STATE OF MADHYA PRADESH AND ORS.versusORIENT PAPER MILLS LTD.

A             STATE OF MADHYA PRADESH AND ORS.
                             v.
                   ORIENT PAPER MILLS LTD.

                            DECEMBER 7, 1989

B          [M.M. PUNCHHI AND S. RANGANATHAN, JJ.]

          Administrative Law: Promissory estoppel-Industrialists generat-
    ing power through their own new generating sets-Assurance given by
    Government-Electricity duty exemption-Effect of

        Constitution of India, 1950: Article 136-lnterference .with
C factual findings-Only in exceptional cases. ·

        Madhya Pradesh Electricity Duty Act, 1949: Section 3-B-
  Electricity duty-Exemption-Notification-High Court granting relief
  without ordering issuance of notification-Whether amounts to trans-
D gression.

           In its· industrial policy, the State Government declared on
    1.8.1961 that . where power has to be generated by industrialists
    themseb<es, exemption from electricity duty would be granted for a
    perit>CI of five years from the date of plant goes into production, and
E   that the concession would be applicable only to new generating sets
    installed during the Third Plan_ period.

          The Respondent indicated to the Government on 3.5.1955 that
    about 5000 K. W. of electriclty Would be required by it to run its paper
    plant and that it would by itself make arrangements for obtaining the
F   necessary generating equipment. It also applied for import licence for
    the import of a production plant as also a power plant to run it. The
    import licence was granted and the Respondent started negotiation with
    the foreign supplier. Since the price had gone up it was rather impossi-
    ble for the Respondent to import both the production plant and the
    power plant, and if the power plant was not purcha8ed along with the
G   production plant, it would make the project unsound. Hence the
    Respondent was in two minds whether to have the power plant or not.
    Meanwhile, the above said industrial policy was announced and the
    Respondent on installation of the power plant was able to start its
    production w.e.f. 16.2.1965.

H         Thereafter to formalise the matter, the Respondent corresponded

                                     436
                STATE OF M.P. v. ORIENT PAPER MILLS                   437

with the appellant for the grant of the requisite exemption, which was
                                                                             A
rejected, and the Respondent approached the High Court by way of a
petition under Articles 226 and 227 of the Constitution of India. The
High Court held that the Petitioner was entitled to invoke the doctrine
of promissory estoppel in order to claim exemption from payment of
electricity duty for a periof of five years from 16.2.1965 in terms of the
assurance of the State Government dated 1.8.1961.                            B

     Against this order of the High Court the State has come in appeal
by Special Leave.

      On behalf of the appellant-State it was urged that there was no
occasion to invoke the doctrine of promissory estoppel, since the Respon·
dent had not in any manner acted on the assurance of the Government          c
to its own prejudice but on its own it was taking steps to set up a
generating plant much before the industrial policy was announced.

      Dismissing the appeal, this Court,
                                                                             D
      HELD: 1. Whether the respondent was ofone mind right from the
beginning to set up a power plant, with or without the assurance of the
State Government dated J.8.1961, as asserted by the State, is neither
borne out nor is the view of the High Court arrived at from the record.
On the contrary, the view taken is that the respondent's indecision in
that regard ended and it became decisive on the announcement of the          E
assurance dated 1.8.1961. Such view of the High Court was a possible
view to be taken on the material placed before it and the inference
drawn therefr(!m could be that the respondent had acted on the basis of
the assurance. [441E-F]

      2. This Court ordinarily d~s not interfere with factual findings       F
arrived at by the High Court and this case has not been shown to be an
exception. The view taken by the High Court was unexceptional
warranting it to be tell uninterferred with. I44 lF]

      3. Without commanding the State Government to issue such a
Notification, the High Courf has granted relief to the respondent to         G
which there was no bar. Accordingly no provision of Madhya Pradesh
Electricity Duty Act, 1949 or any other law can be said to have .been
transgressed. [442A]                       ·

     CIVIL APPELLATE JURSIDICTION: Civil Appeal No 498 of
~.                                                                           H
    438         SUPREME COURT REPORTS               [ 1989] Supp. 2 S.C.R.

A        From the Judgment and Order dated 31.7.1974 of the Madhya
    Pradesh High Court in Misc. Petition No. 316 of 1973.

        Prithvi Raj, Satish K. Agnihotri and Ashok Singh for the
    Appellants.

B       Shankar Ghosh, Vivek Gambhir and Parveen Kumar for the
    Respondent.

          The Judgment of the Court was delivered by

          PUNCHHI, J. This is an appeal by special leave against the judg-
    ment and order of the High Court of Madhya Pradesh at J abalpur
C   whereby the petition under Articles 226 and 227 of the Constitution of
    India preferred by Orient Paper Mills Ltd., the sole respondent
    herein, was allowed and sequally the order dated 15.3.1973 of the
    State Government declining to grant the respondent exemption from
    payment of electricity duty for the period from 16.2.1965 to 15.2.1970
D   and pursuant demand notices dated 20.3.1973 and 3.4.1973 were
    quashed. The aggreived State of Madhya Pradesh and its concerned
    Officers are the appellants challenging the same

           The respondent had neea to go to the High Court to have an
    assurance dated 1.8.1961 regarding exemption from payment of elect-
£   ricity duty given by the State of Madhya Pradesh in its declared indust-
    rial policy observed, which may well be reproduced here at the outset:

               "Where power has to be generated by industrialists
               themselves, exemption from electricity duty shall be
               granted for a period of five years from the date of plant
f              goes into production. The concession shall be applicable
               only to new generating sets installed during the Third Plan
               period."

          Factually it was not disputed before the High Court, that the case
    of the respondent squarely fall within the scope o( the assurance repro-
G   duced above since tbe industrial plant of the respondent had gone into
    production w.e.f. lli.2.1965, the generating set put up was new, and
    had been installed during the Third Plan period. To formalise the
    matter, the respondent had corresponded with the Government for the
    grant of the requisite exemption. Since the same was rejected and
    demands for payment of electricity duty created, the High Court was
H   requested to issue suitable writs, directions and orders cancelling the
        STATE OF M.P. v. ORIENT PAPER MILLS [PUNCHHI, J.]            439

aforesaid orders and demand notices and granting exemption from
payment of electricity duty in respect of electricity self-generated by     A
the respondent during the said period of five years, and also command-
ing the State to carry out the assurance and promises made in the said
industrial policy dated 1.8.1961 extracted above and then, requiring
the State to issue a Notification under Section 3-B of the Madhya
Pradesh Electricity Duty Act, 1949 granting exemption or exception to       B
the respondent from payment of electricity duty and other allied
consequential reliefs.

       Before the High Court voluminous documentary evidence was
given by the parties in support of their respective pleadings. The High
Court, on consideration of the entire material placed before it, spelled
out a promissory estoppel in favour of the respondent and conclnded         c
as follows:

           "To conclude, we are of opinion that the petitioner is
           entitled to invoke the doctrine of promissory estoppel in
           order to claim exemption from payment of electricity duty        D
           for a period of five years from 16.2.1965 to 15.2.1970 in
           terms of the assurance of the State Government, dated
           1.8.1961. Of course, as indicated earlier it is not for us to
           issue any writ directing the State Government to grant the
           petitioner exemption in terms of S. 3-A (vii) or Section 3-B
           of the M.P. Electricity Duty (Amendment) Act, 1949. But          F
           in view of the unambiguous and unequivocal assurance
           given by the State Governmet on 1.8.1961 we can certainly
           quash the order of the State Government, dated 15.3.1973
           as also the demand notices, dated 20.3.1973 (Petitioner's
           Annexure-48) and dated 3.4.1973 (Petitioner's Annexure
           50) and leave the matter at that. It would be for the            F
           Government to work out its own course of action on that
           basis."

      Mr. Prithvi Raj, learned counsel for the appellant urged that on
the facts and circumstances of the case there was no occasion to invoke
the doctrine of promissory estoppel. It was asserted that though the        G
industria.I policy was published by the State Government on 1.8.1961
containing the assurance extracted above, the respondent had not in
any manner acted thereon to its own prejudice, but nad rather on its
own been taking steps to set up a generating plant much before the
industrial policy was announced and had factually set up the generat-
ing plant as per its earlier resolve. The facts highlighted were that the   H
    440         SUPREME COURT REPORTS               [ 1989] Supp. 2 S.C.R.

A respondent Paper Mill, had been set up at Amlai in Vindhya Pradesh,
  when a Part-C State under the administration of the Central Govern-
  ment. It had in its application dated 3.5.1955 to the Government indi-
  cated that about 5000 K.W. electricity would be required by it to run
  its paper plant and. it would by itself make arrangements for obtaining
B the necessary generating equipment. It appears that the State Govern-
  ment had at that time its own project in view for installing a power
  plant. On that basis some correspondence ensued between the respon-
  dent and the State Gdvernment with regard-to its annual requirement
  of electricity. That exercise was abandoned for some reasons which are
  not relevant here. Thereafter the respondent applied for· import
  licence for the import of a production plant as also a power plant to run
C it. The respondent was granted an import licence on the strength of
  which it started negotiation with an American supplier. While negotia-
  tions were in process the American supplier increased the price. It
  became impossible for the respondent to import the production plant
  and the power plant within the funds allotted to it by the World Bank
D and in these circumstances, the American suppliers advised the appel-
  lant to drop procurement of the power plant. At the same time the
  American supplier warned the respondent that if the power plant was
  not purchased along with the production plant, it would make the
  project unsound and it would not be able to fulfil its guarantees as
  desired by the respondent. The respondent in these circumstances
  became of two minds, whether to have the power plant or not. When it
E was in that state of mind, the industrial policy was announced by the
  Government on 1.8.1961. Thereafter, on 21.8.1961, the respondent
  applied to the Government of India for sanction of permission to
  import 3.5 million dollar worth goods more. than the sanctioned
  amount. Finally, the respondent with the consent of the Government
  of India and with the aid of the World Bank was able to import the
F production plant and the power plant and after its installation was able
  to go on production w .e.f. 16.2.1965.

          The course of the events set out earlier were not disputed as such
    by the appellants before the High Court but it was maintained as now
    before us, that the respondent would have on its own gone on to instal
,¢J the power Ijlant even without the announcement of the industrial
    policy dated\ 1.8.1961. Additionally, it was maintained, in the like
    manner, that the respondent had not acted to its prejudice on the basis
    of the aforesaid assurance dated 1.8.1961 and so that doctrine of
    promissory estoppel was not invokable. The defence of the State thus
 H raised was rejected by the High Court in the following words:
        STATE OF M.P. v. ORIENT PAPER MILLS IPUNCHHI, J.]              441

             "We have already dealt with that aspect earlier and we           A
             have already held that the petitioner's action in setting up a
             power plant was postponed on account of certain circum-
           . stances and ultimately on the advise of the manufacturers
             who refused to continue the guarantee, the petitioner
             decided to set up its own power plant. In the meantime, the
             assurance of the State Government, dated 1.8.1961 had            B
             already been given and the petitioner's action in making a
             final decision to set up its own power plant can be directly
             connected with the State Government's assurance dated
             1.8.1961. No sooner the petitioner took the final decision
             in that behalf, it applied to the State Government for grant
             of an exemption, although that application was premature,
             because the petitioner's paper mill had not started func-
                                                                              c
             tioning. As such, the petitioner would certainly be entitled
             to claim exemption in terms of the assurance of the State
             Government dated 1.8.1961 with effect from tile date the
             paper mill started functioning, namely, 16.2.1965 and the
             exemption would last for a period of five years upto             D
             15.2.1970."
                                                   '
      Whether the respondent was of one mind right from the begin-
ning to set up a power plant, with or without the assurance of the State
Government dated 1.8.1961, as asserted by the State, is neither borne
out nor is the view of the High Court arrived at from the record.             E
Rather, on the contrary, the view taken is that the respondent's indeci-
sion in that regard ended and it became decisive on the announcement
of the assurance dated 1.8 .1961. Such view of the High Court was a
possible view to be taken on the material placed before it and the
inference drawn therefrom could be that the respondent had acted on
the basis of the assurance. The effort here to re-do the exercise in this     F
regard must inevitably fail, for this Court ordinarily does not interfere
with factual findings arrived at by the High Court and this case has not
been shown to us to be an exception. In this situation, the view taken
by the High Court was unexceptional warranting it to be left unin-
terferred with.
                                                                              G
      Some attempt was made by learned counsel for the appellant to
contend that the doctrine of promissory estoppel could not be pressed
into service to command the State Government under Section 3cA (vii)
(before its amendment) and Section 3-B of the Madhya Pradesh
Electricity Duty Act, 1949 (as amended) to issue a Notification
exempting the respondent from payment ·of electricity duty. The               H
    442         SUPREME COURT REPORTS              [ 1989] Supp. 2 S.C.R.

A answer to this argument is available in the conclusion arrived at by the
  High Court extracted above. Without commanding the State Govern-
  ment to issue such a Notification, it has granted relief to the respon-
  dent to which there was no bar. Accordingly, no provision of Madhya
  Pradesh Electricity Duty Act, 1949 or any other law can be said to
  have been transgressed. We thus reject this argument too.
B
         Thus for the foregoing reasons this appeal fails and is hereby
    dismissed. No costs.

    G.N.                                                Appeal dismissed