Holding

The State Government is estopped from curtailing the period and opportunities granted under Clause 10 of the Scheme; the 28‑06‑2000 resolution is ineffective without statutory notification, and the appellants are entitled to the full benefits of the Scheme.

Summary

The Gujarat government introduced the New Package Scheme of Incentives for Tourism Projects (1995-2000) offering tax holidays and a two‑year initial operational period extendable by two more years. Devi Multiplex obtained a temporary registration certificate in 1999 and began construction, but progress was halted by a 2001 earthquake and 2002 communal riots, prompting requests for extensions which were partially granted. The State later relied on a Government Resolution dated 28‑06‑2000 to deny further extensions, and the High Court held that the scheme’s operative period ended on 30‑11‑2000, denying any benefits. On appeal, the Supreme Court held that the scheme, having statutory status under Section 29 of the Gujarat Entertainment Tax Act, created a binding promise and the State was estopped from curtailing the period, rendering the 28‑06‑2000 resolution ineffective. Consequently, the appellants were entitled to the full benefits of Clause 10 and the State Level Committee was directed to assess any further extension claims. The appeal was allowed, setting aside the High Court’s decision in part.

Issues considered

The applicability of the doctrine of promissory estoppel to the State's promise under the tourism incentive scheme.
Whether the Government Resolution dated 28‑06‑2000 could validly amend or curtail the scheme without a statutory notification under Section 29 of the Gujarat Entertainment Tax Act, 1977.
Whether the appellants are entitled to extensions of time and the associated tax incentives despite delays caused by natural disaster and communal riots.
Whether the State Level Committee retained the power to grant extensions after the scheme’s operative period.

Legislation cited

Gujarat Entertainment Tax Act, 1977s. 29

Subjects

Promissory estoppelTax holidayTourism incentivesExtension of timeStatutory notificationGujarat Entertainment Tax ActGovernment promiseEquity

Judgment

(2015] 6 S.C.R. 1

DEVI MULTIPLEX &ANR. A
v.
STATE OF GUJARAT & ORS.
(Civil Appeal No. 6478 of 2009)
B
MAY 13, 2015
[ANIL R. DAVE AND UDAY UMESH LALIT, JJ.]
New Package Scheme of Incentives for Tourism
Projects, 1995-2000 - Clause 10 - Scheme by the State c
Government, inviting investments in tourism units, promising
incentives, reliefs and concessions - Appellants started
construction of multiplex in accordance with the Scheme and
the Notification and applied for Temporary Registration
Certification - However, progress of appellant's project D
hampered as a result of major earth quake in State and large
scale communal riots -Appellant sought extension of time -
State Level Committee granted extension -Appellant again
sought extension of time which was 1ejected - Thereafter,
High Court held that the operative period of the Scheme E
came to an end on 30.11.2000 by which time appellants had
not commenced commercial operation, thus, appellants 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 F
as a result of GR. dt.28.06.2000 only upto 31.07.2002 and
upto 30.11.2002 and appellant did not commence the
commercial operations even within such extended time
period - On appeal, held: Appellants entitled to have full G
benefit and advantage of Clause 10 and the curtailment of
the period and opportunity available under said Clause 10
by subsequent G.R. dt. 28.06.2000 was bad and ineffective
- State Government was estopped from going back on the
promise so made in the Scheme - Order of High Court that H
1
2 SUPREME GOURT REPORTS (2015) 6 S.C.R.

A 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, set aside - State Level Committee to assess
whether appellants could justifiably have claimed extension
under clause 10 of the Scheme - Gujarat Entertainment Tax
B Act, 1977- s. 29.

Allowing the appeals, the Court

HELD: 1.1 The Scheme definitely promised
c 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 % of capital investment if a new unit was registered
after 1.8.1995 and appropriate investment in fixed capital
o 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
E 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
F 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
G made available within which the project could be
completed so as to avail the benefits under the Scheme.
There is nothing on the basis of which it could be said
that it would be inequitable to hold the State Government
H to its promise. Out of 108 TRCs issued, the burden that
DEVI MULTIPLEX &ANR. v. STATE OF GUJARAT & 3
ORS.

the Government was well aware and thought that it could A
comfortably bear, only 19 or 20 units have been
established and are functional. 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. [Para B
19) [25-F-H; 26-A-E]

1.2 The Scheme as framed on 20.12.1995 formed
the basis of a statutory notification under Section 29 of
Act 16of1977 and as such the core components of the C
Scheme had acquired a statutory status. By virtue of
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 D
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. 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 E
had acquired statutory status. Therefore, the appellants
were entitled to have full benefit and advantage of Clause
10 and the curtailment of the period and opportunity
available under said Clause 10 of the Scheme by F
subsequent G.R. dated 28.06.2000 was bad and
ineffective. [Para 20, 21) [27-B-E]

1.3 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 G
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 H
4 SUPREME COURT REPORTS [2015] 6 S.C.R.

A 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
B 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. Thus, State Level Committee
was still competent to consider the request for grant of
extension. [Para 22] [27-F-H; 28-A]
c
1.4 The order 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, is set aside. Since the appellants
D have already commenced commercial operations, the
State Level Committee is directed to make such
assessment whether in the facts of the case the
appellants could justifiably have claimed extension
under Clause 1O of the Scheme in three months of the
E receipt of this decision. If such assessment is found in
favour of the appellants, they would be entitled to the
incentives and benefits under the Scheme. [Para 23] [28-
8-D]
F State of Punjab Vs. Nestle India Ltd. 2004 (2) Suppl.
SCR 135: 2004(6) SCC 465; Collector of Bombay Vs.
Municipal Corporation of the City of Bombay 1952 SCR
43; Union oflndia Vs. Anglo Afghan Agencies 1968(2)
SCR 366; Motilal Padampat Sugar Mills Co. Ltd. Vs.
G State of UP 1979 (2) SCR 641 : 1979 (2) SCC 409; Jit
Ram Vs. State of Haryana 1980 (3) SCR 689 :1981
(1) SCC 11; Union of India Vs. Godfrey Philips India
Ltd. 1985 (3) suppl. scR 123 :1985(4) sec 369;
S. \I.A. Steel Re- Rolling Mills Ltd. and others v. State
H

l
DEVI MULTIPLEX &ANR. v. STATE OF GUJARAT & 5
ORS.

of Kera/a and others 2014 (2) SCR 336 : (2014) 4 A
sec 186 - referred to.
Case Law Reference

2004 (2) Suppl. SCR 135 Referred to. Para 18
B
1952 SCR 43 Referred to. Para 18

1968 (2) SCR 366 Referred to. Para 18

1979 (2) SCR 641 Referred to. Para 18 c
1980 (3) SCR 689 Referred to. Para 18

1985 (3) Suppl. SCR 123 Referred to. Para 18

2014 (2) SCR 336 Referred to. Para 19 D
CIVILAPPELLATE JURISDICTION: Civil Appeal No.
64 78 of 2009.

From the Judgment and Order dated 26.06.2009 of the
Gujarat High Court atAhmedabad in Special Civil Application E
No. 18692 of 2005.

WITH
Civil Appeal Nos. 6479, 6480, 6481, 6482, 6483, 6484, 6485, F
6487, 6488, 6489, 6490 and 6491 of 2009.

Rakesh Dwivedi, J.C. Gupta, Kumar Mihir, Sanskriti
Pathak (For Vishal Gupta), Khaitan & Co. for the Appellants.

Preetesh Kapur, Jesal, Hemantika Wahi, Puja, Vanita G
Bhargava, Nitin Msihra for the Respondents.

The Judgment of the Court was delivered by

UDAY UMESH LAUT, J. 1. Civil Appeal 6478of1979 H
6 SUPREME COURT REPORTS (2015] 6 S.C.R.

A is directed against the judgment and order dated 26.06.2009
passed by the High Court of Gujarat atAhmedabad 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
B extension of time under Clause 1Oof 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 2009 was taken as the lead matter, facts
C 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
D 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
E 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
F 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
G 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
H Tourism Units, Small Scale Tourism Units and Tiny Tourism
DEVI MULTIPLEX &ANR. v. STATE·OF GUJARAT & 7
ORS. [UDAY UMESH LALIT, J.]

Units with minimum fixed capital investment of Rs. 10 Crore, A
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 B
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 C
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 D
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.

3. Clauses 4.7 and 10 of the Scheme are quoted E
hereunder:-

"4.7 EFFECTIVE STEPS

The effective steps shall comprise F
(a) initial effective steps which shall include:

i) Effective possession of land by an eligible unit free
from all encumbrances.
G
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. H
8 SUPREME COURT REPORTS [2015] 6 S.C.R.

A 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.

B 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:
c 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
D 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
E
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.
F
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
G 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
H in the first instance upto 2 years to the eligible unit after
DEVI MULTIPLEX &ANR. v. STATE OF GUJARAT & 9
ORS. [UDAY UMESH LAUT, J.]

scrutinizing the application received by him under the A
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 B
Committee which is authorized to grant extension upto
six months at a time or a total period pf 2 years after
examining the difficulties experienced by the individual
unit in implementing the project and also record the
reasons thereof in writing. C

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 ·o
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. E

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 F
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). G

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 H
10 SUPREME COURT REPORTS [2015) 6 S.C.R.

A 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:

B "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,
C Information, Broadcasting and Tourism Department
No.NTP-1095-1983-C, dated the 20'" December, 1995
(hereinafter referred to as "the aid resolution"):

And whereas the Government of Gujarat considers it
D 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
E 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
F 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 ................................................................. .
G ·····-····-··· ....... - ... ····-······· .. ·-····-·······-· .. ·-· .. ·-· .. ····-·-·-····-· ... ~'
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
H dated 20.12.1995 in the Scheme and further conditions
stipulated in the Notification.
DEVI MULTIPLEX &ANR. v. STATE OF GUJARAT & 11
ORS. [UDAY UMESH LAUT, J.)

5. The appellants being desirous of setting up a 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 B
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.
c
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 D
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:
E
"B. ADHOC/FINAL ELIGIBILITY CERTIFICATE:

(1) All the units to whom TRC has already been
issued under the guidelines of Tourism Policy
1995-2000, shall apply for the Eligibility certificate F
within 180 days from the date of commencement
of commercial activities.

(2) All the units to whom TRC has been issued &
have not commenced commercial activities on or G
before 31.07 .2000 shall be considered as
pipelines case.

(3) The units falling under the pipeline cases shall
complete the respective project within the time-
H
12 SUPREME COURT REPORTS (2015) 6 S.C.R.

A limit given below.
a) Tiny Project 1 yearw.e.f. 3117/2000
b) Small Project 1 yearw.e.f. 3117/2000
c) Prestigious Project 2 yearw.e.f. 31.7.2000
B d) Large project 2 yearw.e.f. 31.7.2000
No further extension or relaxation shall be available
to pipeline cases.

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

(5) No investment made after operative period or
D 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
E computing eligible investment.

(6) 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,
F i.e. 31. 7 .2000 whichever is earlier.

(7) The pipeline cases, once rejected shall not be
eligible to apply again for incentives under the
Tourism Policy 1995-2000."
G
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
H
DEVI MULTIPLEX &ANR. v. STATE OF GUJARAT & 13
ORS. [UDAY UMESH LALIT, J.]

the State resulting in collapse of number of buildings and A
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 DevelopmentAct, 1976. On 27.03.2001 B
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 C
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 D
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 E
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.
F
8. Around 26.02.2002 large scale communal riots
took place in the State and Na rod a (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 G
appellants, no construction could take place for more than
four months. On 04.04.2002 in its 121h meeting, State Level
Committee considered the application dated 11.12.2001
preferred by the appellants. It clarified that the date of TRC
H
14 SUPREME COURT REPORTS (2015] 6 S.C.R.

A 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
B 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-
C 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
0
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
E 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
F 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
G 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.
H However, it took the view that extending the validity period
DEVI MULTIPLEX & ANR. v. STATE OF GUJARAT & 15
ORS. (UDAY UMESH LAUT, J.]

would result in extension beyond 31.07.2002 and as such A
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 s
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 C
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.
D
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 E
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 .tejected. F
Relying on the GR dated 28.06.2000, it \.ds 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 G
eligibility certificate was rejected stating the following reasons:

"1. Sufficient time extension has already been given
for starting commercial activities of the project.
H
..
16 SUPREME COURT REPORTS [2015] 6 S.C.R.

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

3. Multiplicity of multiplexes beyond the requirement
in the State."
B
12. 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
c 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
D 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
E 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
F 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
G 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
H @ 9 per cent on reducing balance.
DEVI MULTIPLEX &ANR. v. STATE OF GUJARAT & 17
ORS. [UDAY UMESH LAUT, J.)

13. Appearing for the appellants, Mr. Rakesh Dwivedi, A
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 B
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 C
submitted that Clause 1O(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 D
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 E
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 F
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 TR Cs issued under the Scheme, only
in 22 or 23 cases the projects were completed and G
commercial operations had started. Evidently, the State
Government must have considered that the burden with
respect to 108 TR Cs could comfortably be borne, keeping
in mind the advantages flowing from establishment of the
H
18 SUPREME COURT REPORTS [2015] 6 S.C.R.

A 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.
B
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
C 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
D 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
E 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.

F 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
G 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
H
submission the concept of "accrued right" is to be seen in
DEVI MULTIPLEX &ANR. v. STATE OF GUJARAT & 19
ORS. [UDAY UMESH LAUT, J.]

the context of Section 6 of the General Clauses Act which A
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 B
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 C
effective steps under Clause 4. ?(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 D
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 E
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 F
. 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 G
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 H
20 SUPREME COURT REPORTS (2015] 6 S.C.R.

A 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 1O
would cease to operate after the period of operation had
come to an end. It being the clear intent that such stages
B 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
C 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
D 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
E an opportunity, depending upon the individual fact situation,
to pray for extension up to two years. Clause 1O(C) further
entitled such unit to approach the State Govt. even after the
aforesaid aggregate period of four years for further extension.
F 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,
G 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
H State of Punjab Vs. Nestle India Ltd. 1 It found the foundation
1
2004(6) sec 465
DEVI MULTIPLEX & ANR. v. STATE OF GUJARAT & 21
ORS. [UDAY UMESH LAUT, J.]

of the doctrine laid in the decision in Collector of Bombay A
Vs. Municipal Corporation of the City of Bombay2 , the
principle built upon in Union of India Vs. Anglo Afghan
Agencies3 and ttte 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 • B
This Court then dealt with the discordant note in Jit Ram Vs.
State of Haryana5 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 C
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. D
v. State of U.P'J. Briefly stated: the case related to a
representation made by the State Government that the
petitioners' .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 E
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
F
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 G
2
1952 SCR 43
3 1968(2) SCR 366

4
1979(2)SCC 409
5 1981(1)SCC 11
H
e 1985(4) sec 369
22 SUPREME COURT REPORTS [2015] 6 S.C .R.

A the provisions of the Sales TaxAct;

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

(3) that there could be no promissory estoppel against
B
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 1he well-known preconditions
c for the operation of the doctrine:

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

D (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
E 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
F 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:
G
''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,
H acting in reliance on it, alters his position, the
Government would be held bound by the promise and
DEVI MULTIPLEX &ANR. v. STATE OF GUJARAT & 23
ORS. (UDAY UMESH LAUT, J.]

the promise would be enforceable against the A
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) B

• • *
[E]quity will, in a given case where justice and fairness
demand, prevent a person from insisting on strict legal C
rights, even where they arise, not under any contract,
but on his own title deeds or under statute. (SCC p.
425, para 8)

• • *
D
Whatever be the nature of the function which the
Government is discharging, the Government is subject
to the rule of promissory estoppel and if the essential
ingredients of this rule are satisfied, the Government
can be compelled to carry out the promise made by it." E
(SCC p. 453, para 33)

34. The discordant note struck by Jit Ram case.§ was
firmly disapproved by a Bench of three Judges in Union
of India v. Godfrey Philips India Ltd.§ It was affirm~d F
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 G
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."
H
24 SUPREME COURT REPORTS [2015] 6 S.C.R.

A 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:
B (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
c 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
D 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
E 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
F
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
G Padampat Sugar Mills~ 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
H nor can the Government or public authority be debarred
DEVI MULTIPLEX &ANR. v. STATE OF GUJARAT & 25
ORS. [UDAY UMESH LALIT, J.)

by promissory estoppel from enforcing a statutory A
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 B
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, c
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 of the
person to whom the promise or representation is made
D
and enforce the promise or representation against the
Government or public authority."

19. 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 E
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 F
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 G
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
H
26 SUPREME COURT REPORTS (2015] 6 S.C.R.

A 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
B 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
C inequitable to hold the State Government to its promise. Out
of 108 TR Cs 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
D 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. \I.A.
Steel Re- Rolling Mills Ltd. and others v. State of Kera/a
E and others7 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
F 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 b.ut it would be unfair and
G immoral on the part of the State not to act as per its
promise."

20. Furthermore, the Scheme as framed on

H '(2014) 4 sec 186
DEVI MULTIPLEX &ANR. v. STATE OF GUJARAT & 27
ORS. [UDAY UMESH LALIT, J.]

20.12.1995 formed the basis of a statutory notification under A
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 B
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 C
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 D
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.

22. The record indicates that the progress of the E
. 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 F
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 G
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 H
28 SUPREME COURT REPORTS [2015) 6 S.C.R.

A still competent to consider the request for grant of extension.

23. In the circumstaaces, 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
B and thatthere 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
C 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.
D
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
E 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.
F
Nidhi Jain Appeals allowed.

r

G