement with another company for supply of plant and machinery etc. However, later on the State Government went back on its assurance and stated in it's letter dated 20th January, 1970 that the State Government has taken a policy decision that new Vanaspati units in the State which are going in to commercial production by 30th September, 1970 would be given partial concession in Sales Tax etc. Thereupon, the appellant approached the Court to compel the State Government to adhere to the promise made on the basis of which, it acted and established the company. While dealing with this aspect, the learned Judges of the Supreme Court stated that the letter dated 23rd January, 1969 contained a clear representation to the company on behalf of the Government that it would be entitled from exemption of sales tax in respect of Vanaspati unit for a period of three years from the date of commencement of commercial production. On the said representation, the appellant-company acted and altered its position and borrowed monies from financial agencies and purchased plant and machinery. The learned Judges, on the facts and circumstances, held that the company is entitled to invoke the doctrine of 'promissory estoppel' to make the Government bound to carry out the representation made and exempt the appellant-company from the payment of sales tax in respect of sales of Vanaspati for a period of three years from the date of commencement of the production.
18. While dealing with this case, the learned Judges stated that the doctrine of 'promissory estoppel' applies against the Government and the defence based on executive necessity is not sustainable. The doctrine of 'promissory estoppel' is an equitable doctrine and it must yield if the equity so requires, i.e., if the Government is able to show on facts and circumstances that it would be inequitable to hold the Government to the promise made by it, the Court will not raise an equity in favour of the promisee and enforce the promise against the Government. The learned Judges also specifically stated that the doctrine of 'promissory estoppel' cannot be applied in the teeth of an obligation, or liability imposed by law and that the doctrine of promissory estoppel'cannot be invoked to compel the Government to do an act prohibited by law. The learned Judges stated as follows with regard to the applicability of doctrine of 'promissory estoppel' : [1979]118ITR326(SC) .
'The true principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which .is intended to create legal relations or affect a legal relationship to arise in the future, know ing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the pa'rties, and this would be so irrespective whether there is any pre-existing relationship between the parties or not.'
19. Therefore, this is an authority for the proposition that 'promissory estoppel' is an equitable relief and the same can be invoked against a person who unequivocally promised to do something by his words or conduct made to another and that another acting upon the same alters his position to his detriment, then the promise made by him will be enforced. However, it is subject to the following :
1. being an equitable relief, it is open to the party who made the promise to establish on facts that it is inequitable to enforce the promise;
2. the doctrine of 'promissory estoppel' cannot be applied in the teeth of an obligation or liability imposed by law;
3. The Government or even a private party cannot be compelled by invoking the principles of 'promissory estoppel' to do an act prohibited by law;
4. The legislature can never be precluded by invoking the principles of 'promissory estoppel* from exercising its legislative functions.
20. In M/s Jit Ram Shiv Kumar v. State of Haryana, : [1980]3SCR689 , again the learned Judges of the Supreme Court considered the applicability of principles of 'promissory estoppel'. In the said case, Municipal Committee of Bahadurgarh while establishing Mandi Fateh in Bahadurgarh Town, decided that the purchasers of the plots in the Mandi would not be required to pay octroi duty on goods imported within the said Mandi. This was done with a view to improve the trade in the area. A resolution to that effect was passed on 20-11-1916. In the handbills issued for the sale of plots also, the same thing was proclaimed. Subsequently, Municipal Committee changed its mind and passed a resolution dated 8-5-1954 resolving that octroi duty was also to be levied on the goods imported in to Fateh Mandi. The said resolution was annulled by the Punjab Government exercising its powers under S. 236 of the Punjab Municipal Act. Subsequently, State of Haryana came in to existence on 1-11-1964 and approved the resolution of the Municipal Committee dated 21-7-1965 while cancelling the earlier resolution dated 2-3-1954, as a result the Municipal Committee started charging octroi duty on the goods imported in to the Mandi.
21. We have not referred to the other facts as they are not necessary for the purpose of considering the present case on hand. One important aspect that has to. be noted is that under S. 70(2)(c) of the Punjab Municipal Act, it is the duty of the Municipality to levy octroi duty. Question arose whether pursuant to the subsequent resolution and the decision of the Government, collection of octroi duty by Municipal Committee is legal and whether Municipal Committee is barred by principles of 'promissory estoppel' from collecting octroi duty.
22. While dealing with the said case, the learned Judges of the Supreme Court held that the plea of estoppel is not available against the State in the exercise of its legislative or statutory functions and that the Government have powers to direct the Municipality to collect octroi tax if the Municipality failed to take action by itself under S.62-A(3) of the Act. The learned Judges further held that the principles of promissory estoppel' are not available in a case where the public authority acts beyond the scope of its authority. In other words, if the representation made by the authority is ultra vires its powers, plea of estoppel will not be available to enforce the representation so made. This is on the basis that the persons dealing with it should be knowing the limitations of the authority. It is not necessary to deal with the other aspects dealt with by the learned Judges. The learned Judges felt that it is a duty or obligation imposed on the Municipality to collect octroi duty and if it collects octroi duty pursuant to the statutory duty, promissory estoppel will not be available against it.
23. Supreme Court in its judgment in Union of India v. Godfrey Philips India Ltd., : [1986]158ITR574(SC) , stated that the decision referred to supra : [1979]118ITR326(SC) , to the extent it stated that 'the defence of executive necessity was thus clearly negatived by the Court.......' is subject to the qualifications laid down in the case of Anglo Afghan Agencies (AIR 1968 SC 718) (supra). Therefore, the said observations are subject to the authority pleading and proving that -there were special considerations which necessitated it not being able to comply with the , obligations in public interest. Therefore, insofar as legislative and statutory functions are concerned, principles of promissory estoppel' are not applicable and continues to hold the field.
24. In the decision referred to supra : [1986]158ITR574(SC) the learned Judges of the Supreme Court once again considered the principles governing the doctrine of 'promissory estoppel'. It was laid down that there can be no promissory estoppel against the legis- lature in the exercise of its legislative func- tions. The Government of public authority cannot be debarred by promissory estoppel by enforcing a statutory provision. Government or public authority cannot be compelled to carry out the representation or promise which is contrary to law. It cannot also be compelled to carry out a representation or promise which is ultra vires the power of the officer of the Government or public authority who or which made the representation or promise. Doctrine of 'promissory estoppel' being an equitable doctrine, it must yield when equity so requires, viz., if it can be shown by the Government or public authority that having regard to the facts and circumstances, it would be inequitable to hold the Government or public authority to the promise or representation made by it, promissory estoppel will not be invoked.
25. The next case which considered promissory estoppel is Pournami Oil Mills v. State of Kerala, : [1987]165ITR57(SC) . In this case, by a notification dated 11-4-1979, the State of Kerala with a view to boost Industrilisation in the State, granted exemption from sales tax and purchase tax for a period of five years for the new small scale units from the dale of commencement of production. In response to such an order and in view of the concessions made available, promoters of small scale industries set up their industries within the State of Kerala. Later on, by an order dated 21-10-80 the same were withdrawn. Queslion arose whether the Slate can be made to adhere, to the promise made in the order dated 11-4-1979.
26. The learned Judges of the Supreme Court came to the conclusion that such of those parties before them who in response to the order dated 11-4-1979 set up their industries prior to the subsequent 'order dated 21-10-1980 within the State of Kerala would be entitled for exemption and to that extent they are entitled to invoke the principle of promissory estoppel as against the State Government.
27. Doctrine of 'promissory estoppel' was invoked and also applied by the Supreme Court in Assistanl Commissioner, Commercial Taxes (Asst.) v. Dharmendra Trading Co., : [1988]172ITR395(SC) where the Government of Karnataka having granted certain concessions, withdraw the same subsequently. The learned Judges stated that the doctrine of 'promissory estoppel' can be invoked in such a case. 28. In Vasantkumar Radhakisan Vora v. Board of Trustees of the Port of Bombay, : [1990]3SCR825 , the Supreme Court again considered the applicability of 'promissory estoppel'. In the said case, the representation made by the Estate Manager of the Bombay Port Trust that on deposit of certain amount they would be allotted flats after reconstruction of building, was sought to be enforced against the Bombay Port Trust on the plea of 'promissory estoppel'.
29. Learned Judges of the Supreme Court, after considering the facts and circumstances, came to the conclusion that the representation made by the Estate Manager of the Port Trust is beyond his authority, viz., it.is an ultra vires act and therefore, held that promissory estoppel cannot be invoked to enforce the representation made by the officer. which is ultra vires his powers.
30. Learned Judges in that contest stated as follows : [1990]3SCR825 :
'It is equally settled law that the promissory estoppel cannot be used compelling 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. We may also point out thai the 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 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 Government or the public authority.'
31. In fact while considering the very same orders of the Government, on which the petitioner herein relied, a Division Bench of this Court, to which a reference is already made, repelled the contention that the petitioners therein are entitled to invoke the doctrine of 'promissory estoppel' in Writ Petition Nos. 1861 of 1982, 13447 and 17406 of 1987 dated 10-3-1988. The only question is whether this judgment is no longer good law in view of the judgment of the Supreme Court in M/s. Vij Resins Pvt. Ltd. v. State of Jammu- and Kashmir : [1989]3SCR257 (referred to supra). Question is whether the principles laid down by several decisions which are referred to above in respect of the applicability of doctrine, of 'promissory estoppel', are in any way shaken by the judgment, of the Supreme Court referred to supra : [1989]3SCR257 . It is necessary to examine .the facts of that case.
32. State of Jammu and Kashmir with a view'to industrialise the State came forward with schemes and threw oren invitation to outsiders to set up industries at convenient places within the State. At stimulus, the Government offered land and other facilities, The petitioners in those cases, in response to the offer made in the schemes, negotiated certain arrangements. While the petitioners were carrying on their business activities, Act. 7 of 1986 was passed. The Act created a monopoly with reference to resin in favour of Jammu and Kashmir Industries Limited. A total ban was imposed on extraction by private persons, with the result all the writ petitioners, who were doing business pursuant to the schemes offered by the State, were thrown out of business completely Questioning the said Act 7 of 1987, writ petitions were filed and they fell for consideration before the learned Judges of the Supreme Court.
33. The main attack against Act 7 of 1986 was that right to exploit or utilise particular forest produce under Government orders and contracts amounts to 'property' and they are entitled to protection under Art. 19(1)(f) and Art. 31(2) of Constitution. Taking away the right to property without providing for compensation is in violation of Art. 31(2) of the Constitution of India. The learned Judges took into consideration that by the provisions of the Act all the existing contracts between the parties and the State and existing grants in respect of collection, transport, storage and otherwise dealing with resin have been forthwith terminated and a monopoly situation has been created qua these operations in resin in favour of the Government company.
34. While dealing with the above contention raised by the petitioners therein, the learned Judges specifically referred to the fact that Art/19(1)(f) of the Constitution was deleted by the Forty-fourth Amendment with effect from 20th of June, 1979 with the result, the holding and/or disposal of property ceased to be a fundamental right. So far as the Constitution of the State of Jammu and Kashmir is concerned, no change was brought about with regard to the right to property and it continued to be a fundamental right. The learned Judges, on a consideration of the contention raised therein, declared the provisions of Ss. 3 and 4 of Act 7 of 1986 to be ultra vires the constitution. Having regard to the fact that those provisions of the Act contained the soul of the Act, the Act itself was held not to operate. While dealing with that situation, at the instance of one of the writ petitioners in Writ Petition No. 794 of 1986, in para 25 of the judgment, the learned Judges referred to the principles of 'promissory estoppel'. The contention of the petitioners in the said writ petition was that pursuant to the arrangement entered into between them and the State, following the invitation by the State, they had invested huge amounts in establishing plant and machinery as also land and building. It was contended that the petitioners were invited to set up industries by assuring them supply of raw materials. They changed their position on the basis of the representation made by the State and when the factories were ready and they were in a position to utilise the raw material, the impugned Act was brought into existence only to obliterate their rights and enabled the State to get out of the commitments.
35. While dealing with the said question, the learned Judges stated as follows (AIR 1989 SCI 629, para 25) :
'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 Government is concerned the rule of estoppel does apply and the precedents of this Court are clear. It is unnecessary to go into that aspect of the matter as in our considered opinion the impugned Act suffers from the vice of taking away rights to property without providing for compensation at all and is hit by Art. 31(2) of the Constitution.'
36. The learned Judges thus clearly mentioned that it is unnecessary to go into the aspect of 'promissory estoppel' in view of the fact that Act 7 of 1986 itself was held to be ultra vires Art. 31(2) of the Constitution. It is significant to notice that the learned Judges themselves stated 'but sofar as the State Government is concerned the rule of estoppel does apply and the precedents of this Court are clear.' In the said case, the learned Judges have not referred to any of the decisions of the Supreme Court which dealt with the doctrine of 'promissory estoppel'. Applicability or otherwise of the doctrine of 'promissory estoppel' was not considered in detail by the learned Judges for the reason that Act 7 of 1986 was itself struck down. That means, legislation which protected the State itself was struck-down and therefore, the learned Judges stated that it is unnecessary to go into the aspect of applicability of rule of estoppel. The observations of the learned Judges insofar promissory estoppel are concerned, as we understand them, are general in nature. We understand the learned Judges as saying that (1) there will not be estoppel against the legislature from legislating and the vires of the Act cannot be tested by invoking the plea of promissory estoppel; (2) sofar as the Government is concerned, the rule of estoppel does apply in a given case. The observations, in our opinion, should not be understood as laying down a principle of law that promissory estoppel can be invoked against the State even when it is governed by a statute. There is another way of understanding these provisions. Since the Act itself was struck-down, the learned Judges stated that the principle of promissory estoppel can be invoked, having regard to the fact that there is no statute governing the situation. When the learned Judges clearly mentioned that 'the precedents of this Court are clear', we are of the opinion that the learned Judges did not intend to lay down any law contrary to what the precedents laid down earlier.
37. On a consideration of the precedents of the Supreme Court, the following principles emerge:--
1) The legislature can never be precluded from exercising its functions to legislate by invoking the principles of promissory estoppel;
2) Principles of 'promissory estoppel' can be invoked against the Government or public authority subject to the following:--
i) it cannot be invoked to compel it to act contrary to the obligation or liability imposed by law. In other words, the principle of 'promissory estoppel' cannot be invoked preventing the Government from acting in discharge of its duty or obligation imposed by law.
ii) The doctrine of 'promissory estoppel' being an equitable doctrine if it is established on the facts and circumstances that it would be inequitable, in the larger public interest, to hold the Governme.nt or public authority to the promise or representation made by it, it will not be enforced.
iii) The doctrine cannot be invoked when the representation made by the officer or authority is beyond their powers viz,, if it is ultra vires the powers of the officer or authority, it cannot bind the Government.
iv) The doctrine being an equitable one cannot be invoked if it is shown that the representation was obtained by playing fraud, having regard to the fact that fraud vitiates everything.
38. Having regard to the well settled principles governing the application of the doctrine of promissory estoppel, laid down by the precedents, which precedents are referred to by the learned Judges of the Supreme Court in the decision referred to supra : [1989]3SCR257 , we are of the opinion that the observations made by the learned Judges are general in nature and they did not intend to lay down any principle of law contrary to the principles laid down by the precedents.
39. In view of the above, we arc of the 'opinion that the 'decision rendered by this Court in Writ Petition Nos. 1861 of 1982, 13447 and 17406 of 1987 dated 10-3-1988 cannot be said to be no longer good law in view of the judgment referred to supra : [1989]3SCR257 . In our opinion, the said decision of Division Bench on the question of applicability of the doctrine of 'promissory . estoppel', represents the correct position in law. In fact, the judgment of the Supreme Court referred to supra : [1989]3SCR257 and in particular, the observations made with reference to the doctrine of 'promissory estoppel'were referred to and considered by a Division Bench of this Court, to which two of us were members (A. Lakshmana Rao and P. Venkatarama Reddi, JJ.) in A.P. Rayons Ltd. v. Government of A.P., (1992) 14 APSTJ 12. The case arose on almost identical circumstances as in the present one, and the learned Judges held that the doctrine of 'promissory estoppel' cannot be invoked in the face of the provisions of Act 20 of 1987 itself. The learned Judges had occasion to consider the purport of the observations made by the Supreme Court in the decision referred to supra : [1989]3SCR257 . The learned Judges stated that the facts of the said case and the ratio of the judgment of the Supreme Court are altogether different from the one they were dealing with. The learned Judges in fact referred to the judgment rendered by the Division Bench of this Court' in Writ Petition Nos. 1861 of 1982,13447 and 17406 of 1987 dated 10-3-1988, (referred to supra) and held that the ratio of the judgment of the Division Bench cannot be doubted on the aspect of promissory estoppel. We have already dealt with this aspect in the foregoing paragraphs and we reiterate the view expressed by the Division Bench.
40. In the present case, the legislature enacted Act 20 of 1987 giving retrospectivity with effect from 1-1-1976, whereunder the maximum Interest Free Sales Tax Loan that can be granted shall not exceed a sum of rupees Ten lakhs in respect of each industry with a fixed capital of rupees one crore and above. Having regard to the statutory bar imposed and in the face of it, principles of promissory estoppel cannot be invoked. In this regard, we are in agreement with the decision of the Division Bench in W.P. Nos. 1861 of 1982, 13447 and 17406 of 1987 dated 10-3-1988 as well as the decision referred to supra : [1989]3SCR257 .
41. Therefore, the petitioner is not entitled to invoke the doctrine of 'promissory estoppel' in the face of statutory provisions governing the situation and the Government cannot be compelled by the invocation' of promissory estoppel to act contrary to the provisions of Act 20 of 1987.
42. The contention of the learned counsel for the petitioner that the petitioner-company having been' established even prior to the coming into force of Act 20 of 1987, it is entitled to invoke principles of promissory estoppel is not sustainable for the reason that Act 20 of 1987 was made retrospective with effect from 1-1-1976.
43. POINT No. 2: Now we have to consider whether the facts and circumstances arising in this case enables the petitioner to invoke the doctrine of 'promissory estoppel'.
44. Government of Andhra Pradesh granted certain incentives in the declaredbackward blocks/ taluks under the six pointformula in G.O.Ms.No. 224, Industries andCommerce (II & CP) Department dated 9-3-1976 with effect from 1-1-1976. The Schemeoffered, among others, Interest Free SalesTax Loan to industrial units which go intoproduction on or after 1-1-1976 for a periodof five years, which expired on 31-12-1980.The said Government order stated that thecommittee constituted therein will review theimplementation of the scheme and suggestchanges or modifications as are necessaryfrom time to time for the approval of theGovernment. The relevant portion is asfollows:
'State Government will give an jnterest free-sales-tax loan to all new industrial units and/or those going in for substantial expansion in all the areas excepting the municipal limits of Hyderabad and Secunderabad, Vijayawada and Visakhapatnam. Entrepreneurs setting up industries will be eligible for interest-free Sales-tax loan equal to the tax paid by them under the Andhra Pradesh General Sales-Tax Act if any on construction materials, plant and machinery and equipment during pre-production stage and purchase tax/sales-tax amount paid by them under the Andhra Pradesh General Sales-tax Act...........during the period of 5 years from the date of going into regular production, on raw materials, components and finished goods.'
Adoni in Kurnool District, where the petitioner-industry is situate is one of the areas covered by the Scheme. The said Scheme expired on 31-12-1980. But by G.O.Ms. No.736, Industries and Commerce (II & CP) Department dated 28-12-1981, the same was extended beyond 31-12-1980 till a revised Scheme was introduced. In the meanwhile, a new Scheme was formulated in G.O.Ms. No. 375, Industries & Commerce (IA) Department dated 23-8-1985 in supersession of the Scheme of incentives introduced in G.O.Ms. No. 224 dated 9-3-1976. This was specifically mentioned in para 10 of the said G.O.Ms.No. 375 dated 23-8-1985. For the purpose of the application of the new Scheme, the Government classified Srikakulam, Adilabad and Anantapur as intensive industrial development areas. Kurnool District was totally excluded from the area of operation of the new Scheme formulated by the said G.O.Ms.No. 375 dated 23-8-1985.
45. In view of the fact that the newScheme was introduced in G.O.Ms.No. 375dated 23-8-1985 in supersession of the schemeof the incentives in G.O.Ms.No. 224 dated9-3-1976, first respondent extended the datefor registration of applications up to 29-8-1983 for being eligible to the incentives'offered by G.O.Ms.No. 224 dated 9-3-1976. inG.O.Ms.No. 437 dated 10-10-1985. On 31-7-1986 by G.O. Ms. No. 433, Industries &Commerce; (IA) Department the original scheme introduced in G.O.Ms.No. 224 dated9-3-1976 was continued till 31-3-1984 due tothe fact that the revised scheme came intoeffect only from 23-8-1985. Later on, firstrespondent herein issued an Ordinance, viz.,A.P. Interest Free Sales Tax Loan for Industries (Imposition of Ceiling) Ordinance,1987 (Ordinance 1 of 1987) which was subsequently replaced by A.P. Interest Free SalesTax Loan for Industries (Imposition ofCeiling) Act, 1987 (Act 20 of 1987). The Actwas published in the Gazettee on 13-4-1987giving retrospectivity to the provisions of theAct with effect from 1-1-1976. Under theprovisions of the Act, maximum Interest FreeSales Tax Loan was fixed at rupees ten lakhsin respect of each industry with a fixed capitalof rupees one crore and above.
46. The contention of the learned counsel for the petitioner is that the petitioner-company acted on the representation made by the Government in G.O.Ms.No. 224 dated 9-3-1976 and incurred expenditure, acquired land and machinery and established the factory at a total cost of about thirty crore rupees. The affidavit filed in support of the writ petition itself discloses that the peti-tioner-company obtained industrial licence in August, 3980 and the project report was finalised in the year 1981. It also discloses that the civil works commenced in the year 1982 and went into production on 1-12-1987 and the application for the grant of Interest Free Sales Tax Loan was mode on 14-1-1988.
47. Now the question is whether these facts show that the petitioner established its industry acting on the representation made by the State in G.O.Ms.No. 224 dated 9-3-1976?
48. As already stated, G.O.Ms.No. 224 dated 9-3-1976 was operative for a period of five years with effect from 1-1-1976. The operation of the scheme expired by 31-12-1980. The petitioner-company obtained the industrial licence from the Government of India during August, 1980 only, just before the expiry of the date of the operation of G.O.Ms.No. 224 dated 9-3-1976 viz., 31-12-1980. By G.O.Ms.No. 736 dated 28-12-1981, the scheme introduced in G.O.Ms.No. 224 was extended till a revised scheme is introduced. Therefore, from 31-12-1980 till 28-12-1981, there was no notification extending the operation of the scheme of incentives. The petitioner's project report was finalised in the year 1981, at a time when G.O.Ms.No. 224 dated 9-3-1976 was not in operation, though subsequently it was extended by G.O.Ms. No. 736 dated 28-12-1981. Registration of the applications for the grant of incentives under G.O.Ms.No. 224 dated 9-3-1976 were directed to be stopped with effect from 29-8-1983. Even before 29-8-1983 on which date the registration of the applications for the grant of incentives under G.O.Ms.No. 224 dated 9-3-1976 were stopped, the petitioner did not apply for registration for utilisation of the incentives offered by the Scheme. It is true that it was extended later on by G.O.Ms. No. 433 dated 31-7-1986. Even so, the petitioner never applied for registration of its application for the grant of incentives. It is significant to notice, at this stage, that the scheme of incentives offered in G.O.Ms. No. 224 dated 9-3-1976 which are being claimed in this writ petition by the petitioner-company, was superseded in G.O.Ms.No. 375 Industries & Commerce (IA) Department, dated 23-8-1985, which formulated and introduced a new scheme of incentives. The new scheme of incentives were also restricted to Srikakulam, Adilabad and Anantapur Districts. The petitioner did not even apply, prior to the supersession of the scheme of incentives offered in G.O.Ms.No. 224 dated 9-3-1976 for registration under the scheme. Question of registering the application of the petitioner-company under G.O.Ms.No. 224 dated 9-3-1976 willnot arise after31-12-1984, or at any rate, after the issuance of new scheme of incentives in G.O.Ms.No. 375 dated 23-8-1985. If the petitioner-company was really conceived, located and established pursuant to the incentives offered in G.O.Ms. No. 224 dated 9-3-1976, the Company would have approached the authorities atleast the moment it started purchasing of construction material, plant and machinery, equipment etc. Further, the project report submitted by the petitioner-company only referred to Central subsidy of rupees fifteen lakhs as the means of finance, as stated in the counter, but the facility of Interest Free Sales Tax Loan was not taken into account in computing the economic viability of the project. The petitioner-company itself went into production On 1-12-1987. The application for the grant of incentives under G.O.Ms.No. 224 dated 9-3-1976 was made on 14-1-1988 long after Act 20 of 1987 was published in the Gazettee giving retrospectivity with effect from 1-1-1976. The said Act was published in the Gazettee on 13-4-1987.
49. Having regard to the above mentioned facts, we are of the opinion that the petitioner never intended to establish the industry on the representation made by the first respondent in G.O.Ms.No. 224 dated 9-3-1976. The dates given above clearly indicate that the petitioner-company did not even register its application within the period, during which the registration of applications were permitted under the scheme. The petitioner did not even make any representation or application for the grant of incentives before the incentive scheme in G.O.Ms. No. 224 dated 9-3-1976 was superseded and a new scheme was introduced restricting its application to the Districts of Adilabad, Srikakulam and Anantapur only. The company was incorporated on 24-6-1981 during the interregnum, i.e., after the expiry of operation of G.O.Ms.No. 224 dated 9-3-1976 and before the scheme was extended till 31-12-1981 in G.O.Ms.No. 376 dated 28-12-1981. Even the civil works commenced only in the year 1982 and it went into production on 1-2-1987 as stated above. Having regard to the facts and circumstances, we are of the opinion that the petitioner industry was not envisaged, established or commenced, only due'to the incentive scheme offered by the State Government in G.O.Ms. No. 224 dated 9-3-1976. Therefore, on the merits of the case also, we are not satisfied that the petitioner is entitled to invoke, in any event, the doctrine of 'promissory estoppel.'
50. Furtehr having regard to the provisions of the statute, viz., Act 20 of 1987 as stated in the fore-going paragraphs, doctrine of 'promissory estoppel' cannot be invoked to compel the State to act contrary to the statutory prohibition contained in Act 20 of 1987.
51. In the preamble to Act 20 of 1987 it was stated that in the sixth plan a limited provision of rupees twenty crores was only provided for the grant of Interest Free Sales Tax Loan for any industry and therefore, Expert Committee, on a consideration of the facts and circumstances and taking into consideration the budget provision, recommended maximum limit of rupees ten lakhs for each industry for the grant of Interest Free Sales Tax Loan. It is not necessary to go into this aspect in the view we have taken in this case.
52. No argument was advanced with regard to the constitutional validity of Act 20 of 1987.
53. Having regard to the above and in the circumstances, the petitioner-company is not entitled to invoke the principles of 'promissory estoppel'. Accordingly, this writ petition is dismissed, but in the circumstances without costs.
54. Petition dismissed.