VRINDAVAN STUDIOS PVT. LIMITED v. STATE — 1992 DIGILAW 279 (GUJ)

R. A. MEHTA, J. ( 1 ) THE petitioners claim for subsidy is based on the equitable principle of promissory estoppel and is contended that the petitioners had established a film studio in Gujarat State and produced films therein on the basis of the promise of cash incentives as contained in Government Resolution dated 25/07/1975 Annexure B to the petition and clause (b) under the heading (B) Concessions of the said Resolution is relied which provides that the studios will be eligible to a subsidy of Rs. 50 0 per film and such subsidy shall be limited to six films per year per studio and the amount will be released after the commercial release of the film and such concessions will be available for a period of five years from 7/03/1975 or upto five years from the starting of a studio whichever is later provided for a new studio effective steps to set up the studio had been taken within a period of five years from 7/03/1975 Such effective steps have been defied in the resolution According to the petitioners they have established Vrindavan Studio on the basis of this promise and they had produced 16 films and they were released during the period from April 14 197 8/02/1982 and in respect of each of these 16 films they are claiming subsidy at the rate of Rs. 50 0 per film and thus they have made a claim of Rs. 8 lacs. It is further stated that for the first four films as mentioned in Annexure F/1 a subsidy of only Rs. 20 0 per film i. e. Rs. 80 0 has been paid and for seven other films subsidy has been paid at the rate of Rs. 15 0 per film i. e. Rs. 1 5 0 have been paid. Thus in all a subsidy of Rs. 1. 85 lacs has been paid and the balance subsidy of Rs. 6. 15 lacs has not been paid. ( 2 ) A strong reliance has been placed on the judgment of this Court in Special Civil Application No. 1527 of 1978 Annexure E to the petition in the matter of Laxmi Studio. The studio was also paid subsidy at the reduced rates of Rs. 20 0 per film. 6. 15 lacs has not been paid. ( 2 ) A strong reliance has been placed on the judgment of this Court in Special Civil Application No. 1527 of 1978 Annexure E to the petition in the matter of Laxmi Studio. The studio was also paid subsidy at the reduced rates of Rs. 20 0 per film. In that case the court came to the conclusion that the petitioner in that case had set up the studio in the State relying on the policy of the State Government to give financial assistance and incentives for setting up film studios in the State as per the policy laid down in Government Resolution dated 25/07/1975 and that the petitioner had changed the position to his detriment and it was not open to the Government to reduce the amount of subsidy so as to commit the breach of promise held out by the Government Resolution. The Court held that since the petitioner had spent a large amount of Rs. 31 lacs relying on the Government policy of financial assistance and incentives it was not permissible to the State Government to back out from the policy and to tell to the petitioner that he was not entitled to the benefit of the policy as set out in the resolution. The court further held that the petitioner had relied on the Government policy and the promise contained in the Government Resolution of 1975 and had changed the position by setting up a studio by investing a large amount and the petitioner would not have made such a large investment had he known that the Government would change the policy of financial assistance to the studio and the Government was estopped from denying the said benefit to the petitioner. In the present case the petitioners have pleaded a similar situation. ( 3 ) AT the hearing of this petition both the parties have produced large number of documents by way of Government Resolutions correspondence and other papers. They are undisputed and with the consent of the parties they are considered. ( 4 ) IN the facts of the-present case of the judgment in the cases Laxmi Studio is not at all applicable. In that case the petitioner had acted to his detriment relying on the Government Resolution and the promise held out therein. They are undisputed and with the consent of the parties they are considered. ( 4 ) IN the facts of the-present case of the judgment in the cases Laxmi Studio is not at all applicable. In that case the petitioner had acted to his detriment relying on the Government Resolution and the promise held out therein. In the present petition though the petitioner has averred to the similar effect the facts are otherwise. Though the petitioner has not produced the relevant correspond- ence the Government has produced the relevant correspondence and it is seen from the petitioners letter dated 3/06/1976 at page 99 of the paper book that till the date studio was not established and the petitioner has proposed the establishment of studio at Umargam. In reply to that letter the petitioner was told by the Government letter dated 20/07/1976 (page 101) that the policy about the establishment of a film studio in Gujarat was governed under the Government Resolution dated 25/07/1975 but it was pointed out that the revision of the present policy in laying down of certain procedure for recognition of studios was under consideration of the Government and revised policy was likely to be finalised soon. The petitioners were also told that after the new policy is declared the petitioners will have to apply to the Committee for recognition of a studio to be eligible for incentives that will be available to the studios located in Gujarat and the only studios recognised by Government on the recommendation of such Committee will be considered for incentives offered to film studios. Therefore the petitioners were specifically requested to wait for some time till the revised policy is declared by Government and then take appropriate action as per policy and procedure that may be laid down by the Government. ( 5 ) THE petitioners acknowledged this letter by his letter dated 7/09/1976 (Paga 102) and hoped that the Committee may have submitted the recommendations. The petitioners also asked for a copy of the Government Resolution dated 25/07/1975 The Government Resolution on which the petitioners have based this petition contending that on the basis of a promise held out in that Government Resolution the petitioners had acted to his detriment. It is thus clear that till 7/09/1976 the petitioners were not even having a copy of that Government Resolution. It is thus clear that till 7/09/1976 the petitioners were not even having a copy of that Government Resolution. Therefore there was no question of the petitioners having acted on that Government Resolution. In fact when the petitioners were told by the letter dated 20/07/1976 to wait for the revised policy he was waited for the revised policy. The Government by letter dated 18/09/1976 stated that since the present policy was under review it is of no use sending a copy of the Government Resolution dated 25/07/1975 and it was not sent. The revision of the policy was still under consideration of the Government. By letter dated 13/10/1976 (paga 104) the petitioners again inquired about the revised policy for which they were advised to wait for some time and the petitioners stated that they had then to take the decision whether to pursue the project further of drop it. The Government again replied on 20/10/1976 that the policy was still under Government consideration and the revised policy will be known to the public through newspapers after finalisation of the policy. Ultimately on 8/12/1976 a revised policy regarding financial incentives for film studios located in Gujarat State was announced (page 107 ). This Government Resolution provided for the extent of subsidy per film limited to Rs. 20 0 only irrespective of the number of films produced in the studio. ( 6 ) IN view of these facts which were known to the petitioners it cannot be said that any promise was held out by the Government to the petitioners nor can it be said that the petitioners had acted on such promise to their detriment. Therefore the equitable principle of estoppel would not be applicable in the facts of this case. In fact the petitioners have been expressly told in an uncertain terms that the Government Resolution of 25/07/1975 should not be acted upon and in fact the petitioners have not acted upon the same. The petitioners have suppressed all this material correspondence in the petition. These are the facts and correspondence known to the petitioners. ( 7 ) SINCE the petitioners have failed to make out any case of promise and having acted on such promise no question survives for giving any direction to the Government for complying with such promise and paying subsidy of Rs. 50 0 per film. These are the facts and correspondence known to the petitioners. ( 7 ) SINCE the petitioners have failed to make out any case of promise and having acted on such promise no question survives for giving any direction to the Government for complying with such promise and paying subsidy of Rs. 50 0 per film. 8 However that is not necessarily the end of the petition. Under the Government Resolution dated December ( 8 ) 1976 (page 107) the petitioners are entitled to a subsidy of Rs. 20 0 per film. This policy came into force with immediate effect for a period till 31/03/197 8/06/1977 (page 69) the scheme of incentives was directed to be effective upto 31/07/1980 ( 9 ) ON 27/04/1981 the policy was revised and Government Resolution (page 29) was issued. It provided for cash subsidy at Rs. 15 0 per film for a period for five years from the date of recognition. This resolution was to operate from 1/05/1981 till 31/03/1986 ( 10 ) UNDER these resolutions the petitioners were paid subsidy of Rs. 20 0 each in respect of the first four films referred to at page 51-A of the petition in the year 1979-80 and Rs. 15 0 each for seven other films. This latter payment came to be made under the Government Resolution of April 27 198 1/03/1986 The reason for the delay of five to six years in payment of this amount was that the petitioners had not got the necessary recognition for studio. As regards the last five films which were also released during 1978 to 1982 no subsidy has been released at all. A tabular statement of those 16 movies dates of release and subsidy amount paid are as follows: ( 11 ) AS seen above the Government Resolution dated 8/12/1976 and 22/06/1977 provided for cash subsidy of Rs. 20 0 per film till 1/08/1980 Therefore in respect of films at serial Nos. 5 to 12 13 and 16 in the above table were entitled to subsidy at the rate of Rs. 20 0 per film. However subsidy was actually paid at the rate of Rs. 15 0 only for films at serial Nos. 12 to 16. For rest of the films subsidy was payable at the rate of Rs. 5 to 12 13 and 16 in the above table were entitled to subsidy at the rate of Rs. 20 0 per film. However subsidy was actually paid at the rate of Rs. 15 0 only for films at serial Nos. 12 to 16. For rest of the films subsidy was payable at the rate of Rs. 15 0 per film as per Government Resolution dated 27/04/1981 ( 12 ) THE reason for non-payment or delay in the payment is connected with the question of recognition of the studio. Government Resolution dated 8/12/1976 (page 25) provided that the incentive of subsidy would be available only in respect of the films produced through such studios as are recognised by the Government. It was also provided that minimum initial investment in a studio for the benefit of this Government Resolution shall be Rs. 25 lacs and that the studio shall have to apply to the Chief Industrial Advisor for permission of establishing a studio and obtaining recognition from the Government. The petitioners did not fulfil the criteria of minimum initial investment of Rs. 25 lacs. ( 13 ) BY a memorandum dated 3/05/1977 (page 68) the Government was to consider the question of recognition of the petitioners studio and on consideration of the record of the committee for recognition and in relaxation of condition No. (1) of para 2 of the Government Resolution dated 8/12/1976 as a special case the Government granted approval to the recognition of the petitioner studio for the purpose of incentive of subsidy. Condition No. (1) of para 2 was regarding minimum initial investment of Rs. 25 lacs. This was relaxed as a special case and the petitioners were allowed to create assets worth Rs. 25 lacs within a period from two years the date of issue of the memorandum i. e. 3/05/1977 It was further made clear that whatever policy that may be amended by the government from time to time with regard to the incentives shall be applicable to the studio and the films made in the studio. Since the above recognition was conditional on creating assets worth Rs. 25 lacs within a period of two years the matter for according permanent recognition had come up before the Government after the expiry of two years. Since the above recognition was conditional on creating assets worth Rs. 25 lacs within a period of two years the matter for according permanent recognition had come up before the Government after the expiry of two years. There was some doubt about the valuation of certain items and inclusion and exclusion of certain items for the purpose of consideration of the valuation assets. ( 14 ) ULTIMATELY by Government Resolution dated 7/01/1986 the Government granted recognition to the petitioner-studio for the purpose of incentives admissible under Government Resolution dated 27/04/1981 as amended from time to time. Under the Government Resolution dated 27/04/1981 subsidy was payable at the rate of Rs. 15 0 per film. Accordingly subsidy of Rs. 1 5 0 was released in respect of seven films and paid to the petitioners on 31/03/1986 However for no reason no subsidy was released for the remaining five films. It appeared from the file of the Government that this amount of Rs. 1. 05 lacs was released as that was the budget provision available and the noting indicated that for remaining films matter was to be considered at a later stage. However it did not receive any consideration at any stage and it remained unpaid. ( 15 ) THIS question of recognition and subsidy under Government Resolution dated 27/04/1981 and not under the Government Resolution 26/06/1977 was again considered by the Government by its Government Resolution dated 3/10/1988 (page 70 In para 4 of that Government Resolution the Government came to the conclusion that the petitioner studio was fulfilling the criteria of investment of more than Rs. 25 lacs during the year 1978-79 and therefore the Government granted permanent recognition to the petitioner studio with effect from 3/05/1979 being the date on which the studio completed two years of its temporary recognition for the purpose of incentives as admissible under the Government Resolution dated 22/06/1977 as amended from time to time. Under this Resolution of 22/06/1977 the subsidy was payable at the rate of Rs. 20 0 per film till 1/08/1988 Therefore the payment which was made at the rate of Rs. 15 0 for some of these films was required to be enhanced by Rs. 5 0 It is thus clear that under these two resolutions of recognition dated 7/01/1986 and 3/10/1988 the petitioners are entitled to a subsidy at the rate of Rs. 20 0 per film till 1/08/1988 Therefore the payment which was made at the rate of Rs. 15 0 for some of these films was required to be enhanced by Rs. 5 0 It is thus clear that under these two resolutions of recognition dated 7/01/1986 and 3/10/1988 the petitioners are entitled to a subsidy at the rate of Rs. 20 0 per film upto 1/08/1988 and for the films released afterwards at the rate of Rs. 15 0 per film. Therefore the petitioners are required to be paid the outstanding amount of subsidy at the rate of remaining Rs. 5 0 for six films at serial Nos. 5 to 10 (i. e. Rs. 30 0 Rs. 20 0 each for three films at serial Nos. 11 to 13 (i. e. Rs. 60 0 and Rs. 15 0 each for two films at serial Nos. 14 and 15 (i. e. Rs. 30 0 The petitioners are therefore entitled to a remaining sum of Rs. 1 20 0 towards subsidy. This amount has not been paid to the petitioners since a very long time. The petitioners submit that they have been praying for Justice since 1978 and even though initially for four films subsidy at the rate of Rs. 20 0 was released thereafter no subsidy was released for five years even though the petitioners had produced other 12 films in this studio. The only explanation given by the Government is that till the studio was recognised in 1986 after expiry of its initial recognition of two years no subsidy amount could be paid. However when the studio was recognised in 1986 there is no reason as to why the subsidy is not paid for the remaining five films. Even the enhanced subsidy was required to be paid when the recognition was retrospectively given with a specific direction that the benefits of the resolution are to be paid. However no amount has been paid. In these circumstances the petitioners are required to be compensated by way of appropriate rate of interest. The petitioners have claimed interest at the rate of 18% p. a. from the dates of commercial release of the films or from the dates of application for subsidy i. e. from 1979 to 1982. However no amount has been paid. In these circumstances the petitioners are required to be compensated by way of appropriate rate of interest. The petitioners have claimed interest at the rate of 18% p. a. from the dates of commercial release of the films or from the dates of application for subsidy i. e. from 1979 to 1982. Having regard to the fact that the petitioners did not have the recognition till 1986 the payment could not have been made and therefore the petitioners are not entitled to any interest for a period prior to it. The petitioners can be given interest from 1/04/1986 on the amount of Rs. 1 20 0 at the rate of 12% p. a. till the payment is made. ( 16 ) IN the result the petition is partly allowed and the respondents are directed to pay to the petitioners the balance of subsidy of Rs. 1 20 0 within six months from today. Such amounts will also carry interest at the rate of 12 % p. a. from 1/04/1986 till the date of payment. Rule is made absolute accordingly with no orders as to costs. (GDB) Order accordingly. .