Tripura High Court
Case BriefsHigh Courts

Tripura High Court: A Division Bench of Akil Kureshi, CJ and S.G. Chattopadhyay J., while allowing the present petition, held, “One department of the Government cannot cite the reason of another department not acting promptly enough to deny the benefit declared by the Government under any scheme.”

The petitioner herein challenged a communication dated 25-06-2020 and further prayed for grant of subsidy in terms of Tripura Industrial Investment Promotion Incentive Scheme, 2012 (hereinafter to be referred to as the Incentive Scheme). Petitioner is a private limited company and is engaged in manufacturing different types of UPVC pipe and fittings, HDE coil pipes, etc. for which the petitioner had established a manufacturing unit at Agartala in the year 2013. The State of Tripura had framed the said scheme which envisaged grant of certain incentives in the form of subsidy to the specified industries set up on or after 01-04-2012. Such rebate would be equal to the net amount of Tripura Value Added Tax and Central Sales Tax and other taxes paid by the industry to the State Government on sale of finished goods subject to certain conditions. The petitioner was one of the eligible units and in the past had also claimed and was granted subsidy as per the terms of the said scheme. The issue for determination in the instant case is, a refund of the VAT etc. under the said scheme for the period between 01-01-2016 to 31-12-2016 and thereafter from 01-01-2017 to 30-06-2017. The petitioner first applied under two separate applications for such refund to the District Industries Centre on 23-06-2020 along with all necessary documents. These applications of the petitioner were rejected by the District Industries Centre by two separate orders both dated 25-06-2020. The sole ground cited for rejection of the petitioner’s applications was that the claim was submitted after expiry of two years from the period to which the claim related.

Court observed,

“It is not in dispute that a petitioner is otherwise an eligible unit entitled to the refund of the value-added tax under the said scheme, of course subject to fulfillment of the conditions contained therein. The scheme also envisages time limit for making application for refund. However, if the VAT department of the Government had delayed issuing necessary certificates of payment of tax to the petitioner, the application of the petitioner for refund cannot be rejected only on the ground of delay in making the same.”

While issuing necessary directions, Court held,

“The District Industrial Centre shall consider the petitioner’s further representations both dated 13-07-2020 and the contents thereof. If it is found that the petitioner is correct in contending that the refund applications were delayed on account of non-issuance of certificate of payment of tax by the VAT authorities, its applications for refund shall be entertained and examined on merits and refund to the extent payable be released. If, on the other hand, the authority comes to the conclusion that delay in making the applications could not be attributed to the delay in issuance of the VAT payment certificates by the concerned authority, a speaking order shall be passed and communicated to the petitioner. Entire exercise shall be completed within four months from today.”  [Agartala Plastic Private Ltd. v. State of Tripura, 2021 SCC OnLine Tri 27, decided on 12-01-2021]

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Case BriefsSupreme Court

Supreme Court: In the case where the Jharkhand Government had failed to give effect to the Industrial Policy and subsequent Notification that promised 50% rebate to Industrial Units on electricity duty, the Dr. DY Chandrachud* and Indu Malhotra, JJ took the opportunity to explain the evolution and application of the doctrines of Promissory Estoppel and Legitimate Expectations over the years.

Here is a summary of the discussion by the Court:

Origin and evolution of Doctrine of Promissory Estoppel

Under English Law, judicial decisions have in the past postulated that the doctrine of promissory estoppel cannot be used as a ‘sword’, to give rise to a cause of action for the enforcement of a promise lacking any consideration. Its use in those decisions has been limited as a ‘shield’, where the promisor is estopped from claiming enforcement of its strict legal rights, when a representation by words or conduct has been made to suspend such rights.

However, in the absence of a definitive pronouncement by the House of Lords holding that promissory estoppel can be a cause of action, a difficulty was expressed in stating with certainty that English Law has evolved from the traditional approach of treating promissory estoppel as a ‘shield’ instead of a ‘sword’. By contrast, the law in the United States and Australia is less restrictive in this regard.

India adopted a more expansive statement of the doctrine in order to remedy the injustice being done to a party who has relied on a promise.

In Motilal Padampat Sagar Mills Co. Ltd. v State of UP, (1979) 2 SCC 409, the Supreme Court viewed promissory estoppel as a principle in equity, which was not hampered by the doctrine of consideration as was the case under English Law. The judgment that was penned by Justice P N Bhagwati stated:

“… having regard to the general opprobrium to which the doctrine of consideration has been subjected by eminent jurists, we need not be unduly anxious to project this doctrine against assault or erosion nor allow it to dwarf or stultify the full development of the equity of promissory estoppel or inhibit or curtail its operational efficacy as a justice device for preventing injustice…We do not see any valid reason why promissory estoppel should not be allowed to found a cause of action where, in order to satisfy the equity, it is necessary to do so.”

Doctrine of Legitimate Expectations vis-à-vis Promissory Estoppel

Under English Law, the doctrine of promissory estoppel has developed parallel to the doctrine of legitimate expectations. The doctrine of legitimate expectation initially developed in the context of public law as an analogy to the doctrine of promissory estoppel found in private law. However, since then, English Law has distinguished between the doctrines of promissory estoppel and legitimate expectation as distinct remedies under private law and public law, respectively.

The doctrine of legitimate expectations is founded on the principles of fairness in government dealings. It comes into play if a public body leads an individual to believe that they will be a recipient of a substantive benefit.”

Another difference between the doctrines of promissory estoppel and legitimate expectation under English Law is that the latter can constitute a cause of action. The scope of the doctrine of legitimate expectation is wider than promissory estoppel because it not only takes into consideration a promise made by a public body but also official practice, as well.

Under the doctrine of promissory estoppel, there may be a requirement to show a detriment suffered by a party due to the reliance placed on the promise. Although typically it is sufficient to show that the promisee has altered its position by placing reliance on the promise, the fact that no prejudice has been caused to the promisee may be relevant to hold that it would not be “inequitable” for the promisor to go back on their promise. However, no such requirement is present under the doctrine of legitimate expectation.

Further, while the basis of the doctrine of promissory estoppel in private law is a promise made between two parties, the basis of the doctrine of legitimate expectation in public law is premised on the principles of fairness and non-arbitrariness surrounding the conduct of public authorities.

“This is not to suggest that the doctrine of promissory estoppel has no application in circumstances when a State entity has entered into a private contract with another private party. Rather, in English law, it is inapplicable in circumstances when the State has made representation to a private party, in furtherance of its public functions.”

Indian Law and the doctrine of legitimate expectations

Under Indian Law, there is often a conflation between the doctrines of promissory estoppel and legitimate expectations. While this doctrinal confusion has the unfortunate consequence of making the law unclear, citizens have been the victims. Representations by public authorities need to be held to scrupulous standards, since citizens continue to live their lives based on the trust they repose in the State. In the commercial world also, certainty and consistency are essential to planning the affairs of business.

“When public authorities fail to adhere to their representations without providing an adequate reason to the citizens for this failure, it violates the trust reposed by citizens in the State. The generation of a business-friendly climate for investment and trade is conditioned by the faith which can be reposed in government to fulfil the expectations which it generates.”

In National Buildings Construction Corporation vs S. Raghunathan, (1998) 7 SCC 66, a three Judge bench, speaking through Justice S. Saghir Ahmad, held that:

“The doctrine of “legitimate expectation” has its genesis in the field of administrative law. The Government and its departments, in administering the affairs of the country, are expected to honour their statements of policy or intention and treat the citizens with full personal consideration without any iota of abuse of discretion. The policy statements cannot be disregarded unfairly or applied selectively. Unfairness in the form of unreasonableness is akin to violation of natural justice. It was in this context that the doctrine of “legitimate expectation” was evolved which has today become a source of substantive as well as procedural rights. But claims based on “legitimate expectation” have been held to require reliance on representations and resulting detriment to the claimant in the same way as claims based on promissory estoppel.”

However, it is important to note that this observation was made by this Court while discussing the ambit of the doctrine of legitimate expectation under English Law, as it stood then. Since then and since the judgment in National Buildings Construction Corporation, the English Law in relation to the doctrine of legitimate expectation has evolved. More specifically, it has actively tried to separate the two doctrines and to situate the doctrine of legitimate expectations on a broader footing.

In a concurring opinion in Monnet Ispat and Energy Ltd. vs Union of India, (2012) 11 SCC 1, Justice H L Gokhale highlighted the different considerations that underlie the doctrines of promissory estoppel and legitimate expectation. He said:

“… for the application of the doctrine of promissory estoppel, there has to be a promise, based on which the promise has acted to its prejudice. In contrast, while applying the doctrine of legitimate expectation, the primary considerations are reasonableness and fairness of the State action.”

In Union of India vs Lt. Col. P.K. Choudhary, (2016) 4 SCC 236, speaking through Chief Justice T S Thakur, the Court discussed the decision in Monnet Ispat and held:

“… the doctrine of legitimate expectation cannot be claimed as a right in itself, but can be used only when the denial of a legitimate expectation leads to the violation of Article 14 of the Constitution.”


Hence, in an attempt to provide a cogent basis for the doctrine of legitimate expectation, which is not merely grounded on analogy with the doctrine of promissory estoppel, the Court, in the present case, concluded:

“… the doctrine of legitimate expectation cannot be claimed as a right in itself, but can be used only when the denial of a legitimate expectation leads to the violation of Article 14 of the Constitution. the doctrine of substantive legitimate expectation is one of the ways in which the guarantee of non-arbitrariness enshrined under Article 14 finds concrete expression.”

[State of Jharkhand v. Brahmputra Metallics Ltd.,  2020 SCC OnLine SC 968, decided on 01.12.2020]

*Justice Dr. DY Chandrachud has penned this judgment. Read more about him here

Counsels heard:

For the State of Jharkhand: Additional Advocate General Tapesh Kumar Singh, appearing for the State of Jharkhand

For Respondent: Advocate Devashish Bharuka

Also read: ‘Administrative lethargy of State will discourage entrepreneurship’; SC calls out Jharkhand Govt for not giving 50% electricity rebate to Industrial Units as promised

Case BriefsSupreme Court

Supreme Court: In a case where an Industrial Unit was seeking a rebate or deduction of 50 per cent of the amount assessed towards electricity duty from Financial Years 2011 to 2014 on the basis of Industrial Policy 2012 notified by the State of Jharkhand and a statutory notification dated 8 January 2015 issued under Section 9 of the Bihar Electricity Duty Act 1948, the bench of Dr. DY Chandrachud* and Indu Malhotra, JJ directed came down heavily upon Jharkhand Government’s administrative lethargy and held that the company (respondent)  was entitled to an exemption from electricity duty for FY 2012-13 and 2013-14.

However, considering the terms of Clause 35.7(b) of the Industrial Policy 2012 which provided that entitlement ensues from the financial year following the commencement of production, the Court held that since the respondent had commenced production on 17 August 2011, it was not entitled to a rebate/deduction for FY 2011-12.

“If the object of formulating the industrial policy is to encourage investment, employment and growth, the administrative lethargy of the State apparatus is clearly a factor which will discourage entrepreneurship.”

Terms of the impugned Industrial Policy

The policy document contemplated the grant of a rebate/deduction from the payment of electricity duty not only to new units but to existing units as well who had or would set up captive power plants. The State held out inter alia a solemn representation in terms of Clauses 32.10 and 35.7(b) of the entitlement of the exemption for a period of five years from the date of production. Besides this, it also contemplated in Clause 38(b) that a follow-up exemption notification would be issued within one month. That period of one month stretched on interminably with the result that the purpose and object of granting the exemption would virtually stand defeated. The net result was that when belatedly, the State government issued a notification under Section 9 of Bihar Act 1948 on 8 January 2015, it was prospective. As a consequence, by the time that the exemption notification was issued, a large part of the term for which the exemption was to operate in terms of the Industrial Policy 2012 had come to an end. The State government was evidently inclined to grant the exemption.

“This is not a case where due to an overarching requirement of public interest, the State government decided to override the representation which was contained in the Industrial Policy 2012. To the contrary, it sought to implement the representation albeit in fits and starts. Firstly, there was a delay of three years in the issuance of the notification. Secondly, by making the notification prospective, it deprived units such as the respondent of the full benefit of the exemption which was originally envisaged in terms of the Industrial Policy 2012.”

The Court, hence, noticed that not only did the State in the present case hold out a solemn representation, the representation was founded on its stated desire to encourage industrialization in the State.

The policy document spelt out:

(i) The nature of the incentives;

(ii) The period during which the incentives would be available; and

(iii) The time limit within which follow-up action would be taken by the State government through its departments for implementing the Industrial Policy 2012.

Legitimate Expectation

The State having held out a solemn representation in the above terms, it would be manifestly unfair and arbitrary to deprive industrial units within the State of their legitimate entitlement. The State government did as a matter of fact, issue a statutory notification under Section 9 but by doing so prospectively with effect from 8 January 2015 it negated the nature of the representation which was held out in the Industrial Policy 2012. Absolutely no justification bearing on reasons of policy or public interest has been offered before the High Court or before this Court for the delay in issuing a notification.

“It is one thing for the State to assert that the writ petitioner had no vested right but quite another for the State to assert that it is not duty bound to disclose its reasons for not giving effect to the exemption notification within the period that was envisaged in the Industrial Policy 2012.”

Noticing that both the accountability of the State and the solemn obligation which it undertook in terms of the policy document militate against accepting such a notion of state power, the Court said,

“The state must discard the colonial notion that it is a sovereign handing out doles at its will. Its policies give rise to legitimate expectations that the state will act according to what it puts forth in the public realm. In all its actions, the State is bound to act fairly, in a transparent manner. This is an elementary requirement of the guarantee against arbitrary state action which Article 14 of the Constitution adopts. A deprivation of the entitlement of private citizens and private business must be proportional to a requirement grounded in public interest.”


The Court, hence, held that the State had made a representation to the respondent and similarly situated industrial units under the Industrial Policy 2012 and this representation gave rise to a legitimate expectation on their behalf, that they would be offered a 50 per cent rebate/deduction in electricity duty for the next five years. However, due to the failure to issue a notification within the stipulated time and by the grant of the exemption only prospectively, the expectation and trust in the State stood violated.

“Since the State has offered no justification for the delay in issuance of the notification, or provided reasons for it being in public interest, we hold that such a course of action by the State is arbitrary and is violative of Article 14.”

[State of Jharkhand v. Brahmputra Metallics Ltd., 2020 SCC OnLine SC 968, decided on 01.12.2020]

*Justice Dr. DY Chandrachud has penned this judgment. Read more about him here

Counsels heard:

For the State of Jharkhand: Additional Advocate General Tapesh Kumar Singh, appearing for the State of Jharkhand

For Respondent: Advocate Devashish Bharuka

Case BriefsHigh Courts

Bombay High Court: Deciding a case on amalgamation between two companies the Reliance Industries Limited and Reliance Petroleum Limited, Jamnagar the bench of S .C. Dharmadhikari, K.R. Shriram, B.P. Colabawalla, J.J., held that the order involving different High Courts of various states are separate instruments in themselves in case of scheme under Section 391 to 394 of the Companies Act, 1956 so the stamp duty will be payable on all orders without the benefit of remission, set-off or rebate.

In a case where Reliance Industries Limited, having its registered office in Maharashtra and Reliance Petroleum Limited, having its registered office in Gujarat entered into a scheme of amalgamation under Sections 391 to 394 of the Act,  wherein the Act required the scheme of amalgamation to be approved by High Courts having territorial jurisdiction over the transferor company and the transferee company, the Bombay HC on June 7, 2002 passed an order sanctioning the scheme. RPL paid stamp duty of INR 10 Crores on the Gujarat Order in the state of Gujarat. The RIL on October 16, 2002 submitted the Bombay Order for adjudication of stamp duty and further contended that the maximum payable Stamp duty under Bombay Stamp Act, 1958 was INR 25 Crores and since RPL had already submitted 10 Crores, it only has to pay 15 crores.

However this contention was rejected by the revenue authorities and RIL and RPL were directed to deposit the entire stamp duty which is INR 25 crores on the Bombay Order. RPL and RIL appealed against the order of the revenue authorities but the appeal was rejected by Chief Controlling Revenue Authority, Maharashtra and a reference was filed before the Bombay High Court for its opinion on Section 54 of Bombay Stamp Act as it involved a substantial question of law.

Citing the case of Hindustan Lever v. State of Maharashtra (2004) 9 SCC 438, the Supreme Court decided in favor of the Revenue Authorities and held:

  • the stamp duty is not charged on the ‘transaction’ effected by the instrument rather, it will be charged on the instrument.
  • There cannot be a liability to pay Stamp Duty if a transaction is not supported by the execution of an instrument.
  • Although two orders of different High Courts relate to the same scheme, they cannot be said to be the same document and are independent and different instruments.
  • The order sanctioning scheme of arrangement is the chargeable instrument under the stamp duty laws and not the scheme.
  • the benefit of Section 4 of Bombay Stamp Act will not be available on Orders passed by different high courts sanctioning the scheme of arrangement as they do not constitute several instruments used in a single transaction. [  Chief Controlling Revenue Authority, Maharashtra State v. Reliance Industries Limited, Mumbai, 2016 SCC OnLine Bom 1428, decided on March 3, 2016].