IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD WRIT PETITION NO. 4513 OF 2010 M/s. SKODA AUTO INDIA PVT. LTD. A Company, having its registered office and factory at Plot No. A-1/1, Five Star Industrial Area, MIDC, Shendra Tq. & Dist. Aurangabad. Through it's Company Secretary, Shri. Trivikram Guda, Age 29 yrs., Occu. Service, R/o. Aurangabad. ....Petitioner. Versus 1. The State of Maharashtra, Through it's Chief Secretary, 2. The Principal Secretary, Rural Development, Mantralaya, Mumbai-32. 3. The Principal Secretary, Industrial Development, Mantralaya Mumbai-32. 4. The Gram Panchayat, Kumbephal, Tq. & Dist. Aurangabad. Through it's Sarpanch. 5. The Gram Sevak, Gram Panchayat, Kumbephal, Tq. & Dist. Aurangabad. 6. The Maharashtra Industrial Development Corporation, having its office at Aurangabad Through its Regional Officer. 2 WP4513.10.sxw 7. The Block Development Officer, Panchayat Samiti, Aurangabad, Dist. Aurangabad. 8. The Standing Committee, Through its Chairman, Zilla Parishad, Aurangabad. Dist. Aurangabad. 9. The Chief Executive Officer, Zilla Parishad, Aurangabad, Dist. Aurangabad. 10. The Deputy Chief Executive Officer, Zilla Parishad, Aurangabad, Dist. Aurangabad. 11. The Hon'ble Minister, Rural Development Department, Mantralaya, Mumbai. ....Respondents. Mr. R. N. Dhorde with Mr. N.R. Bhavar, Advocate for petitioner. Mr. K.B. Choudhari, AGP for Respondent Nos. 1 to 3 and 11. Mr. V.D. Sapkal with Mr. D.R. Kale, Advocate for Respondent Nos. 4 and 5. Mr. S.S. Dande, Advocate for Respondent No. 6. Mr. U.B. Bondar, Advocate for Respondent Nos. 7 to 10. CORAM : A.A.SAYED, J. RESERVED ON : 02/12/2010 PRONOUNCED ON: 31/01/2011 JUDGMENT : 3 WP4513.10.sxw 1. Rule. Rule made returnable forthwith and heard finally by consent of Counsel for the parties. Respective Counsel for Respondents waive service of notice. 2. By the above petition, the petitioner impugns the order dated 16.4.2010, passed by Respondent No.11-Minister, Rural Development, State of Maharashtra, in an application/revision (styled as such by the petitioner) purportedly filed under section 124(6) of the Bombay Village Panchayats Act, 1958 which application/revision came to be dismissed. The said application/revision was filed against the decision of Respondent No. 8-Standing Committee, Zilla Parishad, Aurangabad dated 17.8.2009 dismissing the 2nd Appeal of petitioner, thereby affirming the order dated 15.1.2009 passed by the Respondent No. 7 - Block Development Officer, Panchayat Samiti, dismissing the 1st Appeal of the petitioner. 3. The controversy involved in the petition is in respect of payment of property taxes by the petitioner (hereinafter referred to as 'Skoda') pertaining to Assessment Years 2006-07 to 2008-09 pursuant to the demand bills/notices issued by the Respondent No. 4 - Gram Panchayat. 4 WP4513.10.sxw 4. Respondent No. 1 is the State of Maharashtra through it's Chief Secretary. Respondent No.2 is the Principal Secretary, Rural Development Department. Respondent No. 3 is the Principal Secretary, Industrial Development. Respondent No. 4 is the Gram Panchayat, Kumbephal Taluka, District Aurangabad. Respondent No. 5 is the Gram-Sevak of Respondent No.4. Respondent No. 6 is the Maharashtra Industrial Development Corporation (hereinafter referred to as "MIDC"). Respondent No. 7 is the Block Development Officer, Panchayat Samiti, Aurangabad (hereinafter referred to as 'BDO, Panchayat Samiti'). Respondent No. 8 is the Standing Committee, Zilla Parishad, Aurangabad through it's Chairman. Respondent No. 9 is the Chief Executive Officer, Zilla Parishad, Aurangabad (hereinafter referred to as 'CEO, ZP'). Respondent No.10 is the Deputy Chief Executive Officer, Zilla Parishad, Aurangabad. Respondent No.11 is the Minister, Rural Development, Maharashtra State. 5. Brief facts of the case need to be stated. They are as under: The petitioner SKODA AUTO INDIA PVT. LTD., is a company registered under the Companies Act, 1956, and is engaged in the business of manufacture and sale of cars under the brand name "Skoda". A Memorandum of Understanding dated 13.1.2000 5 WP4513.10.sxw (hereinafter referred to as "MOU") was signed between the Government of Maharashtra and Skoda for implementation of a project of setting up a manufacturing unit of Skoda at Aurangabad. The MOU was signed in furtherance to a Joint Letter of Intent between the Government of Maharashtra and Skoda, which was signed in Czech Republic in October 1997, whereby it was agreed to explore the possibility of establishing a car manufacturing unit in the District of Aurangabad. 6. By notification dated 4.12.1997 under section 32(2) of the Maharashtra Industrial Development Act, 1961, (MID Act for the sake of brevity), Government of Maharashtra acquired certain lands for development as an Industrial Area, by following due process of law and handed over the same to MIDC. MIDC in turn leased the land admeasuring 30 hectares or thereabout to Skoda by executing a Lease Deed dated 03-11-2004 for term of 95 years, which Lease Deed was executed in furtherance to an Agreement of Lease which was entered into between the parties on 23-07-03. MIDC was accordingly levying and recovering fees in the nature of service charges as prescribed by the Government of Maharashtra under the MID Act, 1961, from Skoda in respect of the common amenities provided by it. 6 WP4513.10.sxw 7. On 26.4.2006, the Gram Panchayat-Respondent No. 4 issued demand notice for payment of taxes under section 124(1) of the Bombay Village Panchayat Act, 1958 (hereinafter referred to as "BVP Act"), claiming a sum of ` 45,89,434.93 from Skoda for three years viz. 2003-04, 2004-05 and 2005-06. Skoda, by its letter of even date viz. 26.4.2006 addressed to the Gram Panchayat made a request to grant maximum rebate and also requested the Gram Panchayat to enter into an Agreement for lump-sum contribution in lieu of taxes levied by the Gram Panchayat as per the provisions of section 125 of the BVP Act. Accordingly on 7.12.2006, an Agreement for lump-sum contribution in lieu of taxes, came to be executed between Skoda and Gram Panchayat, whereunder taxes for Assessment Years 2003-04 to 2005-06 were reduced from ` 45,89,434.93 to ` 23,00,000/-. The said Agreement was approved by the Standing Committee, ZP as well as by the Divisional Commissioner, Aurangabad. 8. Despite the Agreement dated 7.12.2006 entered into between Skoda and Gram Panchayat, taxes for the Assessment Years 2003-04 to 2005-06 of the agreed amount of ` 23,00,000/- remained to be paid by the Skoda and notices of demand dated 14.6.2007, 6.7.2007 and 29.8.2007 came to be issued by the Gram Panchayat to Skoda. An attachment notice dated 20.12.2007 also 7 WP4513.10.sxw came to be issued on failure on the part of Skoda to make payment. By its letter dated 4.1.2008 Skoda thereafter terminated the Agreement dated 7.12.2006 under which it had agreed to pay lump-sum contribution of ` 23,00,000/- to the Gram Panchayat in lieu of taxes. 9. Skoda, then proceeded to file Special Civil Suit No. 5302/2007 before the Joint Civil Judge, Senior Division, Aurangabad, challenging the final bill and demand notices. In the said suit, an Application came to be filed by Gram Panchayat under section 9-A of Code of Civil Procedure, 1908 questioning jurisdiction of the Court and maintainability of the said suit. The said suit came to be dismissed by order dated 13.2.2008 in view of the remedy of Appeal provided under sub-section (5) of section 124 of BVP Act. 10. Skoda, aggrieved by that order, filed First Appeal No. 910 of 2008 before this Court, which came to be admitted and is pending. Civil Application No. 2266 of 2008 for stay was filed in the First Appeal and Skoda was granted stay subject to deposit of the amount of ` 23,00,000/-, which was accordingly deposited. On a Civil Application filed by the Gram Panchayat, the Gram Panchayat was allowed to withdraw the said amount deposited by 8 WP4513.10.sxw Skoda in this Court. It is to be noted that the aforementioned notices of demand and litigation arising therefrom is the initial round of litigation between the parties pertaining to Assessment Years 2003-04 to 2005-06 and is not the subject matter of the present petition, though the same is relevant and narrated to give the background on which the dispute between the parties has proceeded. 11. Round two of the litigation with which we are really concerned in the present petition, arises from the demand of taxes by the Gram Panchayat from Skoda of a sum of ` 89,70,850.87p for the Assessment Years 2006-07 to 2008-09. The said amount was demanded from Skoda vide bill dated 17-04-2008 issued by the Gram Panchayat. It is to be borne in mind, that the Agreement dated 17.12.2006 of lump-sum contribution in lieu of taxes between Skoda and Gram Panchayat was pertaining to taxes for the Assessment Years 2003-04 to 2005-06 (and which taxes are the subject matter of First Appeal No. 910/2008) and that for the period April 2006 March 2009 there is no such Agreement of lump-sum contribution in lieu of taxes executed between the said parties. 12. Further notices/reminders were sent by Gram Panchayat 9 WP4513.10.sxw to Skoda on 2.5.2008 and 31.7.2008 in respect of taxes for the period from 2006-07 to 2008-09. The same were replied to by Skoda vide its letter dated 13.8.2008. Gram Panchayat thereafter issued final bill dated 25-09-2008 as per Section 129(2) of the BVP Act. Pursuant thereto, Skoda, this time round, filed an Appeal on 24-10-2008 under section 124 (5) of the BVP Act before the BDO, Panchayat Samiti - Respondent No. 7, questioning the demand. A Misc. Application was also filed by Skoda in the First Appeal for adding Chief Secretary, Government of Maharashtra and Principal Secretary, Industrial Development Department, Government of Maharashtra, as a party Respondents in the said Appeal, which Misc. Application came to be rejected on 28.11.2008. The order dated 28.11.2008 in the Misc. Application was challenged by Skoda before the CEO, Standing Committee, ZP, Aurangabad. In the meantime, however, the BDO, Panchayat Samiti, heard the Appeal finally and dismissed the same by his order dated 15.01.2009. 13. Skoda, thereafter, preferred 2nd Appeal under Section 124(5) of BVP Act on 13-02-2009 before the CEO, Standing Committee, ZP, Aurangabad, calling in question the final order dated 15-01-2009 of BDO, Panchayat Samiti. The hearing of the 2nd Appeal came to be fixed before the Dy. CEO, Standing Committee, 10 WP4513.10.sxw when Skoda pointed out that the Appeal under the provisions of Section 124(5) was required to be heard by the CEO and not Dy CEO, Standing Committee, ZP. It appears that the 2nd Appeal thereafter was placed before the CEO, Standing Committee, ZP. During the pendency of the 2nd Appeal, Gram Panchayat issued an attachment notice dated 12.5.2009, consequent to which Skoda filed Misc. Application dated 14.5.2009 before the CEO, Standing Committee, ZP, for stay. As the said Misc. Application remained pending and was not decided, Skoda filed a petition being Writ Petition No. 3137/2009 in this Court on 22.5.2009, interalia praying for directions to the Respondent No. 8 - Standing Committee, ZP to decide the pending Appeal before it and not to take any coercive action against it till then. The said Writ Petition came to be disposed of by the Division Bench of this Court vide order dated 27.8.2009, by recording the statement of Counsel for the Respondent No. 8 (therein) - Standing Committee, ZP, that the petitioner (Skoda) was already heard on 1.7.2009, and that orders would be passed by the Standing Committee in accordance with law, within a period of 15 days. In view of that statement, the Writ Petition came to be dismissed as withdrawn and the ad-interim relief was directed to be continued for a period of 15 days from the date of communication of the decision of the Appeal in order to facilitate Skoda to avail any alternate remedy if available in law 11 WP4513.10.sxw to challenge the said decision, in the event, the decision was adverse to its interest. It appears that the Counsel for petitioner- Skoda and the Respondent No. 8 (therein) - Standing Committee, ZP, were not instructed properly and the Court was not informed that before the passing of the order dated 27-8-2009 in the aforesaid Writ Petition, the Appeal had already by then been decided by the Respondent No. 8 - Standing Committee vide order dated 17-8-2009. The said order dated 17-08-2009 passed in the 2nd Appeal was communicated to Skoda by letter dated 07.09.2009. 14. Being aggrieved by the order dated 17.8.2009 in the 2nd Appeal, Skoda, then filed an application/revision (styled as such by Skoda) purported by under section 124(6) before the Minister, Rural Development, State of Maharashtra - Respondent No. 11. It appears that in the meanwhile, the Gram Panchayat issued further notices including attachment notice dated 5.1.2010. Skoda, thereafter, filed an Application for stay to the attachment during the pendency of revision/application, which came to be allowed by the Minister. The application/revision came to be ultimately rejected by the Minister by his order dated 16.4.2010. It is this order dated 16.4.2010, rejecting the application/revision of Skoda, which is the subject matter of above petition. 12 WP4513.10.sxw 15. I have heard Shri R.N. Dhorde for the petitioner, learned A.G.P. Shri K.B. Choudhari for Respondent Nos. 1 to 3 and 11, Shri V.D. Sapkal for Respondent Nos. 4 and 5, Shri S.S. Dande for Respondent No. 6 and Shri U.B. Bondar for Respondent Nos. 7 to 10. 16. Shri Dhorde, on behalf of Skoda, has raised the following contentions :- I That considering the clauses in the MOU dated 13-01-2000 between the State of Maharashtra and Skoda and the Lease Deed dated 3-11-2004 between MIDC and Skoda, the doctrine of promissory estoppel would be applicable against the State Government and the Gram Panchayat is estopped from charging any amount over and above the amount of ` 3 lacs towards taxes as specified in the Lease Deed. II That the Gram Panchayat does not have authority to levy taxes when the property is vested in the State Government/MIDC and 13 WP4513.10.sxw that in any event it is not permissible for the Gram Panchayat to levy taxes on Skoda when no amenities/facilities are provided by the Gram Panchayat since Skoda was already paying fees/service charges to MIDC for the common amenities. III That the 2nd Appeal filed by Skoda under section 124(5) of the BVP Act was required to be heard by all the Standing Committee members of the ZP and not by the CEO, Standing Committee, ZP. CONTENTION NO. I 17. Shri Dhorde, learned Counsel for Skoda submitted that the Government of Maharashtra and Skoda had signed a Joint Letter of Intent in Czech Republic in October, 1997, agreeing to explore the possibilities of establishing a car manufacturing unit in the district of Aurangabad and that the Government of Maharashtra had shown its willingness to provide all necessary help, support and assistance to facilitate the start of the project. He submitted that in furtherance of the Letter of Intent, an MOU dated 13th 14 WP4513.10.sxw January 2000, was executed between Skoda and Government of Maharashtra, which MOU was signed by Chief Secretary, Government of Maharashtra, Principal Secretary, Industrial Development, Government of Maharashtra and CEO of MIDC. The learned Counsel alluded to clauses 3 and 12 of the MOU, which read as under :- "3. The final site shall be at the Maharashtra Industrial Development Corporation (MIDC) area at Shendra District Aurangabad. The GOM shall provide the necessary infrastructural support. SKODA shall enter into an Agreement with MIDC and other concerned agencies for all the required infrastructural facilities in terms of land, electricity, water, roads, pollution control, etc. MIDC shall co- ordinate to make such requirements available to the PROJECT at mutually agreed time schedules. These Agreements shall be part of this Memorandum of Understanding. ........... 12. GOM shall assist and facilitate SKODA, to the extent appropriate and permissible under law in settling disputes, if any, with the concerned Gram Panchayat with respect to taxes." 18. Learned Counsel further pointed out the recital in the Lease Deed dated 3rd November, 2004 executed between MIDC and Skoda wherein it is stated as follows:- 15 WP4513.10.sxw "AND WHEREAS, for the purpose of stamp duty, recurring charges such as Government revenue, the Lessor's share of cesses and the Lessee's share of Municipal or village Panchayat rate or taxes which the Lessee has agreed to bear and pay under these presents although by law recoverable from the Lessor has been estimated at Rs. 3,00,000/- (Rupees three lakhs) approximately per annum." 19. Relying upon the aforesaid clauses and recital, learned counsel for Skoda submitted that it was based on the promise of the Government of Maharashtra that Skoda, who is a leading manufacturer of automobiles, decided to establish its manufacturing unit at MIDC, Industrial Area, Shendra Taluka, District Aurangabad and that it was only in pursuance of that promise that the manufacturing unit ultimately came to be established by Skoda. He submitted that as set out in clause 3 of the MOU, the Lease Deed between MIDC and Skoda executed on 3-11-2004 also forms a part of the MOU entered into between Government of Maharashtra and Skoda. He submitted that considering the clauses and recital reproduced above, the Gram Panchayat would now be estopped from levying any amount in the form of taxes over and above the sum of ` 3 lacs per annum in respect of the unit of Skoda. Learned Counsel submitted that 16 WP4513.10.sxw when the Government of Maharashtra had by its conduct made a promise, that promise would be binding upon it and that the Government of Maharashtra cannot go back upon it, particularly when Skoda had acted upon the promise and altered its position thereby and therefore, the doctrine of promissory estoppel would come into play and be applicable as against the Government of Maharashtra. He submitted that the Government of Maharashtra cannot be immune from the applicability of the rule of promissory estoppel which is an equitable doctrine and must yield when equity so requires. He contended that in view of the promise held out the Government of Maharashtra and MIDC which is an instrumentality of the State Government, any levy of taxes by the Gram Panchayat over and above the sum of ` 3 lacs would be bad in law. The learned Counsel draws support from the following rulings: (1) Southern Petrochemical Industries Co. Ltd. Vs. Electricity Inspector & Etio and Others, (2007) 5 SCC 447. (2) M/s. Motilal Padampat Sugar Mills Co. Ltd. Vs. The State of U.P. and others, AIR 1979 Supreme Court 621. (3) Century Spinning and Manufacturing Co. Ltd. and Anr. Vs. The Ulhasnagar Municipal Council and Anr., AIR 1971 Supreme Court, 1021. (4) Union of India and Ors. Vs. M/s. Anglo Afghan Agencies etc., AIR 1968 Supreme Court, 718, wherein the doctrine 17 WP4513.10.sxw of promissory estoppel and legitimate expectation has been discussed in the context of promises held out by the Government/local authorities. 20. Shri Sapkal, learned Counsel for Gram Panchayat in response to the arguments made on behalf of Skoda submitted that the interpretation sought to be put by Skoda to clause 12 of the MOU is incorrect, inasmuch as it is only stated in said clause that the Government of Maharashtra shall assist and facilitate Skoda to the extent appropriate and permissible under law in settling the disputes., if any, with the Gram Panchayat with respect to the taxes. He submitted that there is no such promise held out by the Government of Maharashtra as suggested on behalf of Skoda. As regards the recital clause contained in the Lease Deed dated 3rd November, 2004 between MIDC and Skoda, the learned Counsel submitted that the Gram Panchayat is not bound by the terms of the said Lease Deed or the estimates by MIDC as regards the quantum of Gram Panchayat rates or taxes which were estimated to be around ` 3 lacs per annum by MIDC without any basis, as appearing in the said Lease Deed. He submitted that in any event, Skoda has thereafter itself entered into an Agreement dated 7th December, 2006 with the Gram Panchayat, wherein Skoda, as per the provisions of Section 125 of 18 WP4513.10.sxw BVP Act, agreed to pay a lump sum contribution of ` 23 lacs in lieu of taxes of ` 45,89,434.93 for the period from April 2003 to March 2006 towards Gram Panchayat taxes for open land, constructed and other developed area by Skoda. Learned Counsel adverted to the letter dated 16th April, 2006 written by Skoda to Gram Panchayat wherein Skoda has requested to grant maximum rebate and also requested Gram Panchayat to enter into an Agreement with it for lump-sum contribution in lieu of taxes as per Section 125 of the BVP Act. Learned Counsel questioned the conduct and bonafides of Skoda and submitted that though the amount of taxes was to the extent of ` 45,89,434.93p for the period from April 2003 to March 2006 and the Gram Panchayat had at the request of Skoda entered into an Agreement dated 7th December, 2006, whereunder the amount was reduced to ` 23 lacs, Skoda, however, did not pay any amount to the Gram Panchayat and terminated the said Agreement and denied its liability and proceeded to file a suit in the Court of Jt. Civil Judge, Sr. Division, Aurangabad. Learned Counsel submitted that the Agreement between Gram Panchayat and Skoda had sanction of the Government of Maharashtra also under the provisions of Section 125 of BVP Act. The Learned Counsel submitted that insofar as the subject matter of present notices are concerned, they relate to the demand of taxes for the period thereafter i.e. 19 WP4513.10.sxw from April 2006 to March, 2009, in respect of which there was no Agreement of lump-sum contribution and that inspite of demand bill dated 17th April, 2008 for an amount of ` 89,70,850.87p for the said period, so far Skoda has not paid any amount towards taxes. He contended that having entered into the Agreement for lump- sum contribution in lieu of taxes for the earlier period i.e. from April 2003 to March 2006 and agreeing to pay taxes, it is now not open for Skoda to invoke the doctrine of promissory estoppel in respect of taxes even for the subsequent period viz. April 2006 to March 2009. 21. I have heard the rival submissions of the Counsel on contention No. I. On a plain reading of clause 12 of MOU dated 13th January, 2000, I do not find any such promise held out by the Government of Maharashtra as is sought to be suggested by learned Counsel for Skoda. Clause 12 merely states Government of Maharashtra (GOM) shall assist and facilitate SKODA, to the extent appropriate and permissible under law in settling disputes, if any, with the concerned Gram Panchayat with respect to taxes. In fact, implicit in the aforesaid clause 12, is the fact that Skoda would be liable to pay taxes to the Gram Panchayat. Thus, in my view, there was no such promise by the Government of Maharashtra in the MOU dated 13th January 2000. It is significant 20 WP4513.10.sxw to note that the said MOU itself sets out in clause 11 the eligible taxes, exemptions, benefits, and incentives applicable under the scheme of incentives and other dispensations which Skoda was entitled to. Clause 11 of said MOU reads as under: “11. For abundant clarity, it is hereby understood by both the parties that PROJECT is eligible for tax exemptions, benefits and incentives which shall mean and include, among other things, the following as may be applicable under the scheme of incentives and other dispensations of GOM: (i) Exemption of sales tax, additional sales tax and turnover tax payable on sale of its finished products (as in GR dated 7th May 1993 and the relevant provisions of the Sales tax laws and procedures) (ii) Central sales tax payable on sale of its finished products in the course of inter-State trade (as in GR dated 7th May, 1993) (iii) Sales tax incentives by way of deferral in respect of the sales tax liability (as in GR dated 7th May, 1993) (iv) Refund of Octroi Entry tax payable (in lieu of octroi) if applicable as in GR dated 7th May, 1993. (v) Exemption of Electricity duty in case the PROJECT qualifies for classification as a Mega Project (as in