~^f~-6if~=2-£>OJ^, HIGHCOURTOFJUDICATUREATBILASPUR.CHHATTISGARH SINQLE BENCH: HON'BLE SHRI S.R.NAYAK, CJ. WRITPETITION N0.1917 OF 1998 O R D E R Postfor pronounGement oftheorder: 24/04/200S '•^Sd/- ChiefJustice •~^A-^c(Pla^^. .'^ B;: •^ ^^-•""^' JD'dA f^- 'v !•-. i HIGHCOURT OF JUDIGATURE ATBILASPUR. CHHATTISGARH SINGLEBENCH: HON'BLESHRIS.R.NAYAK,CJ. WRIT PETITION N0.1917 OF 1998 PETITIONER Hira Industries Limited, a Public Limited Company duly registered under the Companies Act, 1956, havjng its Registered Office at 572-Urla Industries Area.Uria, Raipur(M.P.) Vs. RESPONDENTS 1.. StateofC.G. Through : ite Seeretary, Department of Finance, Govt. of C.G., D.K.S. Bhavan, Raipur. 2. TheSecretary,Departrment|of Commeree &lndustries, D.K.S. Bhavan, Raipur. 3. The Commissioner of Industries, Departrment of Commerce& Industries, Raipur. 4. GeneralManager, Dlstrictlndustries Centre,Jagdalpur,Bastar,C.G. Present: Mr. B.P. Sharma. leamed eounsel for the Detitioner. Mr. Yashwant Singh, learned Govt. Advocate for the State. O RD^ R (Passedon A"9 OfApril, 2006) The petitioner, Hira Indystries Limited.Which is a public limited company, registered under the Companies Act, 1956 having its registered office at 572-Urla Industries Area, Urla, Raipur, Chhattisgarh State, being aggneved by the aetion of the Government of Chhattisgarh and its authoritiesrthe respondents herein, in not reteEising thetransport subsidy payable to them under the "Madhya Pradesh Transport Subsidy Scheme", hasfiledthis writ petitipn. (2) The facts ofthecase, in brief, are as follows: The petitioner-Connpany is engaged in manufacture and production of cement. The^petitioner-Company was initially dbing its --"-"-•- If business in the name and style of "Jai BajrangCement Pvt. Ltd.". That name of the petitioner-Company was subsequently changed as Hira Industries Ltd. in the year 1991. The districts of Bastar and Surguja in the undivided State of Madhya Pradesh and now part of the newly-formed Chhattisgarh State are industrially most backward districts having mainly tribal population. The Government with a view to promote and develop these districts industnally through its Ctepartment of Commerceand Industries, in the year 1978, floated a scheme calted "Transport Subsidy Scheme" fTSS) dated 01-04-1978 to promote establishment of industrial unite in Baster and Surguja districts. For establishment of industrial units the basic amenities like raw-materials and transport facilities by Rail were not available in these districts. The Government, therefore, underthe TSS promised to provide subsidyon transportation charges. This was done as an incentive to the industrial units if they are established in the backward areas. In terms of the TSS, the transportation charges which were ineurred by the Industrial Unite for a distance between the Industrial Unit andthe Raihway Head are to be reimbursed by respondents 2 to 4— Authorities. The petitioner Company taking advantage of the TSS and incentive offered by the respondents established its Gement Plant in Pandripani village, Tahsil Jagdalpur, District Bastar, and the nearest Railway Head underthe TSS as mentioned in clause (4) of Rule6 of the Rules for Transportation Subsidy Scheme is Raipur. (3) The petitioner's Unit commenced its commercial production on 18-10-1986. After commencement of coramercial production, the petitioner - Company was eligible for transport subsidy for a period of fiveyears, that istosay, up to 17-10-1991 , as per the TSS Rules. After 1 ' 1 commencement of the commercial production, the petitioner - Company raised its claim for transport subsidy before the respondents 2 to 4. Initially, the respondents 2 to 4released the amountof transport subsidy in part and that too only in respect of goods transported within the undivided State of Madhya Pradesh. The petitioner—Company under the circumstance madea representation to the General Manager, DistriGt Industries Centre, Jagdalpur, the 4 respondent herein, for Telease of subsidy for transportation of goods outside the State also. The 4 respondent, having appreciated the legitimate claim of the petitioner - Company, recommended to the Commissioner, Department of Commerce and Industries, the 3 respondent herein, for grant of subsidy tor transportation of goods outside the State also. The 3 respondent aeceptingthe recommeridation ofthe 4 respondent, in hisletter to the Government dated 16-09-1994, recommsnded for grant ofsubsidy to the petitioner - Company for transportation of goods outside the State. The Government of undivided State of Madhya Pradesh, the 1 respondent herein, represented by its Secretary, Department of Finance, the 2 respondent herein, in the lightofthe recommendatjonsofrespondents 3 and 4, accepted theclaim of the petitioner - Company for grant of subsidy for transportation of goods outside theStete and directed payment of transport subsidy to the petitioner - Company vide its order dated 16-12-1994. .Accordingly, the 2nd respondent directed the 3''11 respondent to pay the transport subsjdy to the petitioner - Company. It is also stated that another Company, M/s Rudra Cement Ltd. had raised its claim for transport subsidy towards transportation of goods outside the State, and accepting the Glajm of that Company, the Government Bl' V •f-' paid transport subsidy to that Gompany even with regard to transportation ofgoods outside theState. (4) Notwithstandingtheorder /direction ofFespondents 1 and 2 dated 16-12-1W4, the transport subsidy was not paid tothe petitioner Company despiteseveral representations made by the petitioner - Company to the respondents from time to time. It is steted that the TSS remainedinforceuntil 1996-97. (5} The claim ofthe transport subsidy under the TSS had to be paid by the respondents from oiit of the Grant No. 41, Budget Head 2852, lndustries796—TribalArea,Sub-plan 006- Transport Subsidy (Plan) ofthe Budget. Therewas no fund available in the above Grant No. 41. The respondents did hot pay Rs.43,35,451/- claimed by ttie petitioner -Companytowardstransportsubsidy. (6) According tothe petitioner - Company, out of the said sum of Rs.43,35,451/-, sum of Rs.8,44,747/- was deducted on the ground that sum of Rs.8,44,747/- wa's paid in excess to the petitioner - Company in earlier subsidy bills, and in that view pf the matter, the 4' reSpondent by his letter dated 25-05-1995 recommended payment of Rs.34,90,704/- only, and a copyofthat letter is produced asAnnexure-P/8. It is steted that respondents 2 to 4, from time to time, sought funds from the State Govemmentforpaymentofclaimoftransportsybsidyofthepetitioner- Company. The 3 respondent vide his letter dated T5-12-1997 addressed to the Government soughtfor allocation of nec^ssary funds for payment oftransport subsidy to ttie petitioner - Compdny, but, the ):. Government didnot releaseanyfund. AGbpyofthatletterdated 15-12- 19971s also produced as Annexure-P/9. '\ (7) In the circumstance.the petitioner - Company filed this writ petition in the Madhya Pradesh High CourtonOI-05-1998 for a writ of mandamus to the State Government toprovide funds in GranfrNo.41, Budget Head No.2852, Industry No.796 - Tribal Area, Sub-plan 006- Transport Subsidy (Plan) and for a direction to the respondents 2 to 4to release transport subsidy claimed by the petitioner - Company. (8) The respondents contested the writpetition by filing return dated 06-04-2000. The main contention advanced in the return is that the order of theGovernment dated 16-12-1994 vrassubsequentlyfound to be illegal and therefore, the Goyernment cancelled the same by issuing another order dated 23-06-1^9 and, therefore, the very basis of the claim ofthe petitioner - Company is non-existent and in that viewof the matter.thepetitioner—CompanyisnptentiUedtotransportsubsidy. It is contended thatthe orderdated 16-12-1994 was issued in violation of ^ . • the mandatory provisions of Rules of Business governing the exercise 6f powers conferred on the Government by clauses (2) and (3) of Article 166 of the Constitution of India. It was contended by the respondents that since the order of the Govemment dated 23-06-1%9 was not ehallenged, that order is binding on the petitioner -Company. Secondly, itwas contended thatthe TSS had come to anendon 25-11-1989 and this fact was not disclosed by the petitioner - Company deliberately. With regard to the payment oftransport subsidy to M/s Rudra Cement Ltd., it is stated that the Government having realized that the fransport subsidy was wrongly paid to the said company.a notice was issued on »-08-1999to the saidcompanyfor recovery ofthe paymentoftransport subsidy wrongly made. The petitioner - Company field its | rejoinder dated 06-07-2000 to the above retum of the respondents. In the 'v 6 8^ rejoinder, it is stated that the Government order dated 23-06-1999 is an after-thought to defeat the legitimate claim of the petitioner and in fact, the Government had no legal authority to cancel the order made by it eariier on 16-12-1994 directing paymentof transport subsidy in term of the TSS.It is contended that the respondents are bound by the "principles of promissory estoppel" and "legitimate expectation" and they cannot go back on their promise madein the order dated 16-12-1994. Meeting the contention of the respondents that the TSS was in currency onlyunti! 25-11-1989, itis contended by the petitioner - Company that as perthe letterofthe 3 respondentdated 15-12-1997itselfmarkedas Annexure-P/6, the TSS was in existence till the year 1996 - 97 and, therefore, what is stated in the letter dated 25-11-1989, marked as Annexure-R-111, reljed upon by the respondents being priorto the letter of the 3 resppndent datedl 5-12-1997 is factually incorrect. (9) The petitioner - Company filed I.A. No.2608 of 2000 for amendment of the writ petition in the light of the subsequent events - the Government order dated 23-06-1^9 reversing its eariier decision to pay transport subsidy to the petitioner — Company and the refusal of the respondents to pay transport subsidy. By way of amendment, the petitioner - Company sought quashing of the Government order dated 23-06-1999 in addition to theother prayers made in the writ petition. It also sought to take grounds based on the principles of 'legitimate expectation' and 'promissory estoppel'. It also sought to raise the ground that the order ofthe Government dated 23-06-1999 is a nullity in the eye 'l- ' . of law, because, no notice was jssued to the petitioner - Company before passing that order. I.A. N&.2608 of2000 was prdered by the •<-' 'fc1 /^- Court on 31-03-2006. Learned counsel foFthe petitioner hascamedout the amendments in the body of the writ petition. (10) The writ petition was heard for final disposal on 31-03-20(re and 13-04-2006. (11) Shri B.P. Sharma, leamed counsel for the petitioner contended that the respondents having solemnly promised the petitioner — Company to reimburSethe transportation charges in terms oftheTSS and in the light of the Govemment order dated 16-12-1994 directing paymentof transport subsidy, the respondents cannot go back upon their promise and refuse fo pay transport subsidy due to the petitioner - Company. Itwascontendedbythe leamed counselthattheprineiplesof promissory estoppel and legitimate expectation are atfractsd and the respondents are under a legal obligation to pay transportsubsidy as promised bythem underthe TSS. Attacking the Government order dated23-06-1999,.itwas contended that that order is ex fac/e illegal and the one made in utter violation 6f the principles of natural justice. It was pointed out that the Govemment before passing theorderdated 23-06- 1999 cancelling its earlier order dated 16-12-1994, did not issue any notice to the petitioner - Company to have its say in the matter. Alternatively, it was contended that the reasons given by the Government to eancel the order dated 16-12-1994 are factually incorrect. It was contended that theRules of Business governing the exercise of the power under clauses (2) and (3) of Article 166 ofthe Constitution were not violated while issuing the Government order date^l 16-12-1^4 . as alleged by the respondents in ttieir retum. Furthemnore, it was contended that even assuming that the Government ^ order dated K- 16-12-1994 was not issued in perfectconformity with the provisions of Clauses (1) and (3) ofArticle 13 of the Constitution, even then, the Government order dated 16-12-1994 is not vitiated on that count for the provision of Article 168 is only directory and not mandatory, Shri B.P. Sharma meeting with the contention of the respondents that while issuing ceri:ificate (Annexure-P/2) by the 4 respondent certifying that the petitioner - Company is entitled to Rs.43,35,451/- towards transport subsidy, the fact that the transport subsidy would be calculated on the basis of the distanee between the actuat location of the industrial unit and Raii Head was not taken into aeeount, would submit that that contention is untenable. It is pointed out that the petitioner - Company has claimed only the actual freight charges / transport charges from the factory outlet to and from the RaipurRail Head which is the Rail Head as provided under the TSS. Shri Sharma would draw my attention to Annexure-P/Swhich is a chart showing the computed charges / tariff settled and existing at the relevant periods from 1986 to 1 991 as certified by the Raihn/ays and incurred by the petitioner - Company for the transport pf goods to and from the fectory outlet to the Raipur Rail Head. (12) Shri Yashwant Singh, learned Govt. Advocate, for the respondents, per confra, while supporting the impugned actions of the respondents would highlight that the entire claim of the petitioner - Company is based on the Govemmentorder dated 16-12-1994 and since that order was subsequently caneelled by the Government vide its order dated 23-06-1999, theverybasisoftheclaim disappears'and, therefore, the petitioner - Company is not entitled to transport subsidy underthe TSS. Itwas eonte'hded bythe learned Govt. Advocate thatthe reasohs stetetf by the Government to cancel its earlier order dated •^ A- ..-;v. I: ^ / 16-12-1994 are valid and tenable. It was contended that while issuing the order dated 16-12-1994 the mandatory provisions ofArticle 168 of the Constitution were not adhered to. It was next contended bylearned Govt. Advocate that the TSS was in currency between 01-04-1978 and 01-05-1989 pnly, whereas, theclaim put forth by the petitioner - Company relates to the period between 18-10-1986 ahd 17-10-1991 and, therefore, under no circumstance.the petitioner - Company is entitled to transport subsidy after the TSS wasscrapped/withdrawn on 25-11-1989. Meeting thecontention ofthe learned counsel for the petitioner that the respondents are guilty of practising invidious discrimination in the matter of paying transport subsidy, it was pointed out by the learned Govt. Advocate that though the transpprt subsidy was paid to M/s Rudra Cement Ltd. with regard to the transportation ofgoods outside the State.the Government realizing the mistake, had subsequently issued notice to that Company to refund transport subsidy wrongly paid to it. . (13) Having heardleamed counsel for the parties, the questibn that arises for decision is whether the respondents are duty bound to pay transport subsidy under the TSS to the petitioner - Company for a period of five years between 18-10-1986and 17-10-1991 and whether the Government order dated23-06-1999 is valid and legal. (14) I think that the contentions of the tearned counsel for the petitioner-Company that the principles of 'promissory estoppel' and 'legitimate expectation' are attracted to the facts of this case and respondents cannot be permittedto 50 back on their promlise are well- founded. The basie facts are not in dispute. After the ^" Govemment '~\ '^ 10 <':' framed the TSS witheffectfrom 01-04-1978 to promote industrial growth and development in Baster and Surguja Districts, the petitioner established its Cement Plant in Pandripani village, Tahsil Jagdalpur, District Bastar and it commenced its commercial produetion with effect from 18-10-1986. The relevant Rules for Transport Subsrdy Scheme, as approved and issued under the Government of Madhya Pradesh, Commercial and Industries Department Memo No.F16/23/77/B-11 dated 11-04-1978, produced as Annexyre-R-ll by the respondents themselves along with their return, read as follows: "RULES FOR TRANSPORT SUBSIDY SGI-IEME 1. Shorttitle. This scheme may be called the M.P. Transport Subsidy Scheme, 1 &78. 2. Commencement and duration. Itcomesinto foreewith effect from 1 April, 1978 andwilloperateforaperiodQfSyears. • (^q'-cllf&lwy .•qq ^pT ^l-qpT ^ WH %9902/6390/11/^ 'f^^ 1A85 ?m'^RT ?fRRT ^ ^TI^ 4^c|tfly ,Z[1ijMT ^ {ST^ ^^ ^ <^^ ^H^^ ., 3. ADblicabilitv. It is applicable to all Industrial units (barring plantations, refineries and power generating units) exceptthbse in the central publicsector irrespective of their size, in the districts of Bastar and Sarguja in the State. 4 .Definitions. (a) (b) Industrial unJt-meanSan industrialunit where a manufaeturing programme is carried on. New industrial unit-means an Industrial uhit, which has set up manufaGturing capacity ^nd commencesprpduetioriohorafterthedate ^ommencementofthisschen'iie. of 11 (c) Selected areas-means the district of Bastar and Sarguja. (excluding tehsils of Manendragarh and BaikunthpurofSarguja distt.) (d) Raw material-means any raw material actually required and used by an industrial unit in its manufacturing programme as approved by the Government of India/and/or by the State jpovernment. (e) Finished goods-means the gods actually preduced by an industrial unit in accordance with the manufacturing programme approved by the Government of India and/or the State Government. 5. Area covered bv the Scheme. The Scheme is limitedto the industrial unita located in the selected areas only. ^ :<<, 6. Details ofthe Scheme. "(6) (i) A transport subsidy will be given to new industrial unjts located inselected areas for a period of fiveyears from the date the unit goes into production in respect of raw materialswhich are brought into and finished goodswich are taken out ofsuch area." (ii) industrial units will hot be eligible for transport subsidy for raw materials obtained from within the district and finished goods detivered within the district. :f 1 l^ i (iii) Transport subsidy will be calculated on the basis of the distence between the actual location of the factory and railhead indicated for the tehsils of the seleeted districts. (iv)The railheadforthecomputation ofthedistancewill beasbelow:- E 12 ^. s? <.' (v)The Director of Industries in consultation with the Collector of the eoncemed district shall determining the freight charges for road transport by year. in the absence of any such determination during a particular year, the rates fixed dyring the previous year shatl apply. (vi) The subsidy will be payable on the difference between the national raihray freight as determined on the basis of (ii) and the road transport freightsas fixed in para (v) irrespective of the actual mode of transportati'on, provided and road transport freight is higher. (A?q ^ ^erpr I^TTT t ^nIH yTO 16/3/86/11/6T fN^ 20.3.86/24.3.86 ?RTf?m 6 (vi) ^t-f^TRT^TR W^W feu ''PTT- "6 (vi) Uf^* ^T fll^,i?? 5ffS^ MRclg'1 iTFt (^N .sn^RT IRT 'crfc. snqp w I^RT ^t M ^ IR) 3 TT 5^ ^RT cll^Rcb ^,^ ^ ^ •i^ •^ ^ftT, ^lT ^t <OT ?t, 'CT SRTcRT 3[(R ST^FT ^ ^ ^ ^q ^TT I" (yii) Cost of loading or unloading and other handling charges such as at the railway station and at factory site of the industriai unit will not be taken into accouht for the purpose of determiningtransportcosts. •^" District Tehsils Railhead 1. Bastar AIITehsils Raipur 2. Sarguja Bharatpur (Janakpur) Shahadol Surajpur Surajpur Road Pal Gerwa Road Samri Gerwa Road Ambikapur Bisrampur 13 9 ,'-:\ / V (viii) Transport subsidy will also be payable for movement of machinery and spares for new industrial units. (ix) In order to check any misuse of transport subsidy, the Director of Industries will carry out periodica) checks to ensure that the raw materials, finished goods and machinery and spares in respectof which transport subsidy has been given were actually used for the purpose by veriflcation of consumption of the raw materials, and the outputof thefihished foods andthe logbooksformachines. <x) Separate registration for transport subsicfy will not be necessary but the industrial unit desirous of availing transport subsidy will inform the District Industries Officer and the Addl, Director of Industries, Bhilaiof his intention of doing so giving details of the scheme well before the date from which the subsicty is Rrpposed to beclaimed. (xi)Director of Industries will make arrangements not only for the timely scrutiny pf the claims for transport subsidy hut also arrange for prompt payment of the claims. Normally.a transport subsidy claim may be prefeFred by an ihdustrjal unit for the half year b^inning from April. Thesanctibning authority may, at his discretion, entertain more thanoneclaim iffinancial positipn of the industrial unit so warrants. The claims will be submitted within one month ofthe close of the halfyear. Theclaimfortransportsubsidy.completein all resp^cts witl be submitted in for 'A' to the distt. Industries Officer concerned, who will verify and forward the same within three weeks of its receipt in his. office.tothe Addt. Director of Industries, Bhilai. After proper scrutiny, the Addl. Director of Industries will sanction the subsidy elaim within two weeks 6f r^ceipt of theclaim proposal inhisOffiGe. Thedisbyraementof subsidy will be made by the district Industries OfllcfiF ^- 14 <„ ,. < • concerned within 15 days of the date of issue of sanction." Since the petitioner-Company established its Cement plant in Pandiripani village, Tahsil Jagdalpur, District Bastar,when the TSS was iri curreney andit commenced its commercial productionon 18-10-1986, in terms of Rule 6(i) of the Rules for Transport Subsidy Scheme, the petitioner- Company is entitled to transport subsidy fora period of five years from 18-06-1986. In other words, the petitioner-Company is entitled to claim transport subsidy for the period from 18-10-1986 to 17-10-1991. After the cement plant commenced its commercial production with effect from 18-10-1986, in pursuanceof the representation made bythe petitioner- Company, the Government of undivided State of Madhya Pradesh represented by the Secretary, Department of Finance.passed the order on 16-12-1994 granting subsidy ynder the TSS to the petitioner- Company in the light of the recommendations of respondents 3 and 4. Even the subsequent events to which reference is made supra would go to show that even after 16-12-1994the respondents2to 4,fromtimeto time, made representations to the State Government for releasing the necessary fundto pay transport subsidy to the petitipner-Company and similarly circumstanced others. For'example, the third respondent vide his letter dated 15-12-1997 addressed to the Govemment sought for allocation of necessary funds for payment of trahsport subsidy to the petitioner-Company. As pointed outsupra, this writ petition was filed in the High Court of Madhya Pradesh on 01-05-1998. Only thereafterwards, the Govemment of Madhya Pradesh Ipassed the impugned order dated 23-06-1999 cancelling its earlier orcier dated 16-12-1994 onthe ground that the Government order dated 16-12-1994 •^" r: 15 ( v- was issued without complying with the provisionsof Clauses (2)and (3) of Article 166 of the Constitution of India. At this stage itself, it needs to be noticed that the Government issued the order dated 23-06-1^9 cancellingitseaFlierorderdated16-12-1994withoutissuingany.noticeto the petitioner-Company to have its say in the matter. The affected should be appraised is a Constitutional creed flowing from Article 14 of the Constitution of India. It is needless to state that under the Govt. order dated 16-12-1994, the petitioner-Company had acquired the right to claim transport subsidy for the period 18-10-1986to 17-10-1991. The right accrued to the petitioner - Company under the Govt. order dated 16.12.1994 shouid not have been taken away by theGovt.by issuing the order on 23-6-19^ without hearing the petitioner-Company.Only on that shortground.theGovt.orderdated 23-6-1999 is liable to be quashed for utter violation of the principles of natural justice and fair play in action. Eyen otherwise, in myconsidered opinion.the Govt. order dated 23-6-1999 is.ex fecfe arbitrary, unreasonable and is opposed to the principles of 'promissory estoppel'and 'legitimate expectation' for the reasonsto be stated presently. (15) The basis for the Government to pass the order dated 23.6.1999 canceling its eariier order dated 16.12.1994 isthat the Government order dated 16.12.1994 was issued in violation of the Clauses (2) & (3)ofArticle 166 of the Constitution of India. That ground is stated by the respondents in para 4 of the return. We have perused that defense raised by the respondents in para 4 of their return. It is as vague as it could be. Except stating fhat "mandatory provisions of the Rulesof Business so framed while exercising the powers conferred by clauses (2) & (3) of Article 166 of the Constitution of India were given a ^ 16 complete goby while issuing the order dated 16.12.1994", the respondents have not given details as to whicb Rules of Business made by the Governor on the advise of his Council of Ministers under Article 166 have been violated. Even duringthe couree of arguments, learned counselfortherespondentswasnotinapositiontoppintoutviolationof any specific Ryles of Business except vaguely stating that the Government order dated 16.12.1994 wasissued in violation of Rules of Business. Therefore, the above contention was required to be noticed only to be rejected. Clause (1) ofArticle 166oftheConstitutionrequires that all execirtive action of a State Government shall be expressed to be taken in the name oftheGovernQr.It does not require any particular formula Qf words for compliance with Clause (1) of Article 166. What the Court has to see is whether the substance of its requirements has been complied with. A Constitution Bench of the Apex Court in ChitralekhaR. Vs. State of Mysore held that the provisions of Article 166wereohly directory and not mandatory in character and if they were not complied with.it could still be