S. D. SHAH, J. ( 1 ) RULE was issued in this petition on 6/05/1992 and the learned Counsel appearing for the parties were heard at length and with the consent of the parties such hearing was treated as final hearing Pursuant to such hearing following Judgment is rendered ( 2 ) BY this petition under Article 226 of the Constitution of India the petitioner has moved this court for issuance of a writ of mandamus against the State Bank of India for directing the State Bank to extend to the petitioner the benefits of Rehabilitation Scheme contained in its Circular dated 6/02/1987 ( 3 ) IN order to appreciate the entitlement of the petitioner for extension of the benefits under the said Scheme it is necessary to refer to the relevant facts hereunder: ( 4 ) THE State Bank of India has sanctioned to the petitioner various credit facilities and as on 5/07/1990 amount of Rs. 29 40 558 was due and payable by the petitioner to the bank The respondent-Bank has already instituted Civil Suit No. 3244/90 in the City Civil Court to recover the said amount with interest and cost from the petitioner The petitioner has appeared in such suit and has filed his Written Statement ( 5 ) VARIOUS credit facilities were sanctioned in favour of the petitioner in August 1986 and within a period of one year it was found that petitioner had been running the account irregularly and that he has overdrawn the facilities and no repayment schedules were maintained by the petitioner. ( 6 ) BY letter dtd. 5/01/1988 the petitioner requested for increasing the limit and he also applied for Rehabilitation finance under the Scheme of Rehabilitation and nursing programme for Sick Small-scale Industrial Units The said letter of the petitioner dtd. 5/01/1988 is to be found at Annexure-B to the petition In the said letter the alleged irregularities in operating the account and inability of the petitioner to pay back dues of the bank is virtually admitted and petitioner has shown his readiness and willingness to close down its Roller Printing Department and to deposit the sale proceeds of copper rolls and printing machine It has also shown its readiness and willigness to bring down its total outstanding from Rs. 29 lacs to Rs. 29 lacs to Rs. 13 lacs The petitioner has therefore requested the respondent-bank to sanction some mid-term loan and to extend all other benefits available to a Small-scale Units under the Rehabilitation Scheme of the respondent-bank. The Scheme of Rehabilitation of Sick Small-scale Industrial Units offered by the respondent-bank is to be found in its circular dtd. 6/02/1987 which is at annexure A to the petition. From the said Scheme it becomes clear that the bank expected virtually the need of rehabilitation of sick units in the Small-scale Industries Sector. However for that purpose it defined Sick Smallscale Industrial Unit viability norms and incipient sickness. By clause of the said Scheme a sick SSI unit is one if it has incurred cash loss in the previous accounting year and is likely to continue to incur cash loss in the current accounting year and has an erosion on account of cumulative cash losses to the extent of 50 per cent or more of its net worth. The Unit shall be regarded sick also even if it has continuously defaulted in meeting four consecutive quarterly instalments of interest or two half-yearly instalments of principal on term loans and there are persistent irregularities in the operation of its credit limits with the bank. It appears that petitioner should satisfy the requirements of being called Sick Small-scale Industrial Unit. ( 7 ) IN order to be eligible for benefits under the Rehabilitation Scheme the second requirement is that the Unit should be potentially viable unit and Clause-5 of the aforesaid Scheme provides the guidelines as to when the unit can be regarded as potentially viable. A Unit may be regarded as potentially viable if it would be in a position after implementing a relief package spread over a period not exceeding 5 years from the commencement of the package from banks financial institutions Central Government or State Government and other concerned agencies as may be necessary to continue to service its repayment obligation as agreed upon including those forming part of the package without the help of the concessions after the aforesaid period. The repayment period of restructured (past) debts should not exceed 7 years from the date of implementation of the package. The repayment period of restructured (past) debts should not exceed 7 years from the date of implementation of the package. It is for the respondent-bank to undertake as to viability viability of the unit and to decide thereafter as to whether the unit is entitled to the benefit flowing from the Rehabilitation Scheme. ( 8 ) IN order to be eligible for such benefits under the Scheme it is also stipulated that the sickness of the unit is incipient sickness and what is incipient sickness is provided by Clause 3 of the Scheme. The object of this clause is to see that sickness is arrested at the incipient stage itself. The management of the units financed are required to inform the bank if they face problems which could lead to sickness and to restore the units to normal health. The branch official of the bank are advised to remain in constant contact with new units so that there can be early detection of sickness and the prompt remedial action. What action should be taken by branch officials in cases of incipient sickness are narrated in Clause 3. ( 9 ) IF the aforesaid conditions are satisfied and unit is found to be potentially viable the bank has discretion to grant such reliefs and concessions to the extent indicated in the Annexure-II to the said Circular. It is also stated that such reliefs/concessions are not required to be given as a matter of course in all cases. It is for the bank to decide on the nature and extent of concessions necessary warranted within the parameters depending upon the merits of each cases. ( 10 ) IT appears that in view of the aforesaid Scheme of rehabilitation of SSI Units and in view of the application made by the petitioner dtd. 5/01/1988 the eligibility of the petitioner was considered by the respondent and by Report dtd. 22/08/1988 submitted by Deputy General Manager which is at Annexure-C to the petition it is found that petitioner-company did satisfy the requirement of being incipient sick Unit on the incipient stage of being a sick SSI unit and also unit which was found to be potentially viable unit. In the said Report in the last paragraph it is recommended that petitioner being potentially viable certain limits under the Rehabilitation Scheme should be sanctioned on terms and conditions mentioned in the Annexures to the said Report. In the said Report in the last paragraph it is recommended that petitioner being potentially viable certain limits under the Rehabilitation Scheme should be sanctioned on terms and conditions mentioned in the Annexures to the said Report. It may be noted that power to sanction such limit is with Chief General Manager. ( 11 ) IT appears that the said recommendation and/or proposal did. 22nd 1988 prepared by Deputy General Manager was not prepared according to Techno Economic feasibility/ viability of the unit. It was also found that the report did not establish the genuinness of the movement of goods among the associated concerns of the unit and therefore the said recommendation of the Deputy General Manager in favour of the petitioner was not accepted and the petitioner was accordingly informed. ( 12 ) IT may be mentioned that it is the case of the respondent-bank that in October 1988 technical Consultancy cell of the bank was requested to undertake the study into the technical feasibility and economic viability of the unit with enhanced level of bank borrowing. The report was received by bank in January 1989. Consistent with the report the petitioner has submitted fresh proposal in August 1989. The fresh proposal would only be considered on petitioner satisfying number of requirements and for that purpose several meetings were held with the Director of petitioner-Company starting from November 1989 upto February 1990. In the course of such negotiation the petitioner company was requested (A) to approve the appointment of an approved firm of Charted Accountants for verifying the books of accounts to satisfy whether there was diversion of funds of the entries made were book entries showing repayment to Directors. IT was found that there was diversion of funds and payments were made to the Directors Creditors; (B) to offer further co-lateral security since the security already offered and available with the bank was not sufficient to discharge the existing liability; and (C) the petitioner was requested to bring Rs. 13. 33 lacs towards working capital margin. ( 13 ) IT appears that petitioner did not agree initially to the aforesaid requirement and to the requirement of appointment of approved Chartered Accountant. The petitioner did not agree to offer any further co-lateral security. The petitioner agreed to bring working capital of Rs. 5 lacs. 13. 33 lacs towards working capital margin. ( 13 ) IT appears that petitioner did not agree initially to the aforesaid requirement and to the requirement of appointment of approved Chartered Accountant. The petitioner did not agree to offer any further co-lateral security. The petitioner agreed to bring working capital of Rs. 5 lacs. ( 14 ) IN the aforesaid facts and circumstances the respondent-bank found that the outstanding in the account of the petitioner was Rs. 29. 30 lacs. The losses incurred were entirely financed by bank borrowing. The sale of the company has fallen. The companys fund borrowed from the bank were utilised in making payment of the Directors and other creditors. The company did not offer any satisfactory arrangement for repayment of the loan advanced which became payable for which the Civil Suit was already filed. The petitioner-company also insisted for the waiver of interest from 1/04/1988. The account of the company was irregular. There over-drawing from the account. The overdrawings were permitted in order to assist the company but it is found that the company has misused the overdrawals by making payment to its Directors. In the aforesaid circumstances the bank rejected the proposal for rehabilitation office petitioner unit in April/may 1988 because the bank has found that the unit has made consistent loss and the major cost of sickness was mismanagement diversion of funds to other sister concerns and other several reasons. The bank therefore has rejected the proposal for benefits under the Rehabilitation Scheme. ( 15 ) IT is this decision of the bank not to extend the benefits under the Rehabilitation Scheme to the petitioner which is under challenge in this petition. ( 16 ) MR. K. G. Vakharia Ld. Counsel appearing for the petitioner has vehemently submitted that the action of the respondent-bank in not extending the benefits available to the petitioner under the Rehabilitation Scheme is arbitrary unresonable and discriminatory and further that under the doctrine of Promissory Estoppel the respondent-bank is bound to extend the benefits available under the Scheme to the petitioner. He has submitted that after grant of credit facilities to the petitioner there was textile crisis and petitioner-company was unable to withstand the situation which was created by the forces beyond its control. He has submitted that after grant of credit facilities to the petitioner there was textile crisis and petitioner-company was unable to withstand the situation which was created by the forces beyond its control. It was during this period that Rehabilitation Scheme was announced on the February 1987 and therefore the Managing Director of the petitioner-company started negotiation with the bank for extension of benefits under the said Scheme. According to him petitioner was advised to apply for the benefit of said Scheme and petitioner accordingly applied on 5/01/1988 and in fact the said proposal of the petitioner was assessed and analysed and as per the report of Deputy General Manager it was recommended that petitioner was entitled to the benefits under the Scheme. He further submitted that pursuant to the said report the bank has started granting banking facilities to the petitioner and in fact outstanding dues of the bank thereafter increased to the extent of about Rs. 29 17 339 It is his submission that the increase in the outstanding amount was on account of the part implementation of the Rehabilitation Scheme. It is because of grant of such facilities that the unit which was closed was partially started from September 1988. In his submission the petitioner could make payable to the creditors and the workers from out of advances made by the banker. He further submitted that in fact the petitioner sold his machinery and assets so as to meet with the outstanding debts. However in his submission by restarting the said unit the petitioner has incurred further losses and therefore it was incubment upon the respondent-bank to extend all further benefits under the Scheme to the petitioner. ( 17 ) THE aforesaid claim of the petitioner is stoutly resisted by the respondent by submitting that in fact no promise is held out by respondent-bank to the petitioner or to any party and that the said rehabilitation scheme is nothing but letter of instruction to the bank officials so that case can be forwarded for benefits under Rehabilitation Scheme and genuine cases can be considered by the Authority. The ultimate power is with the bank and as stipulated in the letter itself the case for Rehabilitation can be rejected by the bank. The ultimate power is with the bank and as stipulated in the letter itself the case for Rehabilitation can be rejected by the bank. It is for the bank to decide on the nature and extent of concessions necessary warranted within the parameters laid down in the said letter depending upon the merits of each case. The said letter therefore cannot be and should not be treated as promise or assurance held out to the borrowers at large. It is further submitted that in fact the fresh proposal of the petitioners was submitted in August 1988 for extension of benefits under the Rehabilitation Scheme and it was considered and petitioner was called upon to comply with three requisitions set out hereinabove. Since the petitioner failed to comply with such requisition and since the detailed study undertaken established that the working of the petitioner unit was dismal and unsatisfactory and that the unit was being miss-managed and there was huge diversion of funds to the sister concerns and that the major amount advanced by the bank was being utilised for making payment to the Directors there was no to extend the benefit under the Scheme. It is their further case that in fact this petition is counter blast to the Civil Suit filed by the respondent-bank to recover the outstanding amount and since in the Civil Suit prohibitory orders were obtained the petitioner has rushed to this court. It is their further case that in fact this petition is counter blast to the Civil Suit filed by the respondent-bank to recover the outstanding amount and since in the Civil Suit prohibitory orders were obtained the petitioner has rushed to this court. In the submission of the bank it is not a fit case to grant any relief to the petition especially when the director of the petitioner-company was called upon to comply with the following (I) contribution of working capital; (ii) furnishing of additional security; (iii) offer the viable programme of repayment of the amount which has already become due and payable; (iv) agree to appointing of Auditors and Chartered Accountant; and (v) to repay to the bank any funds which were diverted to the sister concerns instead of utilising the same for working units;and when the Director of the petitioner-company has failed to comply with the aforesaid requirements doctrine OF PROMISSORY ESTOPPEL ( 18 ) INITIALLY it was the view of the courts in India that no estoppel would apply against the Government in the matter of operation of statute Rule of nonapplication of estoppel against the Government at times produces very harsh results for a person who acting on official advice or assurance or representation later found that the advice given or representation made was wrong or was not binding on the Government The Doctrine of Promossory estoppel was applied by the Supreme Court of India in the case of Union of India v. Anglo Afghan Agencies Ltd. reported in AIR 1968 SC 718 The Court applied the doctrine against he Government on equitable grounds The Government notified in the gazette an export promotion scheme under which an exporter of woollen textiles and goods was to be entitled to import raw materials equal to 100 per cent of the F. O. B. value of exports In case the Textile Commissioner considered that the declared value of the goods exported was higher than the real value of the goods he could investigate the matter assess the correct value of the goods exported and issue an entitlement certificate accordingly In the case before the Supreme Court the exporter claimed to have exported goods worth Rs. 5 lacs The Textile Commissioner issued to him an export entitlement of only 1. 5 lacs The Textile Commissioner issued to him an export entitlement of only 1. 99 lacs The exporter challenged the order of the Textile Commissioner The Government resisted the claim by submitting that the scheme was merely administrative in nature and therefore created no rights in the exporter and cast no obligation on the government to issue the import licence to him The court rejected the governments contention and held that the Scheme was binding on the Government. Even conceding that the Scheme was merely the executive in character the court found that the Government was not entitled at its mere whim to ignore the promises made by it The Court made following pertinent observations:"under our jurispudance the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it nor claim to be the judge of its own obligation to the citizen or an ex parte appraisement of the circumstances in which the obligation has arisen". The Court further observed"if our nascent democracy is to thrive different standards of conduct for the people and public bodies cannot ordinarily be permitted" ( 19 ) ONCE again the doctrine was applied by the Supreme Court of India against the Municipality in Century Spinning and Mfg. Co. v. Ulhasnagar Municipality reported in AIR 1971 S. C. 1021 In the said case when particular industrial area was being included within the municipal limits there was opposition. The Municipality agreed to exempt the existing industrial concerns in the area from the levy of octroi duty for seven years. Latter on the Municipality tried to impose octroi duty. This was challenged by the Industrial Units The Supreme Court found that when the representation of a public authority had been acted upon by a private party to its prejudice it could be enforced on the ground of equity in appropriate cases even though the representation did not result in a contract owing to the lack of proper form. This was challenged by the Industrial Units The Supreme Court found that when the representation of a public authority had been acted upon by a private party to its prejudice it could be enforced on the ground of equity in appropriate cases even though the representation did not result in a contract owing to the lack of proper form. The Court observed as under"public bodies are as much as private individuals to carry out representations of facts and promises made by them relying on which other persons have altered their position to their prejudice The obligation arising against an individual out of his representation amounting to a promise may be enforced ex-contractu by a person who acts upon the promise when the law requires that a contract inforceable at law against a public body shall be he certain form or be executed in the manner prescribed by statute the obligation if the contract be not in the form may be enforced against it in appropriate cases in equity. ( 20 ) THE aforesaid principle was examined in greater detail in the case of Motilal Padampat Sugar Mills v. Uttar Pradesh reported in A. I. R. 1979 SC 621 by Justice P. N. Bhagwati (as he then was ) The doctrine found its most eloquent exposition in this case The Government of Uttar Pradesh gave an assurance through a statement published in the newspapers to the petitioners that new industrial units in the State would be exempt from sales lax for a period of three years to enable them to find firm fooling in the initial stage. Acting on the said assurance the petitioners established a mill in the State. Acting on the said assurance the petitioners established a mill in the State. Latter the government retracted is assurance and sought to impose sale lax on the petitioners This was challenged through a writ petition The Supreme Court held that the government was bound by the promise of assurance given by it to the petitioners on the ground of equity Justice Bhagwati (as he then was) expounded the relevant principle underlying promissory estoppel as follows:"when one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future knowing or intending that it would be acted upon by the other party to when the promise is made and it is in fact so acted upon by the other party the promise would be binding on the party making it and he would not be entitled to go back upon it if it would be inequitable to allow him to do so having regard to the dealing which have taken place between the parties and this would be so irrespective whether there is any pre-existing relationship between the parties or not". . ( 21 ) WHEN the government makes a promise knowing or intending that it would be acted upon by the promiser in fact it does act upon the promise and alters his position then the government would be held bound by the promise and the promise would be enforceable against the government at the instance of the promisee. ( 22 ) MR. K. G. Vakharia Ld. Counsel appearing for the petitioner has referred to and relied upon the decision of learned Single Judge of this Court in the case of Gujarat State Financial Corporation v. Lotus Hotels Pvt. Ltd. reported in A. I. R 1982 Guj. 198 and the decision of the Supreme Court conforming the Judgment of the Gujarat High Court Court which is reported in A. I. R 1883 SC 848 The said decision in substance reproduced the doctrine of Promissory estoppel as propounded by the Supreme Court in the aforesaid cases and Mr. Vakharia in substance relies upon the very principle propounded by the Supreme Court in the Case of M. P. Sugar Mills ease (supra) Mr. Vakharia in substance relies upon the very principle propounded by the Supreme Court in the Case of M. P. Sugar Mills ease (supra) Mr. Vakharia has also referred to and strongly relied upon the decision of Andhra Pradesh High Court in the case of Venkateshwara Rice and Flour Mill v. Union Bank of India and Anr. reported in 63 Company Cases 483 In the submission of Mr. Vakharia the facts of the said case are that on the reasoning accepted by the learned Single Judge of Andhra Pradesh High Court this court should also issue direction to the respondent-bank Before Andhra Pradesh High Court the petitioner was a sick unit which had taken loan from the Nationalised bank The petitioner became a sick industry and it approached the bank to apply the nursing programme to the petitioner to habilitate and to regenerate its activities so as to restore its normal health The petitioner relied upon the circular issued by the Reserve Bank of India from time to time On inspection the subordinate officers of the bank found that petitioner was a sick industry and that nursing programme would be applied to it However they started collecting certain amounts from the petitioner which gave rise to the filing of the petition After undertaking close study of the various circulars issued from time to time by Reserve Bank of India and right of the petitioner to act on such circulars the learned Single Judge of Andhra Pradesh High Court found as under :"it is thus clear that due to inherent financial constraints and mounting debt liability the small-scale industry is groaning under its burden seeking to tide over this difficulty. The nursing programme is intended to come in aid to stabilise such an industry The source to lend the finance is the bank so that the additional inputs would be applied to generate internal surplus The desire of the bank officials should be to resuscitate the sick unit Guidelines are mere guides Each case would present its peculiar facts In the light of those facts the officers would carefully analyse and wisely apply the nursing programme with a desire to sustain the industry so that the generated internal surpluses would be ploughed back into the industry to attain stability in its working but not with immediate animation to recover the finance advanced In that process the repayment programme should be carefully worked out in such a way that there would remain enough surplus funds in the desired level If the motivation of the entrepreneur is to swindle public money without appreciable personal stakes involved therein the extension of the nursing programme would be an added impetus to further escalation or when its rehabilitation is beyond redemption; of course in such situations the application of the nursing programme would be futile exercise and the officer may allow the industry to meet its natural death. Obviously keeping this objective in view the Reserve Bank of India itself has cautioned the officers in proceed with the implementation of the nursing programme with an approach to a nursing programme to improve the capability of the unit to generate internal surplus " ( 23 ) IT is true that the nursing programme is a step in aid to establish economically sound units in the process of establishing an egalitarian State affording economic opportunity to the small entrepreneurs. The nationalised bank therefore must adopt sympathetic approach and a proper altitude and understanding towards sick units The nationalised bank should attempt to translate into action the nursing programme in its true spirit and should not try to distort the policy of reviving and resuscitating a sick or a practically dead unit. The nationalised bank therefore must adopt sympathetic approach and a proper altitude and understanding towards sick units The nationalised bank should attempt to translate into action the nursing programme in its true spirit and should not try to distort the policy of reviving and resuscitating a sick or a practically dead unit. The learned Single Judge of Andhra Pradesh High Court further found that the approach of the bank was not proper and that the officers of the bank did not make any sincere efforts to implement the nursing programme in its true spirit He therefore issued necessary directions to the bank to reschedule the repayment of the advances made by the respondents and also issued direction to convent the advances into long-term loans ( 24 ) IN my opinion the aforesaid decision of Andhra Pradesh High Court stands on the peculier facts of the case before the Court The Ld. Single Judge has accepted that each case would present its peculiar facts However the desire of the bank officials should be to resuscitate the sick unit and to carefully analyse and wisely apply the nursing programme with a desire to sustain the industry However it is rightly found that when a motivation of the entrepreneur is to swindle public money without appreciable personal slakes involved therein the extension of the nursing programme would be an added inputs to further escalation or when its rehabilitation is beyond redemption the application of the nursing programme would be a futile exercise In the case before me the respondent-bank has not denied the benefits of rehabilitation scheme to the petitioner but has called upon the petitioner to comply with three requirements set out hereinabove The detailed inspection and report has revealed that the Directors of the petitioner were siphoning away the funds to their sister concerns and that major chunk of finance was being utilised for making payment to the Directors themselves and therefore there three conditions were suggested. The petitioner was initially not ready and willing to fulfil the said three conditions. It was therefore found by the respondent-bank that extending the benefits of the scheme was not going to help the unit in any manner because the unit was hopelessly mismanaged and major cause of the sickness was such mismanagement. The petitioner was initially not ready and willing to fulfil the said three conditions. It was therefore found by the respondent-bank that extending the benefits of the scheme was not going to help the unit in any manner because the unit was hopelessly mismanaged and major cause of the sickness was such mismanagement. There were attempts as diversion of the funds of the unit to other sister concerns and the dealings of the unit with the respondent-bank were also found to be not above board. Therefore on overall consideration of all the factors relevant to the extension of the said benefits to unit the bank has taken considerate and conscious decision of not extending the benefits of the Scheme. Under the Scheme decision is to be taken by the bank and in my opinion a well informed and well considered decision is taken by the bank. The petitioner has rendered itself not entitled to the benefit of the scheme because of its own misconduct and mismanagement and it cannot be said that attitude of the respondent-bank is unsympathetic or is frustratingly clinical. The bank has found that the application of rehabilitation scheme would be a futile exercise and it would be better to allow industry to meet its natural death. In that view of the matter I do not think this court would be justified in applying the doctrine of promissory estoppel especially when equity does not justify extension of such benefit to the petitioner. ( 25 ) THE matter can be viewed from another angle. As found by Justice P. N. Bhagwati (as he then was) in the case of Motilal Padampat Sugar Mills (supra) the law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society. The endeavour of the court therefore should be to close the gap between law and morality. The doctrine of promissory estoppel is regarded as a significant judicial contribution in that direction. Therefore in the very judgment certain exception to the doctrine of promissory estoppel are spelt out by the court. Being an equitable doctrine it must yield when equity so requires. If the authority can show from the facts and circumstances that it would be inequitable to hold the Government by its promises the court would not raise equity in favour of the promisees. Being an equitable doctrine it must yield when equity so requires. If the authority can show from the facts and circumstances that it would be inequitable to hold the Government by its promises the court would not raise equity in favour of the promisees. Secondly the court also would not enforce the promisee if the public interest suffers in fulfilling the promise made by the Government. It is only when the court is satisfied that the overriding public interest requires that the authorities should not be bound by the promise and that the authority should be freed from it that the court would refuse to enforce the promise. In my opinion when the bank was satisfied that extending the benefit under the Rehabilitation Scheme was not going to serve any useful purpose and that finances advanced by the bank were in fact being mismanaged and fund was being siphoned away for payment to the Directors of the company it would not be just and proper for this court to compel the bank to give the benefit under the Rehabilitation Scheme because it would be both against the public interest and against equity. I am therefore on the opinion that the present case would fall within the exception laid down in M. P. Sugar Mills case. (supra) ( 26 ) NO case is therefore made out by the petitioner for grant of any relief and petition therefore must fail. In the result the petition fails. The same is dimissed. Rule is discharged. There shall be no order as to costs. Rule discharged. .