Supreme Court of India
M/S REWA TOLLWAY P. LTD.versusTHE STATE OF MADHYA PRADESH & ORS.
- Citation
- 2024 INSC 539
- Decided
- 19 July 2024
- Disposal
- Case Partly allowed
- Bench
- VIKRAM NATH
Holding
The concession agreement is a lease within the meaning of the Transfer of Property Act and Indian Stamp Act, making the 2% stamp duty on the lessee's expenditure applicable, and the doctrines of legitimate expectation and promissory estoppel cannot bar the legislative amendment.
Summary
M/s Rewa Tollway entered into a BOT concession agreement with Madhya Pradesh Rajya Setu Nirman Nigam Ltd. in 2002, believing, based on executive clarifications, that no stamp duty would be payable. The State later amended the Indian Stamp (M.P.) Act in 2002, imposing a 2% stamp duty on the amount spent by the lessee, and the Collector of Stamps demanded the duty on the entire project cost. The appellants argued that the agreement was a license, not a lease, and invoked legitimate expectation and promissory estoppel to resist the duty. The Supreme Court held that the agreement satisfies the definition of a lease under both the Transfer of Property Act and the Indian Stamp Act, and that the statutory amendment validly reduced the duty to 2% of the lessee's expenditure. It further ruled that legitimate expectation and promissory estoppel cannot be invoked against legislative action in the public interest. Consequently, the Court partially allowed the appeals, directing the revenue officer to recalculate stamp duty on the lessee's actual spend and refund any excess.
Issues considered
- The nature of the BOT concession agreement: whether it constitutes a lease, a bond, or a license.
- Whether the appellants have an enforceable right based on prior executive assurances that no stamp duty would be payable.
- The applicability of the doctrines of legitimate expectation and promissory estoppel against a subsequent legislative amendment.
- The validity and constitutional propriety of the 2002 amendment inserting proviso (c) to Clause (C) of Entry 33 of Schedule 1‑A of the Indian Stamp Act.
- The correct quantum of stamp duty payable: 2% of the amount spent by the lessee versus the entire project cost.
Legislation cited
- General Clauses Act, 1897s. 3(26)
- Indian Stamp Act, 1899s. 2(16), s. 48, s. 48(B)
- Indian Stamp (M.P.) Act, 2002
- Indian Tolls (MP) Amendment Act, 1972
- Transfer of Property Act, 1882s. 105
Subjects
Concession AgreementSubsequent change of policy/lawPrevious law or policy subsequently changedStamp dutyLease deedsBondLicenseLegitimate expectationPromissory estoppelPrevious policyExecutive decisionTolls/bridgesRoadsExecutive action subsequently changed in light of larger public interestStamp duty payable on lease deedsRecovery of deficit stamp dutyRecovery notice
Judgment
[2024] 7 S.C.R. 1129 : 2024 INSC 539
M/s Rewa Tollway P. Ltd.
v.
The State of Madhya Pradesh & Ors.
(Civil Appeal No. 8985 of 2013)
19 July 2024
[Vikram Nath* and Ahsanuddin Amanullah, JJ.]
Issue for Consideration
In view of the subsequent change of policy by the state legislature
in light of larger public interest, the appellants were required to
pay stamp duty on the Concession Agreement executed under the
Build, Operate & Transfer (BOT) Scheme. Plea of the appellants
that in view of the previous executive decision that the agreement
would not require stamp duty, but was to be executed only on stamp
paper of Rs.100/-, the appellants entered into the agreement with
legitimate expectation that no stamp duty was required to be paid.
Whether the appellants had any enforceable legal right in light of
the previous policy and executive action which was subsequently
changed in light of larger public interest; whether the Concession
Agreement was a lease or a bond or a license; when the stamp
duty was payable on the amount spent by the lessee, whether the
demand raised on the whole amount was unjustified.
Headnotes†
Legitimate expectation – Promissory estoppel – When not
applicable – Transfer of Property Act, 1882 – Indian Stamp
Act, 1899 – Indian Stamp (M.P.) Act, 2002 – High Court held
that the Concession Agreement was a lease as defined u/s.105
of the TP Act as also u/s.2(16) of the IS Act and also rejected
the challenge made by the appellants to the validity of the
amendment made in proviso (c) to Clause (C) of Article 33
of Schedule 1(A) as amended by the Indian Stamp (M.P.) Act,
2002 – Correctness:
Held: Concession Agreement was a lease – Definition of lease
as given under the IS Act covers any instrument by which tolls
of any description are let and also u/s.105 of the TP Act, all the
ingredients of a lease are fulfilled – No infirmity in the judgment of
* Author
1130 [2024] 7 S.C.R.
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the High Court warranting any interference – Validity of the M.P.
Act No.12 of 2002 inserting the proviso (c) to Clause(C) to Entry
33 of Schedule 1-A of the IS Act, upheld – It is only a statutory
provision as to what would be the rate of stamp duty payable
on lease deeds of a particular type – But for the insertion of the
proviso which was challenged, the stamp duty payable on the
lease would be 8% of the market value as provided to be charged
on the conveyance under Entry-22 of Schedule 1-A – By inserting
the proviso, the stamp duty chargeable on a lease under BOT
Project for tolls/bridges, construction of roads etc. would be 2% of
the amount spent by the lessee – In fact, insertion of this proviso
reduced the rate of stamp duty to be charged to 2% instead of 8%
and that too on the amount to be spent by the lessee – Principle
of promissory estoppel cannot be invoked against the exercise
of legislative power – A prior executive decision does not bar
the State legislature from enacting a law or framing any policy
contrary to or in conflict with the previous executive decision
in furtherance of larger public interest – Law laid down by the
legislature would not be hit by principle of promissory estoppel or
legitimate expectation because earlier the executive expressed its
view differently – If the previous executive decision is withdrawn,
modified or amended in exercise of legislative power in larger
public interest, then the earlier promise upon which the party acts,
cannot be enforced as a right and neither can the authorities be
estopped from withdrawing its promise, as such an expectation
does not give any enforceable right to the party – Appellants did
not have any enforceable legal right in light of the previous law
or policy and executive action, which was subsequently changed
by the state legislature in light of larger public interest Thus,
principles of legitimate expectation and promissory estoppel are
not applicable – Stamp duty would be chargeable @ 2% on the
amount likely to be spent under the agreement by the lessee –
Lessee had no liability to pay any stamp duty on the amount
not spent by the lessee but by the lessor or any other stake-
holder – The amount spent by the lessee as per the agreement
generally was 50% of the total cost of the project – Once, the
stamp duty was payable on the amount spent by the lessee,
the demand raised on the whole amount would be unjustified –
Demand set aside to that extent – Revenue Officer/Collector
(Stamps) to re-calculate the same and raise the demand
accordingly. [Paras 18, 19, 24, 25, 27, 28, 32, 34]
[2024] 7 S.C.R. 1131
M/S Rewa Tollway P. Ltd. v. The State of Madhya Pradesh & Ors.
Legitimate expectation – Promissory estoppel – Principles
of – Discussed.
Case Law Cited
State of Uttarakhand and Ors. v. Harpal Singh Rawat (2011) 4
SCC 575; Nasiruddin and another v. State of Uttar Pradesh Thr.
Secretary and Ors. [2017] 12 SCR 1073 : (2018) 1 SCC 754;
Union of India & Ors. v. Hindustan Development Corporation &
Ors. [1993] 3 SCR 128 : (1993) 3 SCC 499; Ram Pravesh Singh
& Ors. v. State of Bihar & Ors. [2006] Suppl. 6 SCR 512 : (2006)
8 SCC 381; P.T.R. Exports (Madras) Pvt. Ltd. v. Union of India
& Ors. [1996] Suppl. 2 SCR 662 : (1996) 5 SCC 268; M/s Hero
Motocorp Ltd. v. Union of India [2022] 13 SCR 592 : (2023) 1
SCC 386 – relied on.
Navjyoti Co-op. Group Housing Society v. Union of India [1992]
Supp. 1 SCR 709; Food Corporation of India v. Kamdhenu Cattle
Feed Industries [1992] Supp. 2 SCR 322; The State of Jharkhand
and Ors. v. Brahmputra Metallies Ltd. Ranchi and Anr. [2020] 14
SCR 45; State of Bihar and Ors. v. Shyama Nandan Mishra [2022]
11 SCR 1136; State of Gujarat and another v. Raman Lal Keshav
Lal Soni and Ors. [1983] 2 SCR 287; B.S. Yadav and Ors. etc. v.
State of Haryana and Ors. Etc. [1981] 1 SCR 1024; Kunnathat
Thathunni Moopil Nair v. The State of Kerala and another [1961]
3 SCR 77 – held inapplicable.
Associated Hotels of India Ltd. v. R.N. Kapoor [1960] 1 SCR 368 :
AIR 1959 SC 1262 – referred to.
List of Acts
Transfer of Property Act, 1882; Indian Stamp Act, 1899; Indian
Stamp (M.P.) Act, 2002.
List of Keywords
Concession Agreement; Subsequent change of policy/law; Previous
law or policy subsequently changed; Stamp duty; Lease deeds;
Bond; License; Legitimate expectation; Promissory estoppel;
Previous policy; Executive decision; Tolls/bridges; Roads; Executive
action subsequently changed in light of larger public interest;
Stamp duty payable on lease deeds; Recovery of deficit stamp
duty; Recovery notice.
1132 [2024] 7 S.C.R.
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Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8985 of 2013
From the Judgment and Order dated 11.02.2010 of the High Court of
M.P. at Jabalpur in WP No. 2219 of 2004
With
Civil Appeal Nos. 8989, 8986, 8990, 8988, 8987, 8991, 8992, 8993,
8995, 8996 and 8994 of 2013
Appearances for Parties
Prafulla Kumar Behera, S. S. Nehra, Vikrant Nehra, Ms. Sundari
Rawat, Kunal Verma, Mrs. Yugandhara Pawar Jha, Ms. Lavanya
Dhawan, Shivraj Pawar, Ritik Gupta, Sanjay Kapur, Arjun Bhatia,
B. K. Satija, Advs. for the Appellant.
Saurabh Mishra, A.A.G., Sunny Choudhary, Ms. Aarushi Singh,
Ashiesh Kumar, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
Vikram Nath, J.
1. By the impugned judgment and order dated 11.02.2010, the High
Court of Madhya Pradesh at Jabalpur decided a group of twelve
petitions wherein the question involved was whether a transaction
where the right to collect tolls is given in lieu of the amount spent by
the Concessionaire in the construction of roads, bridges etc. under
the Build, Operate & Transfer (BOT) Scheme amounts to a “lease”
as contemplated under Section 105 of the Transfer of Property Act,
18821 and Section 2(16) of the Indian Stamp Act, 1899.2 Further
challenge made in the said writ petitions was with regard to the validity
of the amendment made in proviso (c) to Clause (C) of Article 33 of
Schedule 1(A) as amended by the Indian Stamp (M.P.) Act, 2002,
and a further prayer was made to declare Section 48 and 48(B) of
IS Act, 1899, as amended by M.P. Act 24 of 1990 as ultra vires.
1 TP Act
2 IS Act
[2024] 7 S.C.R. 1133
M/S Rewa Tollway P. Ltd. v. The State of Madhya Pradesh & Ors.
2. The Division Bench of the High Court, after considering the
submissions and the material on record came to the conclusion that
the writ petitions were without any merit and accordingly dismissed
the same. Aggrieved by the same, these twelve appeals have been
preferred.
3. For the sake of convenience, we are referring to the facts of Civil
Appeal No.8985 of 2013, which are briefly stated hereunder:
(i) Madhya Pradesh Rajya Setu Nirman Nigam Ltd.,3 (respondent
no.3) is a Company incorporated and registered under the
Companies Act, 1956. The State of Madhya Pradesh, vide
order dated 01.02.2001, authorized MPRSNN for reconstruction,
strengthening, widening and rehabilitation of a section of road on
Satna-Maihar-Parasimod-Umaria Road Project to be executed
through Concession on Build, Operate and Transfer Scheme.
(ii) MPRSNN, vide Advertisement dated 22.04.2002, invited
tenders against the aforesaid project pursuant to which the bid
of the appellant was accepted. On 8th August, 2002, Letter of
Acceptance was issued by the MPRSNN to the appellant for
execution of the Concession Agreement within 30 days.
(iii) The IS Act was amended in the State of Madhya Pradesh vide
Amendment Act No.12 of 2002 and proviso (c) to Clause(C)
was inserted to Entry No.33 of Schedule-1(A), which provided
that there shall be levy of stamp duty @ 2% on the amount
likely to be spent on the project, on the agreement to lease and
right to collect the toll is given. The State of Madhya Pradesh
notified the said amendment on 12.08.2002.
(iv) A Concession Agreement was signed on 15.09.2002 on a
stamp paper of Rs.100 between MPRSNN and the appellant.
A show cause notice dated 26.03.2004 was issued to the
appellant intimating that the matter between State of M.P. and
the Rewa Tollway Private Ltd. would be listed for hearing on
29.03.2004 before the Collector of Stamps, Bhopal and the
appellant was required to produce the original copy of the
agreement dated 15.09.2002. The appellant filed a detailed reply
dated 25.04.2004 stating that the agreement executed was a
3 MPRSNN
1134 [2024] 7 S.C.R.
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Concession Agreement and, as such, it cannot be treated as a
lease but as a license at best. The Collector (Stamps), Bhopal
vide order dated 30.04.2004 passed an order exercising power
under Section 48-B of the IS Act directing recovery of deficit
stamp duty amounting to Rs.1,08,00,000/-(Rupees one crore
eight lakhs) said to be payable on the Concession Agreement
dated 15.09.2002. Thereafter, a recovery notice was issued on
29.05.2004 by the Collector (Stamps), Bhopal to deposit the
aforesaid amount within seven days of the receipt of the said
recovery notice.
(v) On 6th June, 2004, the appellant challenged the order dated
30.04.2004 by way of a writ petition under Article 226 of the
Constitution which was registered as Writ Petition No.2219 of
2004. The High Court vide order dated 03.08.2004 granted
interim stay of recovery of any amount pursuant to the impugned
order dated 30.04.2004. The High Court, vide judgment and
order dated 11.02.2010, dismissed the said writ petition along
with eleven other matters and upheld the demand raised by the
Collector of Stamps by the order dated 30.04.2004.
(vi) Aggrieved by the impugned judgment of the High Court, the
appellant preferred the instant appeal with connected matters
before this Court on 3rd May, 2010, in which notices were issued
on 14th May, 2010 and, thereafter, interim order was passed
on 7th January, 2011. Later on, vide order dated 13.09.2013,
this Court granted leave and further directed the interim stay
granted earlier to continue.
4. We have heard Shri Dushyant Dave, learned Senior Counsel
appearing for the appellants in nine (9) appeals and other learned
counsels appearing for the appellants in the other three (3) appeals
and Shri Saurabh Mishra, learned Additional Advocate General for
the State of Madhya Pradesh on behalf of the respondents.
5. Before we proceed further with the submissions, it would be relevant
to refer to three other dates which have been referred to by Shri
Dave in support of his submissions on legitimate expectation and
promissory estoppel. According to Shri Dave, after the tender was
invited vide Advertisement dated 22nd April, 2002, the Chief Secretary
issued a Clarification dated 01.07.2002 with respect to the agreements
executed under BOT Scheme stating that stamp duty would not
[2024] 7 S.C.R. 1135
M/S Rewa Tollway P. Ltd. v. The State of Madhya Pradesh & Ors.
be payable on such agreements in the State of Madhya Pradesh
also and further reiterating that in order to avoid any doubts to be
raised in future, it is necessary to clarify that no stamp duty shall be
payable on the agreements being executed under BOT Scheme. A
further clarification was issued vide letter dated 21.07.2002 by the
Chief Secretary of the State with respect to the Resolution dated
01.07.2002, that no stamp duty would be levied on BOT Projects
in future and such agreements would be signed on stamp paper of
Rs.100/-. Shri Dave further referred to the Notification of the State
Government dated 10th March, 2008 whereby the stamp duty on
toll was reduced from 2% to Rs.100 i.e. the position which existed
prior to the Amendment of 2002 and as clarified in the notification
and the letters of 1st July of 2002 and 21st July, 2002. It was, thus,
submitted that the charge of 2% stamp duty was only applicable
in the State of Madhya Pradesh between August, 2002 till March,
2008 and, thereafter, again all such Concession Agreements under
BOT Scheme are to be executed on stamp paper of Rs.100. It was
throughout the intention of the State of Madhya Pradesh to not charge
stamp duty @ 2% and treat the Concession Agreement under BOT
Scheme to be a license but unfortunately for the period referred to
above, it was treated as a lease and the appellants are the victims
of this period, whereas all subsequent Concession Agreements
under BOT Scheme executed after 10th March, 2008 are exempt
from such stamp duty.
6. Further continuing his submissions Mr. Dave, learned Senior Counsel
submitted that in view of the Clarification dated 01.07.2002 and
subsequent circulation vide letter dated 21.07.2002 throughout the
State, once it was clarified that the Concession Agreements under
the BOT Projects would be executed on stamp paper of Rs.100/-,
the appellants entered into the agreement with the same impression
and having calculated their project cost and also their tenders without
factoring in 2% stamp duty, had legitimate expectation that the
agreement would not require stamp duty @ 2% of the value, but was
to be executed only on stamp paper of Rs.100/-. The subsequent
demand was contrary to the legitimate expectations of the appellants
and, therefore, liable to be set aside.
7. It was next submitted that the Circular of the Chief Secretary dated
1st July, 2002 and its subsequent circulation vide letter dated 21st
July, 2002, estopped the State Government from amending the IS
1136 [2024] 7 S.C.R.
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Act and, further raising the demand @ 2% treating the Concession
Agreement to be a lease, the same would be hit by principle of
promissory estoppel. The State was estopped from demanding such
stamp duty by treating the Concession Agreement to be a lease.
8. In support of his submissions, Shri Dave has placed reliance upon
the following judgments:
(1) Navjyoti Co-op. Group Housing Society Vs. Union of India;4
(2) Food Corporation of India Vs. Kamdhenu Cattle Feed
Industries;5
(3) The State of Jharkhand and Ors. Vs. Brahmputra Metallies
Ltd. Ranchi and Anr.;6
(4) State of Bihar and Ors. Vs. Shyama Nandan Mishra;7
(5) M/S Hero Moto Corp Ltd. Vs. Union of India and Ors.;8
9. Shri Dave, learned Senior Counsel next submitted that the insertion
of proviso (c) to Clause(C) under Article 33 of Schedule 1-A by the
2002 Amendment Act was ultra vires as it violates the mandate of
Article 14 of the Constitution of India. It was submitted that the said
amendment was illegal, arbitrary and bad in law as it nullified the
promise made by the Chief Secretary, vide Circular dated 01.07.2002,
and has taken away the vested right of the appellants of not factoring
in 2% stamp duty and ultimately resulting into a demand of a
huge amount of Rs.1,08,00,000/- (Rupees one crore eight lakhs)
approximately. In support of his submission, he has relied upon the
following two judgments:
(1) State of Gujarat and another Vs. Raman Lal Keshav Lal
Soni and Ors.; 9
(2) B.S. Yadav and Ors. etc. Vs. State of Haryana and Ors. Etc.;10
4 [1992] Supp. 1 SCR 709 : (1992) Supp.1 SCR 709
5 [1992] Supp. 2 SCR 322 : (1992) Supp.2 SCR 322
6 [2020] 14 SCR 45 : (2020) 14 SCR 45
7 [2022] 11 SCR 1136 : (2022) 11 SCR 1136
8 [2022] 13 SCR 592
9 [1983] 2 SCR 287 : (1983) 2 SCR 287
10 [1981] 1 SCR 1024 : (1981) 1 SCR 1024
[2024] 7 S.C.R. 1137
M/S Rewa Tollway P. Ltd. v. The State of Madhya Pradesh & Ors.
10. The next point raised by Shri Dave is that the aforesaid amendment
was ultra vires, inasmuch as, the State had no legislative competence
to bring in this amendment. Further, it was submitted that it was
a colourable and excessive legislation and was a fraud on the
Constitution of India, inasmuch as, the State itself in 2008 withdrew
the Amendment of 2002. In support of his submission, he has relied
upon the following judgment:
(1) Kunnathat Thathunni Moopil Nair Vs. The State of Kerala
and another;11
11. The next submission of Shri Dave is that the Concession Agreement
dated 15.09.2002 is not an instrument of lease and, as such, the
demand of 2% stamp duty was totally uncalled for and illegal.
According to him, the ownership of the project land has not been
transferred by the State to the MPRSNN and, as such, MPRSNN
could not transfer any ownership or interest to the appellants.
The Concession Agreement was on the concept of public, profit,
partnership (PPP mode). He has further elaborated his submissions
by referring to Section 105 of the TP Act. According to him, in a
lease, the following three ingredients must pre-exist:
(1) There is a transfer of a right to enjoy such property.
(2) It is made for a fixed time, express or implied or in perpetuity.
(3) There has to be consideration of a price paid or promised.
12. According to Shri Dave, learned Senior Counsel for the appellants,
lease means transfer of interest in the property to enjoy the property
whereas, license means transfer of property but no interest in
the property. According to him, in the present case, there was no
transfer of interest in the property, as such, it would not fall within
the definition of lease. He has further referred to various clauses of
the Concession Agreement in support of his submission.
13. It was next submitted that MPRSNN is a 50% partner in the
construction of the project which indicates that the Concession
Agreement is a mutual contract and, as such, would not levy 2%
stamp duty as imposed by the impugned orders. According to him,
out of a total project cost, 50% was to be paid by the MPRSNN.
11 [1961] 3 SCR 77 : (1961) 3 SCR 77
1138 [2024] 7 S.C.R.
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According to him, respondent no.3, MPRSNN being a 50% partner
in the entire road project meant that the appellant and respondent
no.3 are equal stake holders and, as such, the unilateral imposition
of 2% stamp duty of the entire project cost on the appellant was
illegal and unwarranted. He has further criticised the judgment
of the Collector (Stamps), Bhopal whereby he held that the total
project cost was Rs.110 crores whereas actually it was 54 crores,
out of which, MPRSNN (respondent no.3) had granted subsidy and
invested Rs.29.10 crores and the remaining Rs.24.90 crores, was
invested by the appellant. As such, even if he was liable to pay 2%
stamp duty, the amount would be much less, approximately Rs.48
lakhs and odd and not Rs.1.08 crores, which was 2% stamp duty
on the entire project cost.
14. The last argument raised is that once the IS Act had been re-amended
on 10th March, 2008, the earlier Amendment of 2002 should be held
to be illegal and arbitrary. On such submissions, Shri Dave, learned
senior counsel urged the Court to allow the appeal and set aside the
impugned orders imposing deficiency in stamp duty of Rs.1.08 crores.
15. On the other hand, Shri Saurabh Mishra, learned Additional Advocate
General for the State of Madhya Pradesh representing all the three
respondents including ‘MPRSNN’ submitted that the High Court had
dealt with all the above arguments in great detail and had rejected
them for good reasons based on statutory provisions as also the
law on the point. It did not suffer from any infirmity, much less any
perversity warranting interference by this Court.
16. According to Shri Mishra, all the ingredients of a document constituting
a lease as defined under the TP Act were existing in the Concession
Agreements under the BOT Scheme. He has also referred to various
clauses of the Concession Agreement to show that possession was
actually transferred to the appellants in order to recover the toll, the
period of such possession was defined to be fifteen years. It was for a
consideration which was also mentioned in the agreement. Therefore,
all the three ingredients were fulfilled and, as such, the Collector
(Stamps), Bhopal and the High Court rightly held the Concession
Agreements to be a lease. He also referred to definition of ‘lease’
under the IS Act, as laid down in Section 2(16), which includes any
instrument by which tolls of any description are let. He also referred
to the definition of ‘immovable property’ as defined under Section
[2024] 7 S.C.R. 1139
M/S Rewa Tollway P. Ltd. v. The State of Madhya Pradesh & Ors.
3(26) of the General Clauses Act, 1897, which would include land,
benefits to arise out of land, and things attached to the earth, or
permanently fastened to anything attached to the earth. He further
referred to various findings recorded by the High Court. He further
placed reliance upon three judgments of this Court:-
(1) Associated Hotels of India Ltd. Vs. R.N. Kapoor;12
(2) State of Uttarakhand and Ors. Vs. Harpal Singh Rawat;13
(3) Nasiruddin and another Vs. State of Uttar Pradesh Thr.
Secretary and Ors.;14
17. Shri Mishra, further referred to the various provisions of the Indian
Tolls (MP) Amendment Act, 1972. Insofar as to the challenge of
the amendments as being ultra vires is concerned, Shri Mishra
submitted that the insertion of proviso (c) to Clause(C) to Entry-33,
is only for determining the rate of charging stamp duty and, as such,
the challenge was totally irrelevant. The Concession Agreement is
a lease as defined under Section 105 of the TP Act as also under
Section 2(16) of the IS Act and, therefore, would be chargeable
to stamp duty, for which rate is provided under Schedule 1-A. It
was further submitted that the submission relating to Promissory
Estoppel and Legitimate Expectation are unwarranted and without
any merit, inasmuch as, prior to the execution of the concession
agreement, the amendment had been brought in. The communication
by the Chief Secretary cannot have any overriding effect over the
statutory amendments brought in by the State legislature. It is also
submitted that there can be no Legitimate Expectation or application
of Promissory Estoppel against statute. It is also submitted that the
State was fully competent to carry out the amendments. It was next
submitted that as the 2002 amendment had been reversed in 2008,
cannot by itself draw any kind of presumption that 2002 amendment
was illegal. It was submitted that the appeals lack merit and are
liable to be dismissed.
18. Having considered the submissions advanced and having perused the
material on record, we have no hesitation in holding that the judgment
12 [1960] 1 SCR 368 : AIR 1959 SC 1262
13 (2011) 4 SCC 575
14 [2017] 12 SCR 1073 : (2018) 1 SCC 754
1140 [2024] 7 S.C.R.
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of the High Court impugned in these appeals does not require any
interference. We do not find any infirmity, much less any perversity
warranting any interference by this Court. The High Court has dealt
with all aspects of the matter considering not only the stipulations
in the Concession Agreement but has also dealt with in detail with
the respective arguments advanced by the petitioners before the
High Court (the appellants herein) at the same time referring to the
statutory provisions, the constitutional provisions as also the case-
laws relied upon by the counsel for the parties. However, there is
one aspect of the matter which requires clarification which we shall
deal with at the end of this judgment.
19. The arguments made on behalf of the appellants relating to the vires
of inserting the proviso (c) to Clause (C) to Entry 33 of Schedule 1-A
of the IS Act, 1899 by the M.P. Amendment of 2002 have no merits
as it neither defines the word ‘lease’ nor does it in any way interfere
with the definition of ‘lease’ in any manner, either by expanding or
restricting its interpretation. It is only a statutory provision as to
what would be the rate of stamp duty payable on lease deeds of a
particular type. But for the insertion of the proviso which is sought
to be challenged, the stamp duty payable on the lease would be 8%
of the market value as provided to be charged on the conveyance
under Entry-22 of Schedule 1-A. By inserting the proviso, the stamp
duty chargeable on a lease under BOT Project for tolls/bridges,
construction of roads etc. would be 2% of the amount spent by the
lessee. In fact, insertion of this proviso reduced the rate of stamp
duty to be charged to 2% instead of 8% and that too on the amount
to be spent by the lessee.
20. The doctrine of legitimate expectation has been discussed and
elucidated upon in several judgment by this Court. The doctrine
provides a framework for judicial review of executive actions,
policy changes, and legislative decisions. In Union of India &
Ors. v. Hindustan Development Corporation & Ors.,15 this Court
emphasized that legitimate expectation primarily grants an applicant
the right to a fair hearing before a decision that negates a promise
or withdraws an undertaking from which an expectation of certain
outcome or treatment arises. It does not, however, create an absolute
15 [1993] 3 SCR 128 : (1993) 3 SCC 499
[2024] 7 S.C.R. 1141
M/S Rewa Tollway P. Ltd. v. The State of Madhya Pradesh & Ors.
right to the expected outcome. The protection of legitimate expectation
is subject to overriding public interest, which means that even if an
individual’s expectation is reasonable and based on a past practice
or representation by the executive or legislature, it can be denied if
justified by a significant public necessity. The Court also highlighted
that in matters of policy change, the judiciary typically refrains from
interfering, unless the decision is arbitrary, unreasonable, or not in
public interest.
21. The judgment in Ram Pravesh Singh & Ors. v. State of Bihar &
Ors.16 defines legitimate expectation as an expectation of a benefit,
relief, or remedy that arises from a promise or established practice
through administrative, executive or legislative action. This expectation
must be reasonable, logical, and valid; but it in no way vests any
enforceable legal right. The doctrine does not elevate legitimate
expectation to the level of a right enforceable by law. Instead, it
is a procedural concept that demands fairness in administrative
action. When an expectation is deemed legitimate, it may entitle
the individual to a chance to show cause before the expectation is
denied or to receive an explanation for the denial. However, legitimate
expectation does not always result in relief, particularly when public
interest, policy changes, or other valid reasons justify the deviation
from the expected course of action.
22. The decision in P.T.R. Exports (Madras) Pvt. Ltd. v. Union of India
& Ors.17 further clarifies the limited role of legitimate expectation
in the context of policy changes and legislative actions. This Court
observed that the government retains the authority to revise policies
in response to changing circumstances, such as potential foreign
markets and the need to earn foreign exchange. Thus, the doctrine
of legitimate expectation does not constrain the government from
altering its policies, provided the changes are made in public
interest and not through an abuse of power. The judiciary affords
considerable leeway to the executive and legislature in matters of
economic policy, recognizing their prerogative to prioritize different
economic factors. Consequently, previous policies do not bind the
government indefinitely; new policies can be adopted, if deemed
16 [2006] Suppl. 6 SCR 512 : (2006) 8 SCC 381
17 [1996] Suppl. 2 SCR 662 : (1996) 5 SCC 268
1142 [2024] 7 S.C.R.
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necessary, for the public good. This underscores the principle that
while legitimate expectation warrants fair treatment, it does not
preclude the government’s flexibility in policy-making.
23. Therefore, the doctrine of legitimate expectation serves only as a
procedural safeguard ensuring fairness in administrative decisions
and policy changes. It grants the expectant party the right to a fair
hearing and an explanation but does not guarantee the realization of
the expected benefit. The government’s authority to revise policies
in public interest remains paramount, with the judiciary intervening
only in cases of arbitrariness, unreasonableness, or lack of public
interest. This balanced approach ensures that while individuals can
expect consistent treatment based on past practices or promises,
the government retains the flexibility to respond to evolving needs
and priorities.
24. On the doctrine of promissory estoppel, since it is an equitable
doctrine, it only comes into play when equity requires a party be
estopped from withdrawing its promise. It has been well settled
by this Court in several judgments that the principle of promissory
estoppel cannot be invoked against the exercise of legislative power.
In order to avoid burden on the present judgment, we are relying on
the observations made by this Court in a recent judgment dealing with
the doctrine of promissory estoppel. The Bench in Hero Motocorp
Ltd vs Union of India,18 while relying upon other judgments of this
Court in this regard, observed thus (SCC pp. 414-415, para 68)
“68. A common thread in all these judgments that could
be noticed is that all these judgments consistently hold
that there can be no estoppel against the legislature in
the exercise of its legislative functions. The Constitution
Bench in the case of M. Ramanatha Pillai (supra) has
approved the view in American Jurisprudence that the
doctrine of estoppel will not be applied against the State
in its governmental, public or sovereign capacity. It further
held that the only exception with regard to applicability
of the doctrine of estoppel is where it is necessary to
prevent fraud or manifest injustice. The analysis of all
the judgments of this Court on the issue would reveal
18 [2022] 13 SCR 592 : (2023) 1 SCC 386
[2024] 7 S.C.R. 1143
M/S Rewa Tollway P. Ltd. v. The State of Madhya Pradesh & Ors.
that it is a consistent view of this Court, reiterated again
in Godfrey Philips India Ltd. (supra), that there can be no
promissory estoppel against the legislature in the exercise
of its legislative functions.”
25. In light of the observations made by this Court in the above cited
judgments and several others, it is an evident position of law that
a prior executive decision does not bar the State legislature from
enacting a law or framing any policy contrary to or in conflict with the
previous executive decision in furtherance of larger public interest. Nor
can it be canvassed that the law laid down by the legislature would
be hit by principle of promissory estoppel or legitimate expectation
because earlier the executive had expressed its view differently.
26. Promissory estoppel or legitimate expectation can be dealt with on
the same status of the executive decision when the prior as well as
the subsequent decisions are both taken by the same or similarly
placed authorities. Where the executive takes a decision based upon
which a party acts and, later on, the executive withdraws that decision
to the detriment of the party acting upon the earlier decision, it can
be said to be estopped from withdrawing its promise or depriving
the party from its legitimate expectation of what had been promised.
27. In situations, such as the one before us, if the previous executive
decision is withdrawn, modified or amended in any manner in
exercise of legislative power in larger public interest, then the earlier
promise upon which the party acts, cannot be enforced as a right
and neither can the authorities be estopped from withdrawing its
promise, as such an expectation does not give any enforceable right
to the party. Applying the above discussion to the present facts, it is
evident that the principles of legitimate expectation and promissory
estoppel would not apply here, as the appellants cannot be said to
have any enforceable legal right in light of the previous law or policy
and executive action, which was subsequently changed by the state
legislature in light of larger public interest. Thus, the submissions
advanced on behalf of the appellants relating to the challenge to
the M.P. Act No.12 of 2002 inserting the proviso (c) to Clause(C) to
Entry 33 of Schedule 1-A of the IS Act has to be rejected. None of
the case-laws relied upon on behalf of the appellants come to the
rescue of the appellants and have no application in the facts and
circumstances of the present case.
1144 [2024] 7 S.C.R.
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28. Now coming to the next submission on behalf of the appellants with
regard to the question as to whether the Concession Agreement
is a lease or a bond or a license. The definition of lease as given
under the IS Act clearly covers any instrument by which tolls of any
description are let and also under Section 105 of the TP Act, all the
ingredients of a lease are fulfilled. In the present case, we need not
reiterate and repeat the same reasoning and findings as given by
the High Court in great detail after considering the various clauses
of the Concession Agreement. We uphold the finding of the High
Court to be clearly justified and based upon a clear understanding
of the terms of the concession agreement. We do not find any
perversity at all in the reasoning given by the High Court to uphold
the Concession Agreement to be a lease.
29. After the judgment of the High Court which is of the year 2010,
two further judgments have been delivered by this Court regarding
interpretation of a lease, which have been relied upon by Shri Mishra
on behalf of the respondents. Out of the three judgments relied upon
by Shri Mishra, the judgment in the case of Associated Hotels of
India Ltd. (supra) has already been considered by the High Court.
Further, the judgments in the case of State of Uttarakhand and
others (supra) and in the case of Nasiruddin and another (supra)
further reiterated the view taken by Associated Hotel of India Ltd.
(supra). Paragraph 17 in the case of Nasiruddin and another
(supra) is reproduced hereunder:
“17. The expression “lease” under the Stamp Act has
a wider meaning as compared to its original meaning
contained in Section 105 of the Transfer of Property Act
(for short “the TP Act”). If “lease” under Section 2(16) of
the Stamp Act includes therein four specified categories
of documents set out in sub-clauses (a) to (d), we do not
find any such inclusion in Section 105 of the Transfer of
Property Act. It is for this reason, we are of the view that
the definition of “lease” for the purpose of the Stamp Act
is extensive in nature. It is also clear from the use of the
expression and includes also “in Section 2(16) of the
Stamp Act. So by fiction, “any instrument by which tolls
of any description are let “is considered as “lease” for the
purpose of payment of stamp duty under the Stamp Act.”
[2024] 7 S.C.R. 1145
M/S Rewa Tollway P. Ltd. v. The State of Madhya Pradesh & Ors.
30. Thus, the view taken by the High Court further stands fortified by
the above two judgments and the view that we are taking.
31. The only issue which requires to be considered afresh is with respect
to determination of the amount spent under the agreement by the
lessee. For the said purpose, we reproduce proviso(c) to Clause (C)
of the proviso inserted in 2002:
“(c) an agreement to lease where the right to collect tolls
is given in lieu of the amount spent by the lessee in
construction of roads, bridge etc. under the Build, Operate
and Transfer (B.O.T.) scheme, shall be chargeable at the
rate of two percent on the amount likely to be spent
under the agreement by the lessee.”
32. From a clear reading of the above proviso (c) to Clause (C), the
stamp duty would be chargeable @ 2% on the amount likely to be
spent under the agreement by the lessee. Thus, the lessee has no
liability to pay any stamp duty on the amount not spent by the lessee
but by the lessor or any other stake-holder. The amount spent by
the lessee as per the agreement generally was 50% of the total
cost of the project.
33. In the case of Rewa Tollway,19 the total cost of the project was Rs.54
crores, out of which, approximately 50 % would be that of the lessee
and 50% to be funded by the lessor i.e. MPRSNN, respondent no.3.
However, further reading of the Concession Agreement reflects that
the amount to be spent by the lessee was not exactly 50% but is
slightly different figure. At some places, it is mentioned as Rs.24.10
crores and in other places a different amount is mentioned. We
are not entering into this issue of what is the amount spent but we
require that this be determined by the Collector (Stamps) / Revenue
Officer of the concerned district.
34. Once, the stamp duty is payable on the amount spent by the lessee,
the demand raised on the whole amount would be unjustified, as
such, to the above extent, the demand needs to be set aside with
a further direction to the Revenue Officer/Collector (Stamps) of the
district concerned to re-calculate the same as observed above and,
accordingly, raise the demand. In case, the appellants have deposited
19 Civil Appeal No. 8985 of 2013
1146 [2024] 7 S.C.R.
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the demand raised on the entire project cost then the amount lying
in excess with the State would be refunded to them. However, in
case of any deficit in stamp duty having not been deposited, the
appellants would deposit the same within two months of the fresh
demand being raised by the Revenue Officer/Collector (Stamps) of
the district concerned. The Collector (Stamps)/Revenue Officer is
further directed to calculate the said amount in each of the cases
individually and communicate the same to the appellants within a
period of two months from today and where the amount is lying in
excess with the State, the same shall be refunded within a period
of two months of such determination.
35. The appeals stand partly allowed as above. No costs.
Result of the case: Appeals partly allowed.
†
Headnotes prepared by: Divya Pandey
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