*THE HON’BLE SRI JUSTICE C.V. NAGARJUNA REDDY + WRIT PETITION No.20582 of 2008 % Dated: 13-07-2011 # Katta Ramesh & another. … Petitioner VERSUS $ The Branch Manager, State Bank of India, Sattenapalli, Guntur District & others. … Respondents ! Counsel for the petitioner : Sri B. Chinnapa Reddy ^ Counsel for respondent No.1: Sri G.V.S. Meher Kumar Counsel for respondent No.2: None Counsel for respondent No.3: Smt. K. Rajitha <GIST: > HEAD NOTE: ? Cases referred 1. AIR 1968 SC 718 2. (1979) 2 SCC 409 3. (1996) 5 SCC 468 4. (1997) 7 SCC 251 5. (1995) 1 SCC 274 6. (2010) 3 SCC 274 THE HON’BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.20582 of 2008 Dated: 13.07.2011 Between: Katta Ramesh & another. …Petitioners And The Branch Manager, State Bank of India, Sattenapalli, Guntur District & others. …Respondents Counsel for the petitioners: Sri B. Chinnapa Reddy Counsel for respondent No.1: Sri G.V.S. Mehar Kumar Counsel for respondent No.2: None Counsel for respondent No.3: Smt. K. Rajitha The Court made the following: THE HON’BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.20582 of 2008 ORDER: At the interlocutory stage, the Writ Petition is taken up for hearing and disposal with the consent of the learned counsel for the parties. This Writ Petition is filed for a Mandamus to declare the action of the respondents in not giving credit of 25% of the capital cost subsidy in respect of loan account No.11247206329 on purchase of harvesting machinery ‘Class Crop Tiger (Track Model)’, as illegal and arbitrary. Petitioner No.1 is the son of petitioner No.2. On 25.09.2006, petitioner No.1 made an application for sanction of loan to respondent No.1 for purchase of a harvesting machine under the scheme for development/strengthening of agricultural marketing infrastructure, grading and standardisation evolved by the Government of India with respondent No.2 as its implementing agency. The scheme inter alia provides for 25% investment subsidy on the capital cost up to Rs.50 lakhs and in case of SC and ST farmers, the subsidy component is 33.33%. It is the pleaded case of the petitioners with respect to which there is no dispute that respondent No.1 Bank has processed the loan application treating the same as dated 01.11.2006 and vide its letter dated 17.11.2006, it has informed the petitioners that the loan of Rs.11.70 lakhs was sanctioned for purchasing the harvesting machinery. Petitioner No.2 has offered Ac.9.80 cents and Ac.11.17 cents as security for providing loan to petitioner No.1 and accordingly the said lands were mortgaged in favour of respondent No.1. Petitioner No.1 has deposited Rs.3 lakhs for sanction of loan. It is their pleaded case that attracted by the scheme of the investment subsidy to the extent of 25%, the petitioners have availed the loan and purchased the machinery. However, when respondent No.1 has not extended the subsidy to them and showed the closing balance as Rs.8.06,263=85ps on 10.06.2008, the petitioners have approached the former and have learnt from it that as per circular No.212/ACD/23/2006, dated 15.12.2006 of respondent No.2, the scheme of providing subsidy on capital cost was discontinued with effect from 14.11.2006 and that therefore the same is not available to them, as the loan was sanctioned subsequent to the discontinuance of the scheme. Feeling aggrieved by this action, the present Writ Petition is filed by the petitioners. Respondent No.3 filed a counter affidavit, wherein he inter alia averred that in the meeting held on 14.11.2006, a decision was taken to stop subsidies to combine harvester projects till further orders, that the decision was made applicable with effect from the said date and that NABARD was requested to issue a circular in that regard. It is further averred that in a meeting held on 14.12.2007 to review the progress of the centrally sponsored schemes, the said scheme was revived only in selected States limiting it to 20% of the total projects and the State of Andhra Pradesh is not included among those selected States. The main plank on which the Writ Petition is filed is that on the basis of the promise held out by respondent No.3, the petitioners have availed the loan and that by the time the loan was sanctioned, the purported decision of respondent No.3 was not communicated to any one including respondent No.1. The petitioners have therefore pleaded that the respondents cannot be permitted to go back on their promise on the doctrine of promissory estoppel. It is not in dispute that the scheme for development/strengthening of agricultural marketing infrastructure, grading and standardisation was introduced by respondent No.3 in November, 2004 and was applicable in the State of Andhra Pradesh when the petitioners made their application and also when loan was processed. It is also not in dispute that the said scheme provided for subsidy on capital cost to the extent of 25%. From the contents of the counter affidavit and the material filed in support thereof, it is evident that a decision appears to have been taken by respondent No.3 in a meeting held on 14.11.2006 to stop this subsidy. When respondent No.2 has addressed letter dated 28.11.2006 to the Assistant Agricultural Marketing Adviser for AMA to the Government of India, the latter replied on 04.12.2006 that having regard to the decision taken on 14.11.2006, respondent No.2 may issue a circular mentioning therein that the issue was discussed in the meeting held on 14.11.2006 under the Chairpersonship of the Secretary (A&C), Ministry of Agriculture, Government of India and that it was decided to stop the financing of fresh cases of combine harvesters under the scheme till further orders with effect from that date. Even though respondent No.3 has not filed any material as to whether such a circular was issued by respondent No.2, Sri G.V.S. Mehar Kumar, learned counsel representing respondent No.1 Bank furnished a copy of circular No.212/ICD/23/2006, dated 15.12.2006, issued by the General Manager of respondent No.2 and addressed to the Chairman/Managing Director of all Scheduled Commercial Banks etc., to the effect that with effect from 14.11.2006, the proposals for combine harvesters sanctioned by the banks on or after 14.11.2006 will not be eligible for subsidy under the scheme until further orders. The law on doctrine of promissory estoppel is too well settled. Where a person makes a promise on the basis of which another person acted and altered his position, the promissor cannot be permitted to wriggle out of the promise so made to the detriment of the promissee (See Union of India vs. Indo-Afghan Agencies[1], Motilal Padampat Sugar Mills Co., Ltd., vs. State of U.P.[2], D.C.M. Ltd., vs. Union of India[3], Pawan Alloys & Casting (P) Ltd., vs. U.P.S.E.B.[4]). In Kasinka Trading vs. Union of India[5] while summarising this doctrine, the Supreme Court held: “11. The doctrine of promissory estoppel or equitable estoppel is well established in the administrative law of the country. To put it simply, the doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in the future, knowing as well as intending that the representation, assurance of the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, the promise, assurance or representation should be binding on the party making it and that party should not be permitted to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings, which have taken place or are intended to take place between the parties. 12. It has been settled by this Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the 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 authority to make." There is preponderance of judicial opinion that to invoke the doctrine of promissory estoppel clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that bald expressions, without any supporting material, to the effect that the doctrine is attracted because the party invoking the doctrine has altered its position relying on the assurance of the Government would not be sufficient to press into aid the doctrine. In our opinion, the doctrine of promissory estoppel cannot be invoked in the abstract and the Courts are bound to consider all aspects including the results sought to be achieved and the public good at large, because while considering the applicability of the doctrine, the Courts have to do equity and the fundamental principles of equity must forever be present to the mind of the Court, while considering the applicability of the doctrine. The doctrine must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation.” In a recent judgment of the Apex Court in State of Bihar and others vs. Kalyanpur Cement Limited[6], the Supreme Court has further reviewed the entire case law and reiterated the legal position enunciated in its earlier judgments referred to supra. In the instant case, it is not in dispute that when the petitioners made their application, the scheme was in force. Even on 17.11.2006, when the loan was sanctioned, no one was aware of withdrawal of the scheme except respondent No.3. It is only when letter dated 28.11.2006 was addressed by the Chief General Manager of respondent No.2, wherein he requested respondent No.3 to indicate the effective date for applicability of the decision regarding stopping of the subsidy for combine harvesters, that a clarification was issued on 04.12.2006 and as a follow up to this a circular was issued by respondent No.2 on 15.12.2006. In this admitted fact scenario, I find force in the submission of the learned counsel for the petitioners that they have acted on the promise made by respondent No.3 by applying for the loan and buying a machinery on the loan availed by them from respondent No.1 bank. Even though an effort was made by the learned counsel for respondent No.1 to show that the petitioners were conscious of withdrawal of the concession by filing a purported letter of the petitioners, I am not inclined to give any credence to such a letter for more reasons than one. Firstly, the said letter in which the petitioners are stated to have mentioned about the withdrawal of subsidy and have undertaken to avail the loan even in the absence of subsidy is undated. It is not the pleaded case of respondent No.1 that it was aware of the withdrawal of the capital subsidy before 17.11.2006 on which date the loan was sanctioned. The time lag between the decision of respondent No.3 and sanction of the loan was three days, which was too short for any one to believe that the petitioners and respondent No.1 were aware of such withdrawal. At any rate, the events referred to above, leading to the addressing of letter by the Chief General Manager of respondent No.2 on 28.11.2006 and the clarificatory letter dated 04.12.2006 issued by respondent No.3 would clinchingly establish that till 04.12.2006 no one was certain as to the date with effect from which the subsidy was withdrawn. I am therefore of the opinion that the so-called letter, which was obviously obtained at a date much after the sanctioning of the loan, was evidently intended to deny the loan subsidy to the petitioners. The learned counsel for respondent No.3 has placed before this Court judgment dated 29.09.2009 of Kerala High Court in Writ Petition (C) No.5859 of 2009-B. A careful perusal of the said judgment would show that the facts therein have no parity with the facts of the present case. In that case the loans were sanctioned on 29.01.2007 and 28.09.2007 by which time the withdrawal of the scheme has already come into effect and the petitioners therein had the option not to avail the loan. In the instant case, the petitioners bona fide believing that the capital subsidy available under the scheme of respondent No.3 can be availed by them purchased the machinery by utilising the loan sanctioned by respondent No.1. From these facts, I have no hesitation to hold that the respondents are prevented by doctrine of promissory estoppel from denying the capital subsidy on the loan availed by the petitioners. For the abovementioned reasons, the Writ Petition is allowed. A Mandamus shall issue to the respondents to extend the subsidy on capital cost in respect of the loan availed by the petitioners in terms of the abovementioned scheme. As a sequel to disposal of the writ petition in the manner indicated above, WPMP.No.26871 of 2008 filed by the petitioners for interim relief is disposed of as infructuous. ____________________________ C.V.NAGARJUNA REDDY, J Date: 13.07.2011 ES LR copies to be marked. [1] AIR 1968 SC 718 [2] (1979) 2 SCC 409 [3] (1996) 5 SCC 468 [4] (1997) 7 SCC 251 [5] (1995) 1 SCC 274 [6] (2010) 3 SCC 274