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PETITIONER: STATE OF MADHYA PRADESH AND ORS.

       Vs.

RESPONDENT: ORIENT PAPER MILLS LTD.

DATE OF JUDGMENT07/12/1989

BENCH: PUNCHHI, M.M. BENCH: PUNCHHI, M.M. RANGNATHAN, S.

CITATION:  1989 SCR  Supl. (2) 436  1990 SCC  (1) 176  JT 1989 (4)   495        1989 SCALE  (2)1290

ACT:     Administrative Law: Promissory  estoppel--Industrialists generating   power   through  their   own   new   generating sets--Assurance given by Government--Electricity duty exemp- tion--Effect of.     Constitution of India,  1950: Article  136--Interference with factual findings--Only in exceptional cases.     Madhya  Pradesh  Electricity Duty  Act,   1949:  Section 3-B-Electricity  duty--Exemption--Notification--High   Court granting    relief    without    ordering    issuance     of notification--Whether amounts to transgression.

HEADNOTE:     In its industrial policy, the State Government  declared on  1.8.1961 that where power has to be generated by  indus- trialists themselves, exemption from electricity duty  would be granted for a period of five years from the date of plant goes  into  production,  and that the  concession  would  be applicable only to new generating sets installed during  the Third Plan period.     The  Respondent indicated to the Government on  3.5.1955 that about 5000 K.W. of electricity would be required by  it to  run  its paper plant and that it would  by  itself  make arrangements  for obtaining the necessary generating  equip- ment. It also applied for import licence for the import of a production plant as also a power plant to run it. The import licence  was granted and the Respondent started  negotiation with  the foreign supplier. Since the price had gone  up  it was rather impossible for the Respondent to import both  the production plant and the power plant, and if the power plant was not purchased along with the production plant, it  would make  the project unsound. Hence the Respondent was  in  two minds whether to have the power plant or not. Meanwhile, the above said industrial policy was announced and the  Respond- ent on installation of the power plant was able to start its production w.e.f. 16.2.1965. Thereafter  to formalise the matter, the  Respondent  corre- sponded 437 with the appellant for the grant of the requisite exemption, which  was rejected, and the Respondent approached the  High Court by way of a petition under Articles 226 and 227 of the

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Constitution  of India. The High Court held that  the  Peti- tioner  was  entitled to invoke the doctrine  of  promissory estoppel  in order to claim exemption from payment of  elec- tricity  duty for a period of five years from  16.2.1965  in terms  of  the  assurance  of  the  State  Government  dated 1.8.1961.     Against this order of the High Court the State has  come in appeal by Special Leave.     On behalf of the appellant-State it was urged that there was no occasion to invoke the doctrine of promissory  estop- pel, since the Respondent had not in any manner acted on the assurance of the Government to its own prejudice but on  its own  it was taking steps to set up a generating  plant  much before the industrial policy was announced. Dismissing the appeal, this Court,     HELD:  1. Whether the respondent was of one  mind  right from the beginning to set up a power plant, with or  without the  assurance  of the State Government dated  1.8.1961,  as asserted by the State, is neither borne out nor is the  view of  the High Court arrived at from the record. On  the  con- trary, the view taken is that the respondent’s indecision in that regard ended and it became decisive on the announcement of the assurance dated 1.8.1961. Such view of the High Court was  a  possible  view to be taken on  the  material  placed before  it and the inference drawn therefrom could  be  that the  respondent  had acted on the basis  of  the  assurance. [441E-F]     2. This Court ordinarily does not interfere with factual findings arrived at by the High Court and this case has  not been  shown to be an exception. The view taken by  the  High Court  was unexceptional warranting it to be  left  uninter- ferred with. [441F]     3. Without commanding the State Government to issue such a  Notification,  the High Court has granted relief  to  the respondent to which there was no bar. Accordingly no  provi- sion  of  Madhya Pradesh Electricity Duty Act, 1949  or  any other law can be said to have been transgressed. [442A]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No 498 of 1975. 438     From  the  Judgment  and Order dated  31.7.1974  of  the Madhya  Pradesh  High Court in Misc. Petition No.  3  16  of 1973.     Prithvi Raj, Satish K. Agnihotri and Ashok Singh for the Appellants.     Shankar  Ghosh, Vivek Gambhir and Parveen Kumar for  the Respondent. The Judgment of the Court was delivered by     PUNCHHI,  J. This is an appeal by special leave  against the  judgment and order of the High Court of Madhya  Pradesh at Jabalpur whereby the petition under Articles 226 and  227 of the Constitution of India preferred by Orient Paper Mills Ltd.,  the sole respondent herein, was allowed and  sequally the order dated 15.3.1973 of the State Government  declining to grant the respondent exemption from payment of electrici- ty  duty  for  the period from 16.2.1965  to  15.2.1970  and pursuant  demand notices dated 20.3.1973 and  3.4.1973  were quashed.  The  aggrieved  State of Madhya  Pradesh  and  its concerned Officers are the appellants challenging the same     The respondent had need to go to the High Court to  have an assurance dated 1.8.1961 regarding exemption from payment

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of electricity duty given by the State of Madhya Pradesh  in its  declared industrial policy observed, which may well  be reproduced here at the outset:               "Where power has to be generated by  industri-               alists themselves, exemption from  electricity               duty  shah  be granted for a  period  of  five               years from the date of plant goes into produc-               tion. The concession shall be applicable  only               to  new generating sets installed  during  the               Third Plan period."     Factually  it  was not disputed before the  High  Court, that  the  case of the respondent squarely fall  within  the scope of the assurance reproduced above since the industrial plant  of  the respondent had gone  into  production  w.e.f. 16.2.1965,  the generating set put up was new, and had  been installed  during  the Third Plan period. To  formalise  the matter, the respondent had corresponded with the  Government for the grant of the requisite exemption. Since the same was rejected and demands for payment of electricity duty  creat- ed,  the High Court was requested to issue  suitable  writs, directions and orders cancelling the 439 aforesaid  orders and demand notices and granting  exemption from  payment of electricity duty in respect of  electricity self-generated  by the respondent during the said period  of five  years, and also commanding the State to carry out  the assurance  and promises made in the said  industrial  policy dated 1.8.1961 extracted above and then requiring the  State to  issue  a Notification under Section 3-B  of  the  Madhya Pradesh  Electricity  Duty Act, 1949 granting  exemption  or exception to the respondent from payment of electricity duty and other allied consequential reliefs.     Before  the High Court voluminous  documentary  evidence was  given  by the parties in support  of  their  respective pleadings.  The High Court, on consideration of  the  entire material placed before it, spelled out a promissory estoppel in favour of the respondent and concluded as follows:               "To  conclude,  we  are of  opinion  that  the               petitioner is entitled to invoke the  doctrine               of  promissory  estoppel  in  order  to  claim               exemption from payment of electricity duty for               a  period  of  five years  from  16.2.1965  to               15.2.1970  in  terms of the assurance  of  the               State  Government, dated 1.8.1961. Of  course,               as indicated earlier it is not for us to issue               any  writ  directing the State  Government  to               grant the petitioner exemption in terms of  S.               3-A (vii) or Section 3-B of the M.P. Electric-               ity Duty (Amendment) Act, 1949. But in view of               the  unambiguous  and  unequivocal   assurance               given  by the State Government on 1.8.1961  we               can  certainly  quash the order of  the  State               Government, dated 15.3.1973 as also the demand               notices, dated 20.3.1973 (Petitioner’s  Annex-               ure-48)   and  dated  3.4.1973   (Petitioner’s               Annexure 50) and leave the matter at that.  It               would  be for the Government to work  out  its               own course of action on that basis. ’ ’     Mr. Prithvi Raj, learned counsel for the appellant urged that on the facts and circumstances of the case there was no occasion  to invoke the doctrine of promissory estoppel.  It was asserted that though the industrial policy was published by the State Government on 1.8.1961 containing the assurance extracted above, the respondent had not in any manner  acted thereon to its own prejudice, but had rather on its own been

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taking  steps to set up a generating plant much  before  the industrial policy was announced and had factually set up the generating  plant  as  per its earlier  resolve.  The  facts highlighted were that the 440 respondent  Paper Mill, had been set up at Amlai in  Vindhya Pradesh, when a Part-C State under the administration of the Central  Government.  It had in its application  dated  3.5. 1955 to the Government indicated that about 5000 K.W.  elec- tricity would be required by it to run its paper plant  and. it  would  by  itself make arrangements  for  obtaining  the necessary  generating equipment. It appears that  the  State Government  had  at that time its oven project in  view  for installing a power plant. On that basis some  correspondence ensued between the respondent and the State Government  with regard to its annual requirement of electricity. That  exer- cise  was abandoned for some reasons which are not  relevant here.  Thereafter the respondent applied for import  licence for  the import of a production plant as also a power  plant to  run it. The respondent was granted an import licence  on the strength of which it started negotiation with an  Ameri- can supplier. While negotiations were in process the  Ameri- can  supplier increased the price. It became impossible  for the respondent to import the production plant and the  power plant within the funds allotted to it by the World Bank  and in  these circumstances, the American suppliers advised  the appellant  to  drop procurement of the power plant.  At  the same  time the American supplier warned the respondent  that if the power plant was not purchased along with the  produc- tion  plant, it would make the project unsound and it  would not  be  able  to fulfil its guarantees as  desired  by  the respondent. The respondent in these circumstances became  of two  minds, whether to have the power plant or not. When  it was  in  that state of mind, the industrial policy  was  an- nounced  by  the  Government  on  1.8.1961.  Thereafter,  on 21.8.1961, the respondent applied to the Government of India for  sanction  of permission to import  3.5  million  dollar worth  goods more than the sanctioned amount.  Finally,  the respondent  with the consent of the Government of India  and with  the aid of the World Bank was able to import the  pro- duction plant and the power plant and after its installation was able to go on production w.e.f. 16.2.1965.     The  course of the events set out earlier were not  dis- puted as such by the appellants before the High Court but it was  maintained as now before us, that the respondent  would have  on  its own gone on to install the  power  plant  even without  the  announcement of the  industrial  policy  dated 1.8.1961.  Additionally,  it  was maintained,  in  the  like manner,  that the respondent had not acted to its  prejudice on  the basis of the aforesaid assurance dated 1.8.1961  and so  that doctrine of promissory estoppel was not  invokable. The  defence  of the State thus raised was rejected  by  the High Court in the following words: 441               "We have already dealt with that aspect earli-               er and we have already held that the petition-               er’s  action in setting up a power  plant  was               postponed on account of certain  circumstances               and  ultimately on the advise of the  manufac-               turers who refused to continue the  guarantee,               the petitioner decided to set up its own power               plant.  In the meantime, the assurance of  the               State  Government, dated 1.8.1961 had  already               been  given  and the  petitioner’s  action  in               making  a  final decision to set  up  its  own

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             power plant can be directly connected with the               State Government’s assurance dated 1.8.  1961.               No sooner the petitioner took the final  deci-               sion  in that behalf, it applied to the  State               Government for grant of an exemption, although               that  application was premature,  because  the               petitioner’s paper mill had not started  func-               tioning.  As such, the petitioner  would  cer-               tainly be entitled to claim exemption in terms               of the assurance of the State Government dated               1.8.1961  with effect from the date the  paper               mill  started functioning,  namely,  16.2.1965               and  the exemption would last for a period  of               five years upto 15.2. 1970."     Whether  the respondent was of one mind right  from  the beginning  to  set  up a power plant, with  or  without  the assurance of the State Government dated 1.8.1961, as assert- ed by the State, is neither borne out nor is the view of the High  Court arrived at from the record. Rather, on the  con- trary, the view taken is that the respondent’s indecision in that regard ended and it became decisive on the announcement of the assurance dated 1.8.1961. Such view of the High Court was  a  possible  view to be taken on  the  material  placed before  it and the inference drawn therefrom could  be  that the respondent had acted on the basis of the assurance.  The effort here to re-do the exercise in this regard must inevi- tably  fail,  for this Court ordinarily does  not  interfere with factual findings arrived at by the High Court and  this case  has not been shown to us to be an exception.  In  this situation, the view taken by the High Court was unexception- al warranting it to be left uninterferred with.     Some attempt was made by learned counsel for the  appel- lant  to  contend that the doctrine of  promissory  estoppel could  not  be  pressed into service to  command  the  State Government  under Section 3-A (vii) (before  its  amendment) and Section 3-B of the Madhya Pradesh Electricity Duty  Act, 1949  (as  amended) to issue a  Notification  exempting  the respondent from payment of electricity duty. The 442 answer  to  this  argument is available  in  the  conclusion arrived  at by the High Court extracted above. Without  com- manding  the State Government to issue such a  Notification, it  has granted relief to the respondent to which there  was no  bar. Accordingly, no provision of Madhya  Pradesh  Elec- tricity Duty Act, 1949 or any other law can be said to  have been transgressed. We thus reject this argument too.     Thus for the foregoing reasons this appeal fails and  is hereby dismissed. No costs. G.N.                                            Appeal  dis- missed 443