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extension of time under Clause 10 of New Package Scheme of Incentives for Tourism Projects, 1995- 2000 We therefore hold that the appellants were entitled to have full benefit and advantage of Clause 10 of the Scheme and the curtailment of the period and opportunity available under said Clause 10 of the Scheme by subsequent G.R. dated 28.06.2000 was bad and ineffective. The record indicates that the progress of the project of the appellants was greatly hampered as a result of major earth quake in the State on 26.01.2001 and large scale communal riots in the State in February 2002. The State Level Committee was satisfied that the commencement and continuation of the project was so affected as a result of these major difficulties and had granted initial extension of six months but the appellants had benefit of only few days out of such extension. The subsequent request for further extension which was backed with relevant certificate from the Chartered Accountant certainly persuaded the State Level Committee to find that the facts justified grant of further extension but it felt it had lost the power to grant such extension because of G. R. dated 28.06.2000. In the light of the view that we have taken, the State Level Committee was still competent to consider the request for grant of extension. 23. In the circumstances, we allow the appeal and set aside the decision of the High Court in so far as it held that the operative period of the Scheme came to an end on 30.11.2000 and that there could be no further extension of time limit. Since the appellants have already commenced commercial operations, it now needs to be assessed by the State Level Committee whether in the facts of the case the appellants could justifiably have claimed extension under Clause 10 of the Scheme. We direct the State Level Committee to make such assessment in accordance with Clause 10, in three months of the receipt of this decision. Needless to say, if such assessment is found in favour of the appellants, they shall be entitled to the incentives and benefits under the Scheme. 24. All the connected matters raise identical issues and challenge rejection of their applications for extension of time. In each case the Order passed by the concerned authority is similarly worded and passed on 20.07.2005, i.e. the same date. These connected appeals are also allowed with similar direction. 25. The appeals stand allowed in terms as stated above. No order as to costs.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.6478 OF 2009



DEVI MULTIPLEX & ANR.                         …. Appellants

                                   Versus

STATE OF GUJARAT & ORS                    …. Respondents

                                    WITH

             CIVIL APPEAL NOs.6479/2009, 6480/2009,  6481/2009,
      6482/2009, 6483/2009, 6484/2009, 6485/2009, 6487/2009, 6488/2009,
                     6489/2009, 6490/2009 AND 6491/2009


                               J U D G M E N T


Uday Umesh Lalit, J.



1.    Civil Appeal 6478 of 1979 is directed against  the judgment and  order
dated 26.06.2009  passed by the  High  Court  of  Gujarat  at  Ahmedabad  in
Special Civil Application No.18692 of 2005  to the extent it  dismissed  the
challenge to  the  order  passed  by   respondent  no.  3  dated  20.07.2005
rejecting the application of the appellants for  extension   of  time  under
Clause 10 of New Package Scheme of Incentives for  Tourism  Projects,  1995-
2000. Similar challenge stands raised in other civil appeals against  Orders
 rejecting their applications for extension of  time.   Since  Civil  Appeal
No.6478 of 2009was taken as the lead  matter,  facts  relating  thereto  are
dealt with in detail hereafter.

2.    On 20.12.1995  Government  of  Gujarat  announced  policy  named  “New
Package Scheme of Incentives for  Tourism  Projects,  1995-2000”  (hereafter
referred to as the Scheme) with a view to make available all fiscal and  non
fiscal  incentives,  reliefs  and  concessions  enjoyed  by  industries   to
‘Tourism’ which was accorded the status of an industry, in order to  give  a
boost to tourism sector by attracting higher investment in  the  areas  with
tourism potential and to generate employment opportunities. Under Clause  2,
the Scheme came into operation on 1.8.1995 and was to remain in force for  a
period of five years upto 31.07.2000. Under Clause 3, to be eligible, a  new
tourism unit ought to be registered after 1.8.1995. Clause  4.7  dealt  with
effective steps which such unit was expected to undertake. Under  Clause  5,
after taking initial effective steps a  tourism  unit  could  apply  to  the
Director of Tourism for registration. All projects had  to  conform  to  the
specifications and requirements spelt  out  in  Appendix  B  which  Appendix
dealt  with  various  categories  of  tourism  units  and  Item  22  thereof
pertained  to  Entertainment  Complexes  including  multi   cinema   theater
complexes or multiplexes.  Clause  7  categorised   tourism  units  in  four
categories, namely, Prestigious Tourism Units, Large  Scale  Tourism  Units,
Small Scale Tourism Units and Tiny Tourism Units with minimum fixed  capital
investment of Rs. 10 Crore, 90 lakhs,  10  lakhs  and  less  than  10  lakhs
respectively. Clause 8 dealt with incentives and stated that a  tax  holiday
of 5-10 years would be available in respect of  exemptions  from  (i)  Sales
Tax (ii) Turnover Tax  (iii)  Electricity  Duty  (iv)  Luxury  Tax  and  (v)
Entertainment Tax, upto 100% of capital investment.  In clause  8.1  it  was
stated that the quantum of incentives would  not  exceed  100%  of  eligible
capital investment and it  further  stated  the  period  of  eligibility  in
respect of Prestigious Tourism Unites,  Large  Scale  Tourism  Units,  Small
Scale Tourism Units and Tiny Tourism Units to be 10 years, 8 years, 6  years
and 5 years respectively.  Clause 9 dealt with  composition  of  sanctioning
authority  whereunder  State  Level  Committee  was   competent   to   issue
eligibility certificate in respect of  Prestigious  and  Large  Units  while
District Level Committee was to issue eligibility certificate for all  Small
Scale and Tiny Tourism Units.  The procedure for registration tourism  units
for incentives was detailed in Clause 10.

Clauses 4.7 and 10 of the Scheme  are quoted hereunder:-
“4.7        EFFECTIVE STEPS

The effective steps shall comprise

 (a) initial effective steps which shall include:

i)   Effective possession  of  land  by  an  eligible  unit  free  from  all
encumbrances.

ii) Registration in respect of company/Cooperative Society/Trust in  respect
of a partnership  firm,  evidence  of  execution  of  partnership  deed  and
filling of requisite application  with  payment  of  necessary  registration
fees with the Registrar of Firms.

iii)   Submission of project report specifically mentioning the category  of
tourism activity (coverage) and  the  incentive  that  are  proposed  to  be
availed of by the eligible unit with all relevant details.

iv) Copy of application duly acknowledged by  all  statutory  and  executive
authorities from which permission is required.

(b)  final effective steps shall mean and include:

i)     Clearance,  if  any,  from   Central/State   Government   and   other
authorities concerned for implementing the project.

ii)   Tying up of the means of finance for the project to  the  satisfaction
of the incentive sanctioning authority.

iii)  Acquisition of fixed assets at site to the extent of 10% of the  total
fixed assets as envisaged for the project, and

iv)  Evidence regarding expenditure on the project, including  advances  and
pre-operative expenses paid, aggregating to  at  least  25  percent  of  the
capital cost envisaged for the project.

10.   PROCEDURE FOR REGISTRATION OF TOURISM UNITS FOR INCENTIVES:
All tourism units eligible for the Scheme will  apply  to  the  Director  of
Tourism in a prescribed Form.   The Directors of  Tourism  will  scrutinizes
the  application  and  will  issue  temporary  and  permanent   registration
adopting the following procedure:

a)  Director of Tourism shall give provisional  registration  in  the  first
instance  upto  2  years  to  the  eligible  unit  after  scrutinizing   the
application received by him under the Scheme.

b)  If such a unit is not  in  a  position  to  start  commercial  operation
during the initial validity period the unit will  have  to  apply  with  the
progress report to the State Level Committee which is  authorized  to  grant
extension upto six months at a time or a  total  period  of  2  years  after
examining  the  difficulties  experienced  by   the   individual   unit   in
implementing the project and also record the reasons thereof in writing.

c)   The units which are unable to go  into  operation  after  it  has  been
given extension under para (b) above will have to apply  to  Government  the
reasons for the delay.  Such application will have to be  forwarded  by  the
director of tourism, who will carry out physical inspection of projects  and
report to government for decision.  If the director of tourism is  satisfied
that the steps to implement the project are adequate  he  shall  inform  the
Government about the same.

d)    The State Government on examination of details made available  by  the
director of  tourism  may  decide  to  extend  or  reject  the  registration
depending upon the merit of each case.  The decision of Government  in  this
regard will be final and binding on the party.

e)   The unit will become eligible to apply  for  provisional  or  temporary
registration only after taking initial  effective  steps  as  stipulated  in
para 4(7)(a).

f)  The  eligible  unit  will  be  registered  permanently  only  after  the
commencement of commercial operation and completion of the project.”


4.    The State Government, in exercise of powers conferred  upon  it  under
Section 29 of the Gujarat Entertainment Tax Act,  1977  (Act  16  of  1977),
issued Notification dated 14.02.1997 which was published in  the  Government
Gazette of even date.  The relevant part of the Notification was as under:
“Whereas the Government of Gujarat has introduced a New  Package  Scheme  of
incentives for Tourism Projects 1995-2000, under  the  “New  Package  Scheme
for incentives for  Tourism  Projects  1995-2000,  under  the  “New  Tourism
Policy, 1995” vide  Government  Resolution,  Information,  Broadcasting  and
Tourism  Department  No.NTP-1095-1983-C,  dated  the  20th  December,   1995
(hereinafter referred to as “the aid resolution”):

      And whereas the Government of Gujarat considers it necessary so to  do
in the public interest:

      Now, therefore, the exercise of powers conferred by  sub-sec.  (1)  of
Section 29 of the Gujarat Entertainment Tax Act, 1977  (Guj.  16  of  1977),
(hereinafter  refrred  to  as  “the  said  Act”)  and  in  supersession   of
Government Notification, Information, Broadcasting  and  Tourism  Department
No.  (GHT.91.45)  MNR-1391-285-E,  dated  the  24th   December,   1991   the
Government of Gujarat hereby exempt wholly  the  tax  on  the  entertainment
which fulfils the criteria laid down in Appendix-B of  the  said  resolution
(hereinafter referred to as the eligible entertainment) during the  eligible
period or upto the period of expiry of the limits of  incentives,  whichever
is  earlier,  to  the  extent  referred  to  in  para  8.1   of   the   said
resolution……………………………………..
…………………………………………………………………………………………………………………..”


      Paragraph 17 of the Notification stated that the exemption under  said
Notification would be subject to all terms and  conditions  referred  to  in
Government Resolution dated 20.12.1995 in the Scheme and further  conditions
stipulated in the Notification.

5.    The appellants being desirous of setting up a multiplex and avail  the
incentives under the Scheme took effective steps as  stated  in  the  Scheme
and  the  Notification  dated   14.02.1997   and   applied   for   Temporary
Registration Certification (TRC for short).  Said application  was  examined
by the concerned authorities and TRC was granted on 17.09.1999 and the  same
was sent to the appellants  under  covering  letter  dated  04.11.1999.   In
pursuance thereof the  appellants  started  constructing  the  multiplex  in
accordance with the Scheme.

6.     On 28.06.2000 Government Resolution No.NTP/1098-3219/C was issued  by
the State  Government seeking to  clarify  incidental/ancillary  aspects  as
regards treatment of certain cases covered under the Scheme.   Clause  A  of
the Resolution stated that  an  application  for  TRCs  under  the  existing
policy would be accepted till 31.07.2000 and TRCs would be  issued  provided
initial effective steps were taken on or before  31.07.2000.   Clause  B  of
the said Resolution was as under:
“B.   ADHOC/FINAL ELIGIBILITY ERTIFICATE:
All the units to whom TRC has already been issued under  the  guidelines  of
Tourism Policy  1995-2000,  shall  apply  for  the  Eligibility  certificate
within 180 days from the date of commencement of commercial activities.

All the units to whom TRC has been issued & have  not  commenced  commercial
activities on or before 31.07.2000 shall be considered as pipelines case.

The units falling under the pipeline cases  shall  complete  the  respective
project within the time-limit given below.

a)    Tiny Project           1 year w.e.f. 31/7/2000
b)    Small Project    1 year w.e.f. 31/7/2000
c)    Prestigious Project    2 year w.e.f. 31.7.2000
d)    Large project    2 year w.e.f. 31.7.2000

No further extension or relaxation shall be available to pipeline cases.

The unit falling under the pipeline cases who fails to complete the  project
as stipulated above shall not be eligible for any incentive Adhoc  or  Final
as per tourism Policy 1995-2000.

No investment made after operative period or Scheme,  i.e.  31.7.2000  shall
be considered as eligible investment.  However,  in  case  of  projects  not
completed and commissioned  up  to  31.7.2000  the  investment  made  during
extended  period  mentioned  above  shall  be  considered  while   computing
eligible investment.

The validity period of the TRC issued under the  existing  policy  1995-2000
shall be two years from date of issue  or  expiry  of  operative  period  or
policy, i.e. 31.7.2000 whichever is earlier.

The pipeline cases, once rejected shall not be eligible to apply  again  for
incentives under the Tourism Policy 1995-2000.”


The Scheme was extended upto  30.09.2000  and  later  upto  30.11.2000  vide
Resolutions dated 31.07.2000  and  30.09.2000  respectively  issued  by  the
State Government.

7.    On 26.01.2001 a massive earthquake took place in the  State  resulting
in collapse of number of buildings and structures.  This  caused  suspension
of the process of issuing  development  permissions,  for  the  purposes  of
maintaining structural safety standards in Development  Control  Regulations
under the provisions of the Gujarat  Town  Planning  and  Urban  Development
Act, 1976.  On 27.03.2001 it was directed by the State Government  that  all
development permissions must adhere to structural safety norms as stated  in
annexure to said order dated 27.03.2001 and that even with  respect  to  the
existing  development   permissions,   necessary   certification   regarding
structural stability and strengthening ought  to  be  issued  by  Structural
Engineers  having  requisite  qualifications.   The   appellants   submitted
building plans along with the requisite  structural  stability  certificate.
The approval was accorded by the Municipal Corporation in October  2001  and
the appellants resumed construction work.  Since more than a year  was  lost
because of subsequent changes in building norms, the appellants  applied  on
11.12.2001 for grant of extension for completing the  project  pointing  out
the aforesaid difficulties.   It  was  stated  that  as  on  the  date,  the
appellants had incurred expenditure to the tune of Rs.91.25 lakhs for  which
a certificate of the Chartered Accountant was enclosed.  Photographs of  the
completed civil works were also enclosed.

8.    Around 26.02.2002 large scale communal riots took place in  the  State
and Naroda (where the project of the appellant is located) was  one  of  the
worst affected areas.  Normal civil life was disrupted  for  a  considerable
time, the labour force had  left  the  site  and  accordingly,  as  per  the
appellants, no construction could take place for more than four  months.  On
04.04.2002 in  its  12th  meeting,  State  Level  Committee  considered  the
application dated 11.12.2001 preferred by the appellants. It clarified  that
the date of TRC in case of the appellants shall  be  4.11.1999.  Keeping  in
view the delay in continuation of operation due to earthquake  and  so  also
the progress made by the appellants,  the  Committee  granted  extension  in
validity period of TRC by six months  which  decision  was  communicated  on
15.04.2002.  The appellant wrote  on  24.02.2002  stating  that  though  the
extension was granted by the State Level  Committee,  the  appellants  could
effectively get only 17 days out  of  the  extension  of  six  months.   The
appellants  informed  that   the   civil   work   was   complete   and   the
electrification and air-conditioning work was in progress.  It  was  further
stated that as on that date Rs.1.11 crores were spent on  various  items  of
capital work, as supported by certificate from the Chartered Accountant  and
prayed for further extension of four months.   By  subsequent  letter  dated
19.08.2002 it was stated that the civil work  and  the  electrification  was
complete and the ducting and air-conditioning  work  was  on  the  verge  of
completion. The status of investment as on that date was  said  to  be  more
than Rs.3.21 crores, as supported by  the  certificate  from  the  Chartered
Accountant.  The appellants then  requested  for  extension  of  six  months
instead of four months as was prayed earlier vide request dated  29.04.2002.


9.    The State Level Committee in  its  13th  meeting  held  on  21.09.2002
discussed the provisions of extension in validity period of TRCs as per  the
policy.  It felt that the implementation of various  projects  was  affected
on account of the earthquake  and  subsequent  finalisation  of  Development
Control  Rules  and  Regulations  for  the  earthquake  resistant   building
structures.   As regards the application of the  appellants,  the  Committee
found that the delay in commencing the operation due to  earthquake  and  in
completing the operation due to riots was justifiable and that the  physical
progress of the project was satisfactory.  However, it took  the  view  that
extending the validity period would result in  extension  beyond  31.07.2002
and as such the matter was required to be deferred till the Government  took
a decision on modification of GR dated 28.06.2000.

10.   The appellants vide letter dated 30.10.2002 reiterated  their  request
for  extension  which  was  repeated  by  letters   dated   13.12.2002   and
22.04.2003.  On 20.06.2003 the  Commissioner  of  Tourism  informed  that  a
proposal for amendment of GR dated 28.06.2000 was sent and  the  matter  was
being considered  at  the  governmental  level.   It  was  stated  that  the
eligibility as per TRC issued to the appellants was in force and that  their
project was still eligible.  The appellants commenced commercial  operations
on 11.07.2003 and applied for grant of appropriate  eligibility  certificate
on 04.11.2003.

11.   In June 2004 Multiplex Association  of  Gujarat  filed  Special  Civil
Application No.5574 of 2004 on behalf of  its  members  in  the  High  Court
seeking appropriate directions for grant of eligibility certificate  to  its
members.  The High Court by its order dated 22.06.2004  directed  the  State
Government to  decide  the  applications/representations  for  extension  of
time.  Thereafter, on 22.07.2004 the Commissioner of Tourism issued  a  show
cause notice  calling  upon  the  appellants  why  their  application  dated
04.11.2003 for grant of eligibility  certificate  should  not  be  rejected.
Relying on the GR dated 28.06.2000, it was stated that the project  was  not
completed by 31.07.2002 and as such the appellants did not qualify  for  the
benefit of the Scheme dated 20.12.1995.  The show cause notice  was  replied
by the appellants. On 20.07.2005 the application for  grant  of  eligibility
certificate was rejected stating the following reasons:
“1.    Sufficient  time  extension  has  already  been  given  for  starting
commercial activities of the project.

2.    Further extension of time limit would lead  to  undue  burden  on  the
State’s Exchequer.

Multiplicity of multiplexes beyond the requirement in the State.”


The aforesaid order dated 20.07.2005 was challenged  by  the  appellants  by
filing Special Civil Application No.18692 of 2005 in the High Court  seeking
declaration that period for starting commercial operation  as  envisaged  in
the Scheme stood extended upto  11.07.2003  and  that  the  appellants  were
entitled to be issued eligibility certificate and to  all  incentives  under
the Scheme.  The High Court while rejecting the  submissions  observed  that
the operative period of the Scheme came to an end  on  30.11.2000  by  which
time the appellants had not commenced  commercial  operation  and  that  the
appellants were not  entitled  to  any  benefits  or  incentives  under  the
Scheme. It found that the time for completing  the  project  and  commencing
the commercial operation would stand extended  as  a  result  of  Government
Resolution dated 28.06.2000 only upto  31.07.2002  and  upto  30.11.2002  in
view of Government Resolutions dated 31.07.2000 and 30.09.2000,  that  there
could be no further extension of time limit and that  since  the  commercial
operations had not commenced even within  such  extended  time  period,  the
claim of the appellants was rightly rejected. It observed that in the  facts
and circumstances  of  the  case  there  could  be  no  application  of  the
principles of Promisory Estoppel.   The  present  appeal  by  Special  Leave
seeks to challenge the view so taken by the High Court. During the  pendency
of the matter this Court had directed the appellants and similarly  situated
multiplex theatre owners to keep paying the current  taxes  and  to  deposit
the outstanding dues as on 31.07.2009 in six  equal  quarterly  installments
with interest @ 9 per cent on reducing balance.

    Appearing  for  the  appellants,  Mr.  Rakesh  Dwivedi,  learned  Senior
Advocate submitted that the incentives provided in Clauses 8  and  8.1,  and
the procedure prescribed for registration in Clause 10 formed  the  core  of
promise and representation on part of the State Government  based  on  which
eligible units including that of the appellants had altered  their  position
and made huge investments in Large Scale Tourism Units.  He  submitted  that
such units could not now be told that the non fiscal benefits  of  extension
of validity period would not be granted  to  them  despite  they  have  been
fulfilled the conditions of satisfactory progress. It was further  submitted
that Clause 10(b) and  more  particularly  the  expressions  “in  the  first
instance” and “initial validity period” in said Clause 10  (b)  promised  an
over all validity period of four years; the initial  validity  period  being
two years granted straight away under TRC while  the  subsequent  period  of
two  years  could  be  granted  depending  upon  the  progress  report   and
difficulties  experienced.  He  submitted  that   the   notification   dated
14.2.1997 was issued under Section  29 of Act 16 of 1977 incorporating   the
terms and conditions of the Scheme dated 20.12.1995 and as  such  Clause  10
of the Scheme had acquired a  statutory  status.  In  his  submission,  G.R.
dated 28.06.2000 was a mere resolution not  being  translated  into  similar
notification under Section 29, and therefore said GR dated 28.06.2000  could
not detract or derogate from statutory  notification  dated  14.2.1997.   On
merits, it was submitted that the reasons in the letter of  rejection  dated
20.07.2005 were incorrect and irrelevant. He stated that  out  of  108  TRCs
issued under the Scheme, only in 22 or 23 cases the projects were  completed
and commercial operations had started. Evidently, the State Government  must
have considered that the burden with respect to 108 TRCs  could  comfortably
be borne, keeping in mind the advantages flowing from establishment  of  the
projects.   Further,  three  projects  had  shut  down  after  they   became
operational.  In the circumstances, the reasons regarding  undue  burden  on
the Exchequer and requirement of Multiplexes in the State  as  stated,  were
absurd and baseless.

14.     Mr.  Pritesh  Kapur  learned  Advocate  appearing  for   the   State
submitted that the Scheme  was to  remain in force up  to  31.07.2000  which
period was further extended up to 30.11.2000 and that the  Scheme  including
Clause 10  in its  entirety  ceased  to  be  operative  thereafter.  In  the
submission of the learned counsel, the right to seek  an  extension  of  the
validity period beyond the cut off date would survive  only  if  such  right
was an accrued right, which was not so  in  the  present  case.  He  further
submitted that GR dated 28.06.2000, rather than detracting from  the  Scheme
granted further extension to such units and  as  such  cases  for  extension
after the period of operation of the Scheme had come  to  an  end  must  and
ought to be governed by G.R. dated 28.06.2000  alone  and  that  since  said
G.R. did not contemplate any extension, the State Level Committee was  right
in not exercising any powers for grant  of  extension.  The  Government  was
also right in his submission, in taking a policy decision  in  not  granting
any further extensions.

15.   Mr. Rakesh Dwivedi learned  Senior  Advocate  in  rejoinder  submitted
that incentives under Clause 8 which span  beyond  5  years  and  up  to  10
years, were designed to survive even after expiry of the Scheme. He  further
submitted that in a case where TRC  was  granted  towards  the  end  of  the
operative period of the Scheme, the final effective steps would  necessarily
have to be taken after the expiry of the Scheme and thus the  Scheme  itself
contemplated that the actions under various clauses  would  continue  to  be
undertaken even after the expiry  of  the  Scheme.  In  his  submission  the
concept of “accrued right” is to be seen in the context of Section 6 of  the
General Clauses Act which may not strictly apply in  the  present  case.  It
was  submitted  that  in  any  case  positive  acts  in  the  form  of  huge
investments for setting up the projects having been  undertaken  during  the
initial validity period of the Scheme, the entitlement to claim  benefit  of
consideration of case  for  extension  under  the  Scheme  was  an  “accrued
right”.

16.   Reading of the Scheme shows that to be  eligible  for  the  incentives
under the Scheme, a new project ought to have  obtained  registration  after
1.8.1995 and taken initial effective steps under Clause 4.7(a)  which  inter
alia included effective possession of land free from  all  encumbrances  and
submission of Project Report.  It is only thereafter that an intending  unit
could apply and be given provisional registration under Clause 10(a).   Said
clause indicates that such provisional registration “in the first  instance”
would be up to two years. If the  unit  was  not  in  a  position  to  start
commercial operation during this initial validity period of  two  years,  it
would be  entitled  to  apply  with  progress  report  to  the  State  Level
Committee for extension, which could be granted up to six months at  a  time
or a total period of two years after examining the difficulties  experienced
in implementing the project. This first level  of  extensions  for  a  total
period of two years could be granted by the State Level Committee  and  even
if a unit was unable to go into operation after  availing  such  extensions,
it could still apply to the Government for further extension. Clauses 8  and
8.1 dealt with incentives and period of eligibility which  would  go  up  to
ten years after a unit  was  found  to  be  fully  eligible.  These  clauses
clearly show that such stages or eventualities would survive even after  the
expiry of period of the operation of the Scheme. The reading of  the  Scheme
further shows that no fresh application and TRCs could be granted after  the
period of operation but those who had crossed the threshold and  were  given
TRC, could have the full benefit of the stages contemplated in  Section  10.
In our considered view, it would be incorrect to say that  all  the  clauses
including Clause 10 would cease to operate after  the  period  of  operation
had come to an  end.  It  being  the  clear  intent  that  such  stages  and
eventualities ought to survive even after  the  expiry  of  the  Scheme,  we
reject the submission advanced on behalf of the State.

17.   Clause 7 of the Scheme classifies  projects  in  different  categories
and for a Large Scale Tourism Unit, with which we are  presently  concerned,
fixed capital investment was required to be  more  than  Rs.90  lakhs.   The
Scheme definitely promised an initial period for completion of  the  project
under Clause 10 (a) as two years after  the  initial  effective  steps  were
under taken by the concerned  unit.   Clause  10  (b)  further  promised  an
extension for two years subject to State  Level  Committee  being  satisfied
that an individual unit had experienced  difficulties  in  implementing  the
project.  A unit was therefore promised the availability of an  opportunity,
depending upon the individual fact situation, to pray for  extension  up  to
two years. Clause 10(C) further entitled such unit  to  approach  the  State
Govt. even after the aforesaid aggregate period of four  years  for  further
extension. In our view, Clause 10 was  one  of  the  core  features  of  the
Scheme  based  on  which  eligible  units  were  invited  to  make   capital
investment of more than Rs. 90 Lakhs with  a  promise  of  incentives  under
Clause 8. Having given such promise, based on which the appellants  incurred
capital expenditure, the question now arises  as  regards  applicability  of
doctrine of Promissory Estoppel.

18.   The law on the subject of Promissory Estoppel  was  recapitulated  and
succinctly dealt with by this Court in State  of  Punjab  Vs.  Nestle  India
Ltd.[1] It found the foundation of the doctrine  laid  in  the  decision  in
Collector of Bombay Vs. Municipal Corporation of the City of Bombay[2],  the
principle built upon in Union of India Vs. Anglo Afghan Agencies[3] and  the
superstructure of the  doctrine,  with  its  pre-conditions,  strengths  and
limitations outlined in the decision in Motilal  Padampat  Sugar  Mills  Co.
Ltd. Vs. State of UP[4]. This Court then dealt with the discordant  note  in
Jit Ram Vs. State of Haryana[5] and  how  that  was  firmly  disapproved  in
Union of India Vs. Godfrey  Philips  India  Ltd.[6]  by  a  bench  of  three
judges. We deem it appropriate to quote paras 27, 28,  29,  34,  35  and  36
from the decision in State of Punjab Vs. Nestle India Ltd. (Supra):-

“27. However, the superstructure of the  doctrine  with  its  preconditions,
strengths and limitations has been  outlined  in  the  decision  of  Motilal
Padampat Sugar Mills Co. Ltd. v. State of U.P.3  Briefly  stated:  the  case
related  to  a  representation  made  by  the  State  Government  that   the
petitioners’ [pic]factory would be exempted from payment of sales tax for  a
period of three years from the date of commencement of  production.  It  was
proved that the petitioners had, as a  consequence  of  the  representation,
set up the factory in the State. But the State Government refused to  honour
its representation. It claimed sales tax for the period it had said that  it
would not. When the petitioners went to court,  the  State  Government  took
the pleas:

(1) in the absence of notification under Section 4-A, the  State  Government
could not be prevented from enforcing the liability to sales tax imposed  on
the petitioners under the provisions of the Sales Tax Act;

(2) that the petitioners had waived their right to claim exemption; and

(3) that there could be no promissory estoppel against the State  Government
so as to inhibit it  from  formulating  and  implementing  its  policies  in
public interest.

 28. This  Court  rejected  all  the  three  pleas  of  the  Government.  It
reiterated the well-known preconditions for the operation of the doctrine:

(1) a clear and unequivocal promise knowing and intending that it  would  be
acted upon by the promisee;

(2) such acting upon the promise  by  the  promisee  so  that  it  would  be
inequitable to allow the promisor to go back on the promise.

29. As for its strengths it was said: that  the  doctrine  was  not  limited
only to cases where there was some contractual relationship  or  other  pre-
existing legal relationship between the  parties.  The  principle  would  be
applied even when the promise is  intended  to  create  legal  relations  or
affect a legal relationship which would arise in future. The Government  was
held to be equally susceptible to the operation of the doctrine in  whatever
area  or  field  the  promise  is  made  —  contractual,  administrative  or
statutory. To put it in the words of the Court:

“The law may, therefore, now be taken to be settled  as  a  result  of  this
decision, that where the Government makes a  promise  knowing  or  intending
that it would be acted on by  the  promisee  and,  in  fact,  the  promisee,
acting in reliance on it, alters his position, the Government would be  held
bound by the promise and  the  promise  would  be  enforceable  against  the
Government at the instance of the promisee, notwithstanding  that  there  is
no consideration for the promise and the promise  is  not  recorded  in  the
form of a formal contract as required by Article 299  of  the  Constitution.
(SCC p. 442, para 24)
      *     *    *
[E]quity will, in a given case where justice and fairness demand, prevent  a
person from insisting on strict legal rights, even  where  they  arise,  not
under any contract, but on his own title deeds or  under  statute.  (SCC  p.
425, para 8)
      *     *    *
Whatever be the nature of the function which the Government is  discharging,
the Government is subject to the rule of  promissory  estoppel  [pic]and  if
the essential ingredients of this rule are satisfied, the Government can  be
compelled to carry out the promise made by it.” (SCC p. 453, para 33)

34. The discordant note struck by Jit Ram case5 was firmly disapproved by  a
Bench of three Judges in Union of India v. Godfrey Philips  India  Ltd.6  It
was affirmed that: (SCC p. 387, para 12)
“12. There can therefore  be  no  doubt  that  the  doctrine  of  promissory
estoppel is applicable  against  the  Government  in  the  exercise  of  its
governmental, public or executive functions and the  doctrine  of  executive
necessity or freedom of future executive action cannot be invoked to  defeat
the applicability of the doctrine of promissory estoppel.”

35. It was held that  irrespective  of  the  nature  of  power  wielded  the
Government is bound to wield that power provided  it  possessed  such  power
and has promised to do so knowing and intending that the promisee would  act
on such promise and the promisee has done so: (SCC p. 389, para 14)

“We think that the Central Government had power under Rule  8  sub-rule  (1)
of the Rules to issue  a  notification  excluding  the  cost  of  corrugated
fibreboard  containers  from  the  value  of  the  cigarettes  and   thereby
exempting the cigarettes from that part of the excise duty  which  would  be
attributable to the cost of corrugated fibreboard containers.  So  also  the
Central Board of Excise and Customs had power under Rule 8 sub-rule  (2)  to
make a special order in the case of each of  the  respondents  granting  the
same exemption, because it could legitimately be said  that,  having  regard
to the representation made  by  the  Cigarette  Manufacturers’  Association,
there were  circumstances  of  an  exceptional  nature  which  required  the
exercise of the power under sub-rule (2) of Rule 8. The  Central  Government
and the Central Board of Excise and Customs were therefore clearly bound  by
promissory estoppel to exclude the cost of corrugated fibreboard  containers
from the value of the goods for the purpose of  assessment  of  excise  duty
for the period 24-5-1976 to 2-11-1982.”

36. The limitations to the doctrine delineated  in  Motilal  Padampat  Sugar
Mills3 however, were also reaffirmed when it  was  said:  (SCC  pp.  387-88,
para 13)
“[T]hat there can be no promissory estoppel against the legislature  in  the
exercise of its legislative functions  nor  can  the  Government  or  public
authority be debarred by promissory  estoppel  from  enforcing  a  statutory
prohibition. It is equally true that promissory estoppel cannot be  used  to
compel the Government or a public authority to carry  out  a  representation
or promise which is contrary to law or which was outside  the  authority  or
power of the officer of the Government or of the public authority  to  make.
We may also point out that the doctrine  of  promissory  estoppel  being  an
equitable doctrine, it must yield when the equity so requires; if it can  be
shown by the Government or public authority that having regard to the  facts
as they have transpired, it would be inequitable to hold the  Government  or
public authority to the promise or representation  made  by  it,  the  Court
would not raise an equity in favour [pic]of the person to whom  the  promise
or representation is made and enforce the promise or representation  against
the Government or public authority.”


       Coming to the facts of the present case,  we  find  that  the  Scheme
definitely promised incentives in the form of Tax holiday of 5-10  years  in
respect of exemptions  from  Sales  Tax,  Turnover  Tax,  Electricity  Duty,
Luxury Tax and Entertainment Tax upto 100 per cent of capital investment  if
a new unit was registered  after  1.8.1995  and  appropriate  investment  in
fixed capital assets was made. It also promised an  initial  period  of  two
years for going operational in the first  instance,  extendable  by  further
period of two years subject to satisfactory progress  to  be  found  by  the
State Level Committee. Even thereafter, the Unit could  still  approach  the
State Government for further extension. This was part of  the  core  of  the
Scheme, which invited investment in tourism units promising tax  holiday  as
stated above.  Based on such representation, various units  including   that
of the appellants having come forward and altered their position, the  State
Government  would  certainly  be  bound  by  the  principles  of  Promissory
Estoppel.  The State Government was thus estopped from  going  back  on  the
promise so made in the Scheme and could not have curtailed  the  period  and
the opportunity specifically made available within which the  project  could
be completed so as to avail the benefits under the Scheme.

We find nothing in the present case  on  the  basis  of  which  there  could
possibly be room to say that it would  be  inequitable  to  hold  the  State
Government to its promise. Out of 108 TRCs  issued  under  the  Scheme,  the
burden that the  Government  was  well  aware  and  thought  that  it  could
comfortably bear, only  19  or  20  units  have  been  established  and  are
functional.  In any case, the impact of  incentives  so  offered  under  the
Scheme and the consequential burden must have been  weighed  carefully  when
such promise was made and the Scheme was formed.  We may respectfully  refer
to the following observations of this Court  in  S.V.A.  Steel  Re-  Rolling
Mills Ltd. and others v. State of Kerala and others[7] to which  one  of  us
(Anil R. Dave, J.) was a party:
“30. Before laying  down  any  policy  which  would  give  benefits  to  its
subjects, the State must think about pros and cons of  the  policy  and  its
capacity to give the  benefits.  Without  proper  appreciation  of  all  the
relevant factors, the State should not give any assurance, not only  because
that would be in violation of the principles of promissory estoppel  but  it
would be unfair and immoral on the part of the State not to act as  per  its
promise.”


     Furthermore, the Scheme as framed on 20.12.1995  formed the basis of  a
statutory notification under Section 29 of Act 16 of 1977 and  as  such  the
core components of the Scheme had acquired a statutory status. By virtue  of
said Section 29, the notification dated 14.2.1997 was required  to  be  laid
for not less than 30  days  before  the  State  Legislature.  If  the  State
Government  was  desirous  of   amending,   varying   or   rescinding   said
notification dated 14.2.1997, the subsequent G.R.   dated  28.06.2000  ought
to have been translated in a statutory notification under Section 29 of  the
Act 16 of 1977.  In the absence of such steps having been  undertaken,  G.R.
dated 28.06.2000 could not in any way detract from or dilute the  effect  of
the Scheme which had acquired statutory status.

21.   We therefore hold that the  appellants  were  entitled  to  have  full
benefit and advantage of Clause 10 of the Scheme and the curtailment of  the
period and opportunity available under said  Clause  10  of  the  Scheme  by
subsequent G.R. dated 28.06.2000 was bad and ineffective.

      The  record  indicates  that  the  progress  of  the  project  of  the
appellants was greatly hampered as a result of  major  earth  quake  in  the
State on 26.01.2001 and large scale communal riots in the State in  February
2002. The State Level Committee was  satisfied  that  the  commencement  and
continuation of the project was so affected  as  a  result  of  these  major
difficulties and had  granted  initial  extension  of  six  months  but  the
appellants had  benefit  of  only  few  days  out  of  such  extension.  The
subsequent request for further extension  which  was  backed  with  relevant
certificate from the Chartered  Accountant  certainly  persuaded  the  State
Level Committee to find that the facts justified grant of further  extension
but it felt it had lost the power to grant such extension because of  G.  R.
dated 28.06.2000.  In the light of the view that we have  taken,  the  State
Level Committee was still competent to consider the  request  for  grant  of
extension.

23.   In the circumstances, we allow the appeal and set aside  the  decision
of the High Court in so far as it held that  the  operative  period  of  the
Scheme came to an end on 30.11.2000 and  that  there  could  be  no  further
extension of  time  limit.  Since  the  appellants  have  already  commenced
commercial operations, it now needs  to  be  assessed  by  the  State  Level
Committee whether in the facts of the case the appellants could  justifiably
have claimed extension under Clause 10 of the Scheme. We  direct  the  State
Level Committee to make such assessment in accordance  with  Clause  10,  in
three months of the receipt of this  decision.  Needless  to  say,  if  such
assessment is found in favour of the appellants, they shall be  entitled  to
the incentives and benefits under the Scheme.

24.   All  the  connected  matters  raise  identical  issues  and  challenge
rejection of their applications for extension of time.   In  each  case  the
Order passed by the concerned authority is similarly worded  and  passed  on
20.07.2005, i.e. the same date.  These connected appeals  are  also  allowed
with similar direction.

25.      The appeals stand allowed in terms as stated above.   No  order  as
to costs.


                             ………………………..J.
                                  (Anil R. Dave)



                                  ………………………..J.
                                  (Uday Umesh Lalit)
New Delhi,
May 13, 2015

-----------------------
[1]    2004(6) SCC 465
[2]    1952 SCR 43
[3]    1968(2) SCR 366
[4]    1979(2)SCC 409
[5]    1981(1)SCC 11
[6]    1985(4) SCC 369
[7]    (2014) 4 SCC 186

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