IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.6846 of 2010 1. M/S BALAJEE STEEL CORPORATION PRIVATE LIMITED, A COMPANY REGISTERED UNDER THE PROVISIONS OF COMPANIES ACT,HAVING ITS REGISTEREED OFFICE AT BHARTIYA PLACE BANDAR BAGICHA, FRASER ROAD, PATNA THORUGH ITS DIRECTOR, PRABHU DAYAL BHARTIYA, S/O LATE MAHABIR LAL BHARTIYA, R/O SHANTI KUNJ APRATMENT,CHHAJUBAG,P.S.- GANDHI MAIDAN, TOWN AND DISTRICT- PATNA-------------------------------------------------------------------------PETITIONER. Versus 1. THE STATE OF BIHAR,THROUGH THE CHIEF SECRETARY, GOVT. OF BIHAR, OLD SECRETARIAT, PATNA 2. THE PRINCIPAL SECRETARY, DEPARTMENT OF INDUSTRIES, GOVT. OF BIHAR,PATNA 3. THE DIRECTOR OF INDUSTRIES, BIHAR, PATNA. 4. THE DEPUTY DIRECTOR, DEPARTMENT OF INDUSTRIES,BIHAR, PATNA. 5. THE SECRETARY, DEPARTMENT OF REGISTRATION, GOVT. OF BIHAR,PATNA. 6. THE I.G., REGISTRATION, BIHAR, PATNA. 7. THE DISTRICT MAGISTRATE, PATNA. 8. THE DISTRICT SUB REGISTRAR, PATNA CITY, PATNA.--- RESPONDENTS ----------- For the petitioner :Mr.Suraj Samdarshi, Advocate For the State :Mr.S.K.Singh, A.C. to G.A.6 ------ 8. 13.9.2010 I.A.No. 8081 of 2010 The interlocutory application has been filed for amendment of the reliefs prayed for in the writ application giving direction to the respondent authorities to provide exemption of the stamp duty of the entire land which has been registered and give necessary refund in the light of the Industrial Policy, 2006. It is stated in the interlocutory application that during the pendency of the writ application the petitioner has 2 registered the balance land on 17.5.2010 & 18.5.2010 after paying the stamp duty and registration fee and thus the present amendment has been necessitated. In the facts and circumstances of the case, the prayer for amendment is allowed. I.A.No.8081 of 2010 is, accordingly, disposed of. Heard learned counsel for the petitioner and learned counsel for the State. The petitioner seeks a direction on the respondent State to refund the amount of stamp duty and registration fee charged in contravention of the Industrial Policy, 2006 and for a further direction to the Principal Secretary, Department of Industries to issue a letter to the Department of Registration exempting the petitioner from payment of stamp duty and registration fee on the entire land and for other ancillary reliefs. The facts of this case lie in a very narrow compass. The Government of Bihar came out with its Industrial Incentive Policy, Bihar, 2006 taking note of the requirement to provide a new industrialized shape full of industries to Bihar State and for this purpose the need for creating a favourable environment to attract the investors 3 of the State and from abroad. It was expected that with the implementation of the Industrial Incentive Policy there would be growth in the per capita income of the State and industrial growth as well as accelerated employment opportunities. The strategy in the Industrial Investment Policy is to create favourable circumstances in order to establish industries in the State so that there might be positive communication among the investors. The first incentive/exemption facility granted under the said Industrial Policy by Clause 1 thereof is that tiny, small, medium and large scale industries which are to be established in the industrial area/shed and outside the area of the Authority will enjoy full (100%) exemption in stamp duty and registration fee in lease/sale/transfer with the condition that the facility will be granted only for the first time and will not be granted thereafter. The petitioner intending to construct a high class hotel on Patna Bye-Pass Road entered into negotiation with the owners of the land for purchase of 7 Bighas 5 Kathas 15 Dhoors and 17 Dhurkies. The petitioner claims to have filed an application in the month of January before the Department of Industries which was acknowledged by the 4 General Manager, District Industries Centre, Patna on 15.2.2010. In the meantime the petitioner claims that on account of pressure from the owners of the land it got registered part of the land, i.e., 4 Bighas of land with the Registration Department upon payment of stamp duty and registration fee on 13.2.2010 and thereafter the balance land has been registered on 17.5.2010 & 18.5.2010 on payment of stamp duty and registration fee as stated in the above-mentioned I.A.No.8081 of 2010. The petitioner’s application for exemption was taken up for consideration and by letter dated 11.3.2010 the General Manager, District Industries Centre requested the Director of Industries, Bihar that the District Magistrate on 26.2.2010 in a meeting under Single Window Clearance Act, 2006 had decided to give the benefit of exemption from payment of stamp duty and registration fee to the petitioner for registration of the land and requested that authority letter for the same may be issued. Thereafter certain correspondences relating to discrepancy in the area of the land and other aspects were pointed out by the Industries Department which was duly replied by the petitioner pointing out that the difference mentioned in the 5 documents are nominal and would be found with respect to any large piece of land upon measurement. Thereafter other objections were also raised which were duly replied by the petitioner. Ultimately it appears that by letter dated 14.5.2010 the Directorate of Industries requested the petitioner to remove three anomalies: firstly, to provide the copy of the resolution by which one of the Directors has been authorized for the present work; secondly, to file an affidavit that if the land is used by the investor for other than the specified purpose the amount of exemption/stamp duty shall be refunded to the State Government along with rate of interest to be determined by the Government; and, lastly, since the registration had already been done for part of the land of the hotel project it had to give details of the remaining land which was yet to be registered. In the counter affidavit filed on behalf of the respondent authorities the stand taken is that since the petitioner had already got part of the land registered on 13.2.2000 prior to making the application on 15.2.2000 he is not entitled to the benefit of exemption for the same under the Industrial Incentive Policy, since an exemption can be permitted only on an authority issued for this 6 purpose in the name of the investor by the Department of Industries with details of land and its location, in terms of order dated 10.3.2007 issued by the Government of Bihar in the Registration Department in exercise of power conferred by clause(a) of sub-section (1) of Section 9 of the Indian Stamp Act,1899. It is thus the clear stand that the petitioner having failed to apply for exemption and obtain an authority from the Industries Department he is not entitled for exemption for 4 Bighas of land that has already been registered on 13.2.2000. With respect to the remaining area of land the stand taken is that no sooner the petitioner removes the defects as required, within three days the authority shall be issued. However, after the filing of I.A.No.8081 of 2010 the stand of the respondents is that there being no provision for refund of stamp duty and registration fee under the Industrial Incentive Policy, 2006 the claim of the petitioner is inadmissible. Learned counsel for the petitioner submits that the stand of the respondent authorities is contrary to the spirit in which the provisions of the Industrial Policy are required to be interpreted. It is submitted that by a long line of decisions of the Apex Court and of this Court it has been 7 held that a liberal interpretation has to be given to the provisions of an Industrial Policy and it is not open to the authority to deny the benefits thereunder on a narrow and technical view of its provisions. It is further urged by learned counsel that any notification issued by the Department pursuant to the Industrial Policy cannot detract from the same so as to create a situation where the benefit granted under the Industrial Policy is refused to the person who is otherwise eligible for it. It is also the case of learned counsel that the entire stance of the respondent authorities has been to create roadblocks in the grant of exemption to the petitioner as frivolous objections have been raised. It is stated that the petitioner had already filed an affidavit stating that in case of land not being utilized for the same purpose the State Government will be entitled to recover the amount of stamp duty and registration fee with interest. It is also submitted by learned counsel for the petitioner that the exemption from the stamp duty and registration fee is being sought on behalf of the Company and the Directors of the Company are by virtue of their 8 office authorized to look after the affairs of the Company and it is not a case of any other lower level officer or employee of the Company having come forward in the matter and, therefore, the objection raised in this regard of different Directors having signed the Memorandum of Association and the application for grant of exemption has no relevance in the matter and no resolution of the Company is required for the said purpose either in terms of the Industrial Policy or even the order dated 10.3.2007 issued by the Registration Department. It is urged by learned counsel that the petitioner having made clear its intention that the entire land is to be used for setting up a high class hotel project he immediately becomes entitled to the benefit of the Industrial Incentive Policy which is effective from 1.4.2006 to 31.3.2011 and the mere fact of an application in terms of the order dated 10.3.2007 of the Registration Department having been filed/receipted two days after the registration of the part of the land cannot deprive the petitioner of the benefit of exemption from stamp duty and registration fee with respect to the said land under the Industrial Incentive Policy and once it is held that the 9 petitioner is entitled to such exemption then the refund of the amount shall follow as a natural consequence. It is urged that under the Industrial Policy itself what was required was a genuine establishment of an industry in order to get the benefit of exemption from stamp duty and registration fee for the purchase of land and the bona fides of the petitioners are not in dispute. Learned counsel for the State, on the other hand, submits that the respondent authorities had merely sought clarification from the petitioner and at all times were ready to give the benefits no sooner the clarifications were received on the documents in question. It is also submitted by learned counsel for the State that the petitioner having already registered the land prior to the receipt of his application by the Industries Department there being provision only for exemption of stamp duty and registration fee and not for refund of the same, the petitioner is not entitled to any refund of the amount with respect to the land registered on 13.2.2010 or even 17/18.5.2010. I have considered the submissions of learned counsels for the parties. It has been held by a catena of 10 decisions of the Apex Court and of this Court that the Industrial Incentive Policies of the Governments have to be given a liberal interpretation in favour of the beneficiaries and it is not permissible to take a highly technical view of the matter. It has also been held that once an industrial unit becomes entitled to avail of incentives and benefits under the Industrial Policy then it is not open to the other departments issuing notification to give effect to the said Industrial Policy to negate the incentives and benefits which any industrial unit would be otherwise entitled to under the general policy resolution itself. In the case of State of Bihar and others vs. Suprabhat Steel Ltd. and others : (1999) 1 SCC 31 a Three Judge Bench of the Supreme Court upheld the striking down by the High Court of the notification of the State Government issued under Section 7 of the Bihar Finance Act holding that it would not be permissible while issuing such notification to deny the benefit which is otherwise available under the industrial policy itself. The Apex Court took note of the fact that the Industrial Incentive Policy is issued by the State Government after such policy is 11 approved by the Cabinet itself whereas the notification of the Finance Department was only for the purpose of carrying out the objectives and the policy decisions taken in the industrial policy itself and thus any notification to the contrary issued by the government in exercise of power under Section 7 of the Bihar Finance Act must be held to be bad to that extent. In this regard one may usefully refer to paragraph-7 of the said judgment, which is in the following terms : “7. Coming to the second question, namely, the issuance of notification by the State Government in exercise of power under Section 7 of the Bihar Finance Act, it is true that issuance of such notifications entitles the industrial units to avail of the incentives and benefits declared by the State Government in its own industrial incentive policy. But in exercise of such power, it would not be permissible for the State Government to deny any benefit which is otherwise available to an industrial unit under the incentive policy itself. The industrial incentive policy is issued by the State Government after such policy is approved by the Cabinet itself. The issuance of the notification under Section 7 of the Bihar Finance Act is by the State Government in the Finance Department which notification is issued to carry out the objectives and the policy decisions taken in the industrial policy itself. In this view of the matter, any notification issued by government order in exercise of power under Section 7 of the Bihar Finance Act, if is found to be repugnant to the industrial policy declared in a government resolution, then the 12 said notification must be held to be bad to that extent. In the case in hand, the notification issued by the State Government on 4-4-1994 has been examined by the High Court and has been found, rightly, to be contrary to the Industrial Incentive Policy, more particularly, the policy engrafted in clause 10.4(i)(b). Consequently, the High Court was fully justified in striking down that part of the notification which is repugnant to sub-clause (b) of clause 10.4.(i) and we do not find any error committed by the High Court in striking down the said notification. We are not persuaded to accept the contention of Mr.Dwivedi that it would be open for the Government to issue a notification in exercise of power under Section 7 of the Bihar Finance Act, which may override the incentive policy itself. In our considered opinion, the expression “such conditions and restrictions as it may impose” in sub-section (3) of Section 7 of the Bihar Finance Act will not authorize the State Government to negate the incentives and benefits which any industrial unit would be otherwise entitled to under the general policy resolution itself. In this view of the matter, we see no illegality with the impugned judgment of the High Court in striking down a part of the notification dated 4-4-1994.” In support of his contention learned counsel for the petitioner has placed reliance upon a decision of a Division Bench of this Court in the case of M/s. S.C.I. India Ltd. vs. The State of Bihar & Ors. :2002(2) PLJR 288 in paragraph- 14 of which, it has been held as follows : “14. In the instant case, undisputedly, as per the installed production capacity, the unit 13 was producing 6600 KL of ethyl alcohol i.e. rectified spirit while as the result of diversification i.e. the additional fixed capital investment, the unit has been producing 6000 KL of Extra Neutral Alcohol i.e. more than the required quantum of incremental production. If the additional fixed capital investment resulted in sufficient incremental production, it should be treated as a strong index of the genuineness of the claim. The object underlying the condition that there should be 50 per cent or more additional fixed capital investment appears to be that only such units which make substantial investments and contribute to the required incremental production of scheduled commodities should be allowed the benefit of tax exemption. The Industrial Policy is designed to give benefit to industrial units and therefore a positive approach is required to be adopted. Any attempt to find loopholes and reject the claim on technical ground, in my opinion, may be counter-productive and subversive of the objects. The Supreme Court in State of Bihar vs. M/s. Suprabhat Steel Ltd., (1999) 1 SCC 31 : 1999 (1) PLJR (SC) 1 has observed that the power under Section 7(3) of the Bihar Finance Act in the matter of exemption from sales tax to industrial units desirous of availing the incentives under the Industrial Policy Resolution should not be exercised in a manner that they are denied the benefit which is otherwise available to such unit under the Industrial Policy. Notification under Section 7 of the Bihar Finance Act is issued to carry out the objects of the Industrial Policy and in that view of the matter, any notification issued by the Government in exercise of powers under Section 7 of the Bihar Finance Act, found to be repugnant to the Industrial Policy must be held to be bad to that extent.” 14 Learned counsel also seeks support from another Division Bench decision of this Court in the case of M/s. Salson Liquors Pvt. Ltd. vs. The State of Bihar & Ors. : 2002(3) PLJR 617 in paragraph-9 of which, it has been laid down as follows : “9. After hearing learned counsel for the parties and going through the records, we are of the view that the State Level Committee has taken too technical a view of the matter. The very object of Clause 2(8) of the said policy is to see that the land either belongs to the entrepreneur or it has been leased in its favour for a particular period. This requirement has been incorporated with the sole purpose that the State Government may not suffer in future if ultimately there is a default in payment of the deferred sales tax by the unit after expiry of the period specified in the scheme. This Court in the case of M/s. Eastern Synpacks Limited (supra) had occasion to consider the similar matter. There the sub- lease was granted by the TISCO and the entrepreneur was put in possession but the formal document was not created because of non-fixation of rate of salami by the State Government. Taking into consideration the said matter, a Division Bench of this court observed; “If there is material to satisfy the State Government that the petitioner has set up its industrial unit upon land upon which it is authorized to set up such a unit pursuant to an understanding with the land-holder, namely, TISCO, then in that event the State Government will have no objection to the grant of benefit of deferment of payment of sales tax in accordance with the Incentive Policy, without production of a registered lease deed for 15 years.” Learned counsel also refers to similar other decisions. 15 In the present matter there is no stand on behalf of the State Government that the petitioner has not bona fide come forward to set up a new industrial unit, namely, Hotel Project in question and that such a unit would not be otherwise entitled to the benefits under the Industrial Incentive Policy, 2006. As a matter of fact, the Bihar Single Window Clearance Committee under the District Magistrate has already taken a decision to exempt the petitioner from the stamp duty and registration fee on the registration of the land in question and by the aforesaid letter dated 11.3.2010 the General Manager of the District Industries Centre, Patna has requested for issuance of authority letter in the matter from the Director of Industries. It is thus nowhere the case of the respondent State that the petitioner is not entitled to the benefit of exemption from stamp duty and registration fee under the Industrial Incentive Policy. The only plea taken is that since part of the land has been registered on 13.2.2006 before the application was made on 15.2.2006 and further that the entire land has been registered without first obtaining authority letter of exemption, the petitioner is not 16 entitled to any exemption with respect to the said land, there being no provision for refund. This Court does not find any force in the aforesaid stand of the respondent State. Once it is held that under the Industrial Incentive Policy the petitioner being a bona fide unit establishing new industry, namely, Hotel Project, then it has to be held that the incentive/exemption provided in the Bihar Industrial Incentive Policy, 2006 would go to the said unit. So far as the delay in filing the application is concerned, the same has also been done on the very next working day after the registration of the land, the intervening date, namely, 14th February being a Sunday even assuming that the petitioner had not filed the application earlier as asserted by it. Moreover, it is nowhere the case of the State respondents that the petitioner did not intend to establish a Hotel over the land which had been purchased on 13.2.2010 or that the said transaction is not part of the overall transaction of the contiguous piece of 7 Bighas, 5 Dhurs and odd of land. That being the position it cannot be denied the benefit of exemption of stamp duty and registration fee with respect to the land in question under 17 the Industrial Incentive Policy and any condition laid down in the subsequent notification dated 10.3.2007 of the Registration Department has to be read along with the Industrial Policy. It is true that the order dated 10.3.2007 of the Registration Department speaks of an exemption on an authority issued by the Department of Industries with details of land and its location; the same, however, does not mean that under any circumstances the authority cannot be issued subsequent to the act of registration. Moreover, the order dated 10.3.2007 has to be taken as an essentially procedural one in order to carry out the purpose of the Industrial Incentive Policy and such procedural provision cannot be so read as to negate the benefits granted under the Industrial Incentive Policy. This Court also does not find any substance in the objection raised regarding the provision of resolution of Board of Directors and other details as sought in the letter dated 14.5.2010 of the Director of Industries and reiterated in the letter dated 6.7.2010. Thus, this Court is of the view that the petitioner is entitled to exemption in stamp duty and registration fee with respect to the entire area of land on which he intends 18 to establish a Hotel Project including the 4 Bighas of land purchased on 13.2.2010. Consequently the petitioner will be entitled to refund of the amount of stamp duty and registration fee already paid on the different dates of registration. It is also to be kept in mind that when the State Government comes out with an Industrial Incentive Policy then many investors come forward and invest in the expectation that the incentive/exemption promised in the State Industrial Policy will be available to them without any hindrance. Thus, on the promise of incentive/exemption made in the Industrial Policy the investors come forward by making various investments. It is not open to the State authorities to turn around by raising technical objections and deprive such persons of the benefits under the Industrial Policy. Such action of the State authorities is hit by the doctrine of promissory estoppel. In view of the aforesaid discussions and findings, the writ application is allowed. The respondent authorities are directed to refund the amount of stamp duty and registration fee paid by the petitioner for the registration of