Union Of India & Ors vs Hanuman Industries & Anr

1. All these appeals seek to impeach the decision rendered by the

Guwahati High Court (Shilong Bench) in a batch of Writ Appeals

preferred amongst others by the respondents herein being aggrieved

by the dismissal of their respective writ petitions, questioning the

refusal of the appellants to sanction financial assistance to them

under the “Scheme of Promotion of Industries in North East”

(SPINE) on the ground of delay and laches. By the determination

made in the appeals, the grievance of the respondents has been

redressed primarily on the basis of the adjudication made earlier by

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the same High Court in Writ Petition(C) No. 279 (SH) of 2007 since

affirmed by this Court by Order dated 01-05-2009 rendered in

SLP(C) 9578-9584/2009.

2. We have heard Dr. Abhishek Atrey, learned counsel for the

appellant and Ms. N. Saikiya, learned counsel for the respondents.

3. The individual facts qua the respondents marginally vary and

do not demand separate dilation in the face of the common issues

that need to be addressed. Common arguments have also been

advanced. The pleadings pertaining to Civil Appeal No. 3962/2011,

Union of India and Ors. vs Shri Hanuman Industries & Anr. would,

therefore, be outlined for the factual foundation of the debate.

3.1 In the year 1997, a policy decision was taken by the Planning

and Development Department, Government of India for promotion

of industries in the North East Region, during the period of 9 th Plan

by providing inter alia a package of incentives to create an

entrepreneurial environment. With this objective, a scheme

nomenclatured SPINE, as above, was launched by the Ministry of

Development of North Eastern Region, North Eastern Council,

Shilong (for short DONER). In terms of the scheme, The North

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Eastern Council (NEC) was to provide to the newly set up industries

to the extent of 25 per cent of the project cost or Rs. 50 lacs,

whichever was less as deemed proper by the recommending

authority on the fulfillment of the conditions stipulated therein.

The Union of India, represented by the Ministry of DONER and the

NEC were entrusted with the role of implementing the scheme.

4. In response to this scheme, which was apparently akin to a

State policy, the respondents on various dates submitted their

applications accompanied by necessary documents for setting up

their industries as mentioned therein inter alia disclosing the

investments made even by obtaining financial accommodation from

banking institutions and otherwise. According to the respondents

though their applications remained pending and they were made to

understand that the same were being processed as per the norms

applicable, it was noticeable, that the implementing authorities

were adopting pick and choose methods in the matter of

disbursement of the financial assistance to a selected few by

overlooking their worthy claims.

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5. It is a matter of record that another set of such applicants with

the similar grievance had meanwhile instituted writ proceedings

registered as WP(C) 279 (SH) to 285 (SH) of 2007 and eventually as

adverted to hereinabove a Single Bench followed by a Division

Bench of the Guwahati High Court had entertained the challenge

made therein and the implementing authorities of the scheme were

directed to process the applications of the said writ petitioners for

grant of subsidy under it (SPINE) in accordance with law and for

sanctioning the same to each of them, within a period of ninety

days from the receipt of the copy of the judgment and order. To

reiterate, this Court by its Order dated 01-05-2009 passed in

SLP(C) 9578-9584/2009, declined to interfere with this

adjudication.

6. Be that as it may, a learned Single Judge of the same High

Court by judgment and order dated 07-10-2009, rejected the writ

petitions filed by the respondents herein on the ground of delay and

laches, the decision in the earlier proceedings notwithstanding. This

determination, however, was reversed in the appeals filed by the

respondents, by the common judgment and order impugned herein,

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whereby the direction, in the earlier proceedings to the

implementing authority for processing the applications for

investment subsidy under SPINE in accordance with the law was

reiterated vis-à-vis the present respondents. Being aggrieved, the

Union of India and the NEC are before this Court.

7. At this juncture, the admitted facts need be noted. As per the

procedure prescribed, the applications submitted by the

respondents along with the accompanying documents were to be

routed through the Department of Industries of the respective State

Governments to be forwarded to the NEC by the Planning

Department of the State concerned and that no proposal was to be

received directly by the NEC.

8. While the said applications were thus pending a letter dated

05-02-2007 was issued by the Secretary, Ministry of Development

of North Eastern Region etc. New Delhi, addressed to the Secretary

North Eastern Council, Shilong referring to various

correspondences mentioned therein pertaining to request for

reports in respect of alleged financial irregularities in the

disbursement of Grant-in-Aid under SPINE qua each unit for

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inquiry. It was underlined in the said letter that the report had been

sought for to positively reach the issuing Ministry by 15-02-2007.

It was in clear terms mentioned that in view of the pending inquiry

and decisions in connection therewith, further

sanction/disbursement of Grant-in-Aid particularly under SPINE

should be stopped forthwith. The letter also contained a caveat that

in case the report was not submitted by the deadline of time given,

the matter would be forwarded for investigation.

8.1 The records reveal that thereafter in the meeting of the

Ministry of DONER to review the scheme of the NEC with particular

reference to SPINE held on 21-02-2007, it was resolved amongst

others that a committee would be constituted to monitor and

evaluate projects before release of funds under the SPINE.

Subsequent thereto, the Deputy Secretary, NEC addressed a letter

dated 23-2-2007 to the Commissioner and Secretary, Planning

Department of the North Eastern States as named therein

intimating about the receipt of a letter from the Secretary, Ministry

of DONER, recommending discontinuance of SPINE immediately.

The letter further required that a review of the liabilities be

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undertaken and submitted for necessary decision by the Chairman,

NEC. That this view of the Ministry of DONER, had also been

shared with the State Governments, was mentioned. The addressee

was requested to ensure that no new proposal for consideration

under SPINE be forwarded to NEC.

8.2 It is noticeable, that with effect from 01-04-2007, the

Government of India, Ministry of Commerce and Industry,

Department of Industrial Policy and Promotion did approve a

package of fiscal incentives and other concessions for the northeast

region named “Northeast Industrial and Investment Promotion

Policy (NEIIPP) 2007”. Parallely by a communication dated

04-09-2007, the Government of India, Ministry of DONER reiterated

its request to the Industries and Commerce Department of

Government of Assam to get the industries in the list appended

thereto, inspected and reports submitted to the NEC as per the

format enclosed. The letter disclosed that a formal meeting of the

Committee in this regard would consider and recommend further

release to the said industries. It was thereafter that the same

Ministry i.e. of DONER vide its letter dated 01-10-2007 addressed

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to the Commissioner and Secretary, Planning and Development,

Assam while referring to its earlier letter dated 23-02-2007,

conveyed that as the proposals pending at the time of closure of

SPINE could no longer be processed, it had been decided that the

same be returned to the State Governments. Thereby a list of the

pending proposals, State-wise, was forwarded with the observation

that the Units concerned could take the benefit of Northeast

Industrial and Investment Promotion Policy 2007(NEIIPP – 2007). It

was assured that the relevant papers would be returned at a later

date. The list appended amongst others contained the names of the

respondent units involved in the present proceedings. It is thus

apparent from the communication dated 01-10-2007 and the

annexures thereto that at the time of the issuance thereof

indicating the closure of SPINE, the proposals vis-à-vis these units

had remained pending and were not processed as per the procedure

prescribed. In the contemporary context, the media also flashed the

decision of withdrawal of SPINE at or about the same time. Prior to

these developments, the working group on NEC while deliberating

upon the related issues for the 11 th Five Year Plan held on

22-06-2006, however, had recommended continuance of SPINE

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with improved guidelines to block loopholes, increase opportunities

for generating local employment and expedite industrialisation of

the region. This recommendation, however, needless to mention,

has to be construed in the backdrop of the decision for closure of

SPINE as was taken and communicated vide the letters dated

23-2-2007 and 01-10-2007 alluded hereinabove.

9. Exasperated by the delay in the grant of the incentives under

SPINE, to reiterate, several similarly situated industrial units had

meanwhile approached the Guwahati High Court with a series of

writ petitions seeking judicial intervention. By common judgment

and order dated 20-06-2008, the petitions were allowed by the

Single Judge of that Court directing the implementing authorities to

process the applications of the writ petitioners for grant of subsidy

under SPINE in accordance with law for sanctioning the same to

each of them without being influenced by the letter dated

05-02-2007 of the Secretary, Ministry of DONER within a period of

ninety days from the receipt of the copy of the judgment and order.

In pronouncing this verdict, the learned Single Judge inter alia

recorded that relying on the assurance under the scheme, units

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concerned had materially altered their positions by investing huge

amounts for setting up their respective new industrial units even by

obtaining secured and unsecured loans and that denial of the

financial assistance under the scheme would result in their closure

observing that the letter dated 05-02-2007 did not indicate

withdrawal of the scheme and that only enquiry into some

irregularities was comprehended. The learned Single Judge noted

as well that meanwhile the concerned industries had made their

units functional. The minutes of the meeting dated 21-02-2007

was also taken note of in expressing this view. The learned Single

Judge entertained the plea of promissory estoppel as well in issuing

the operative directions.

9.1 This decision was taken in appeals before a Division Bench of

the Guwahati High Court by the Union of India and NEC which

were dismissed on 27-11-2008. Admittedly, the present

respondents were not parties in the earlier round of litigation. This

adjudication undertaken by the Guwahait High Court, attained

finality by the order dated 01-05-2009 passed by this Court in SLP

No. 9578-9584/2009, whereby the same was left uninterfered.

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10. Close on the heels of this affirmation by this Court, the

respondents herein on 27-08-2009 filed their writ petitions claiming

the same relief seeking parity of treatment. The learned Single

Judge of the Guwahati High Court by judgment and order dated

07-10-2009 dismissed all the petitions analogously heard on the

ground of delay and laches. Observing with reference to the

relevant decisions of this Court that the benefit of a judicial verdict

in a case cannot automatically be extended to another more

particularly in the face of unexplained and/or unsatisfactory

explanation of delay in between, the learned Single Judge declined

the relief holding that the exercise of powers under Article 226 of

the Constitution of India was primarily equitable in nature.

According to the learned Single Judge, in the attendant facts and

circumstances, the respondents were not only aware of the decision

of the concerned authorities to wind up SPINE by refusing financial

assistance thereunder as intimated by the letter dated 05-02-2007,

it was held as well that the respondents without joining the writ

petitioners in the earlier outing had deliberately chosen to await the

outcome thereof and thus were really fence sitters to avail the

benefit of a favourable verdict, if forthcoming. The learned Single

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Judge was of the view that the passive conduct of the respondents

herein tantamounted to sleeping over their rights for over two years

to wake from their feigned slumber after the decision of this Court

on 01-05-2009, to agitate their perceived rights. That having regard

as were, to the financial implications that would ensue in case the

inordinately delayed claim of the respondents is/was by

entertained, thus adversely impacting upon public exchequer, the

learned Single Judge declined the relief sought for.

11. By the decision impugned in the present proceedings, a

Division Bench of the same High Court reversed these findings and

granted the relief prayed for by the respondents in the same terms

as sanctioned earlier to the otherwise equally placed industrial

units. The Division Bench adverted inter alia to the letters dated

05-02-2007 and 04-05-2010 issued by the Ministry of DONER

apart from heavily relying on the decision in the earlier lis and

returned a finding that SPINE had continued till the issuance of the

notification/letter dated 04-05-2010. Their Lordships held the view

that as the respondents had set up their industrial units during the

validity of the scheme and their claims were pending in course

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thereof, the appellants, the implementing authorities were obliged

to consider the same. That the view taken by the learned Single

Judge was inconsistent with the one taken in the judgment and

order dated 20-6-2008 was also noted. It was held as well that

apart from the fact that there was no prescribed period of limitation

to invoke the writ jurisdiction under Article 226 of the Constitution

of India, as under the Limitation Act 1963, it was in any case, three

years, their writ petitions could not have been dismissed on the

ground of delay. In any view of the matter, it was observed that, the

time lag in filing the writ petitions could not have been reckoned

from 05-02-2007 where the SPINE was not closed. That the

implementing authorities did not at any point of time communicate

to the respondents the rejection of their claims was also recorded.

The aspect of financial implications was also dismissed as

inconsequential. Relying on the determination made in the earlier

proceedings, the appellants herein were directed to process the

application of the respondents for investment subsidy under SPINE

in accordance with the law and without being influenced by the

letter dated 05-02-2007 for sanctioning the same within a period of

ninety days. In another words, the operative directions contained

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in the judgment and order dated 20-06-2008 in the earlier batch of

writ petitions was replicated vis-à-vis the respondents.

12. In the backdrop of this factual matrix, Dr. Atrey the learned

counsel for the appellants has insistently argued that it being

apparent on a combined reading of the letters dated 05-02-2007,

20-3-2007 and 04-05-2010 that a conscious decision had been

taken by the concerned authorities to discontinue SPINE with effect

from 23-2-2007, the writ petitions of the respondents, who had

admittedly not joined the earlier set of industrial units had been

rightly rejected by the learned Single Judge on the ground of

unexplained delay , laches and inaction on their part. Referring to

the letter dated 04-05-2010 in particular, he has urged that it being

evident therefrom that SPINE had been discontinued with effect

from 23-02-2007, an advance indication to that effect being

disclosed in the letter dated 05-02-2007 preceding thereto, and

conveyed by the one dated 23-2-2007, it is apparent that the

respondents herein had not approached the Guwahati High Court

in time, to take a gambling chance later on and to cash upon any

favourable verdict in the earlier litigation. As the approach of the

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respondents lack in bonafide and as they cannot be construed to

have invoked the writ jurisdiction of the High Court in time, their

claim had been rightly rejected by the learned Single Judge in the

exercise of the equitable prerogative, he urged. The learned counsel

maintained that as the claim of the respondents had not been

allowed during the pendency of SPINE, they have no vested right to

insist for a direction to sanction the incentives thereunder and thus

the impugned judgment and order in the prevailing facts and

circumstances ought to be interfered with. He further argued that

not only on the closure of the scheme in 2007, as conveyed by the

letter dated 23-2-2007, the pending proposals including those of

the respondents herein had been returned to the respective State

Governments, in absence of any challenge to the said decision, the

respondents even otherwise are not entitled to the benefit under it.

According to the learned counsel, the respondents are not entitled

to the benefit of the earlier adjudication and that if their claim is

entertained it would not only signify unwarranted premium on their

speculative inaction but also would severely impinge upon the

financial resources of the State qua an unworthy cause.

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13. As against this, Ms. N. Saikia has emphatically argued that

the respondents being similarly placed with the writ petitioners in

the earlier proceedings, they had been rightly extended equal

treatment and thus the impugned judgment and order is

unassailable in law and on facts. As admittedly by the letter dated

05-02-2007, the scheme had not been withdrawn and in fact no

decision rejecting their claim thereunder had ever been conveyed to

the respondents, the action of the appellants in endeavouring to

deny the benefit thereunder is patently arbitrary, whimsical and

unconstitutional, she urged. In any view of the matter, according to

the learned counsel, as the implementing authorities were generally

sloth in processing the applications, taking about four/five years’

time to complete the process, the respondents could not have been

non-suited on the purported ground of delay and laches. While

asserting that the scheme was in force when the writ petitions were

filed Ms. N. Saikia insisted that the respondents having altered

their position in view of the incentives promissed thereunder, the

action of the appellants in declining them the same is violative of

the doctrine of promissory estoppel. According to the learned

counsel, as others similarly placed with the respondents have been

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extended the benefits under the scheme, the denial to the

respondents was discriminatory as well. The following decisions

were relied upon to buttress the above assertions:

AIR 1979 SCC 621 M/S Motilal Padampt Sugar Mills Co. –Vs- The

State of Uttar Pradesh & Ors., (2004) 6 SCC 465 State of Punjab –Vs-

Nestle India Ltd., (2006) 8 SCC 702 MRF Limited Vs Assistant

Commissioner Sales Tax., (2004) 1 SCC 139 State of Orissa & Ors Vs

Mangalam Timber Products Limited., (2009) 6 SCC 791 Basanti

Prasad Vs Chairman, Bihar School Examination Boards & Ors.,

(2010) 6 SCC 786 Improvement Trust, Ludhiana VS. Ujagar Singh &

Ors., (2013) 12 SCC 649 Esha Bhattacharjee Vs. Raghunathpur

Nafar Academy & Ors.

14. The pleaded facts and the competing arguments have received

our due attention. To start with, it is not disputed that the writ

petitioners in the earlier round of adjudication were applicants

under SPINE alike the respondents herein. They being appalled by

the delay in the grant of their receivables thereunder and being

faced with the letter dated 05-02-2007 whereby pending receipt and

scrutiny of the reports as called for, further sanction/disbursement

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of Grants-in-Aid under the said scheme was stopped, did promptly

approach the Guwahati High Court with a batch of writ petitions in

the year 2007 itself and as narrated hereinabove were favoured with

a direction to the implementing authorities for consideration of their

application for the investment subsidy in accordance with law

without being influenced by the said letter. Admittedly, the

respondents herein elected not to join them and instead, soon

thereafter this Court affirmed the above verdict on 01-05-2009,

staked their claim on 27-08-2009. There is evidently thus a time

lag of more than two years by which the respondents’ challenge was

delayed.

14.1 It is a matter of record, that by letter/notification dated

04-05-2010 issued by the Secretary, Ministry of DONER, NEC,

Shillong, confirmation of the decision of withdrawal and closure of

SPINE with effect from 23-02-2007, was notified. A plain perusal of

the contents of this document would reveal in no uncertain terms

that the withdrawal and closure of SPINE had been effected by an

Order of Government of India vide NEC/PLAN/ii-23-2-2007. Thus

the letter/notification dated 04-05-2010, did relate back to

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23-02-2007 for all intents and purposes. Therefore the scheme,

SPINE stood withdrawn and/or closed on and from 23-02-2007. As

a corollary, on a cumulative reading of the letters dated

05-02-2007, 23-02-2007 and 04-05-2010 as well as the resolution

dated 21-02-2007 it is indubitable that SPINE stood withdrawn

and/or closed with effect from 23-02-2007. As adverted to

hereinabove, by letter dated 01-10.2007, as a consequential step,

the proposal which had remained unprocessed as per the standard

procedures of the scheme were returned to the State Governments.

The list of proposals remitted back admittedly included those

amongst others of the respondents herein. It is thus patent that on

such date i.e. 01-10-2007, the claims of the respondents had not

been accepted and in view of the closure of the scheme, were

returned to the respective State Governments. In this pronounced

backdrop, the plea of the respondents that at the institution of the

writ petitions in 2009, no decision had been taken rejecting their

applications fades into insignificance, as those by implication had

not been entertained under the scheme.

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14.2 The letters dated 04-08-2006, 04-09-2007 and 12-09-2007

to which our attention has been drawn in course of the arguments,

suffice it to mention, do not contain any assurance on the part of

the implementing authorities promising grant of the subsidy

allowance under the scheme or any other incentive to the

respondent. No reference has been made before us of any other

document qua the other respondents. We are thus constrained to

hold that there was no promise on the part of the public

functionaries in charge of implementation of SPINE to the

respondents to extend benefits thereunder, inspite of the decision to

withdraw or close the same with effect from 23-02-2007.

15. In M/s Motilal Padampt Sugar Mills Company supra, this

Court, on an exhaustive survey of the law pertaining to the doctrine

of promissory estoppel held that the same was an equitable doctrine

that would yield when equity so required. While propounding that

the same had been evolved to avoid injustice where it is

demonstrated that a party acting on the words or conduct of

another, amounting to clear and unequivocal promise and intended

to create legal relations or effect legal relationships to arise in the

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future had altered his position, then the promise would be binding

on the promisor and he would not be permitted to renege therefrom

unless it would be inequitable to compel him to do so. While

extending this doctrine to the Government as well, it was

enunciated that if it can be shown that having regard to the facts as

had subsequently transpired, it would be inequitable to hold the

Government to the promise made by it, the Court would not raise

the equity in favour of the promisee and enforce the promise against

the Government. Their Lordships held that the doctrine of the

promissory estoppel would be displaced in such a case, because on

the facts, equity would not require that the Government should be

held bound by the promise made by it. That aside overriding public

interest against enforcement of the doctrine qua the Government, it

would be still competent for it to depart from the promise on giving

reasonable notice which need not be a formal one, affording the

promisee a reasonable opportunity of resuming his position was

underlined. We consider it inessential to dilate on the other

decisions cited on behalf of the respondents on this theme as these

are in essence in reiteration of the above proposition.

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16. The gravamen of the authorities pertaining to delay highlight

in unison that the same has to be explained by cogent convincing

and persuasive explanation to justify condonation thereof. The

legal diktat being so fundamental that a detailed treatment of the

decisions relied upon by the respondents in this regard is not

warranted.

17. Noticeably, in the earlier round of litigation, there was no

scope to examine the purport of the contents of the letter dated

04-05-2010, which to reiterate only affirmed the decision of

withdrawal and closure of SPINE with effect from 23-02-2007. The

contents of the said letter to repeat disclose in unequivocal terms

that even prior thereto a decision to that effect had been taken on

and from that date. This decision as referred to hereinabove

amongst others also received media coverage. The plea that the

respondents had no knowledge of the withdrawal/closure of SPINE

then, is to say the least, unconvincing. We see no weighty or cogent

reason for the respondents to wait till the earlier Special Leave

Petition was dismissed on 01-05-2009 by this Court to embark

upon their pursuit for redress in similar terms. Their writ petitions

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dated 27-08-2009 also do not evince that the same were filed after

the letter/notification dated 04-05-2010. In our considered opinion

therefore, the respondents were deliberately bidding time to seek

judicial remedy in case their co-applicants under the scheme

emerged successful in their adjudicative enterprise. As the initial

decision conveyed by the letter dated 05-02-2007 to stop further

sanction/disbursement of Grant-in-Aid under the scheme pending

scrutiny of the report of the industrial units involved did eventually

metamorphosise in the closure/withdrawal of the scheme, there is

an apparent correlation between the intervening developments

conveyed from time to time eventuating in such a conclusion. The

merit of the factums leading to this decision however has not been

questioned or impeached.

18. On a consideration of the totality of the aspects involved, we

are thus of the unhesitant view that the respondents herein in view

of their deliberate laches, negligence and inaction have disentitled

themselves to the benefit of the adjudication in the earlier lis. In

the accompanying facts and circumstances in our comprehension,

it would be iniquitous and repugnant as well to the public

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exchequer to entertain the belated claim of the respondents on the

basis of the doctrine of promissory estoppel which is even otherwise

inapplicable to the case in hand.

19. For the foregoing determination, we are constrained to interfere

with the impugned judgment and order which is hereby set aside.

The appeals are allowed. No cost.

………………………J. ( M.Y.EQBAL)

……..…………..….J. (AMITAVA ROY)

NEW DELHI Dated: May 08, 2015

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