Research › Search › Judgment

Allahabad High Court · body

2019 DIGILAW 368 (ALL)

Mawana Sugars Limited v. State of Uttar Pradesh

2019-02-12

GOVIND MATHUR, SHAHIBUL HASNAIN

body2019
JUDGMENT : SHABIHUL HASNAIN, J. 1. The questions of facts and law raised in these writ petitions being substantially common, all the writ petitions have been heard together and are being decided by this common judgment. It is not necessary to delve into facts of each case separately and it would be sufficient to refer to the facts and pleadings in Civil Misc (MB) Writ Petition No. 2679 of 2008 in Mawana Sugars Limited Versus State of Uttar Pradesh and Others for deciding this bunch of writ petitions. 2. In order to appreciate the gamut of submissions advanced, it is imperative to extract the crucial and necessary facts leading to the present controversy. 3. The State Government of Uttar Pradesh vide G.O. No. 1631(1)SC/18-2-2004-57/2004 dated 24th August 2004 declared a Sugar Industry Promotion Policy, 2004 (the Policy) to attract investments by private entrepreneurs to establish new sugar mills in the State to ensure better utilization of sugar cane produced in the State and also to provide direct employment to at least 1000 persons by each of the investor. To attract such fresh investments, the State Government promised to provide various benefits in the form of exemptions/remissions in taxes, reimbursements of duties and cash subsidy etc. for varying periods depending upon the level of investment made. 4. Investments made upto Rs. 350 crore (Level-1) for setting up of new sugar mills would entail the benefits for a period of five years from the date of commencement of commercial production from the new facility and investment of Rs. 500 crores or above (Level-2) entailed these benefits for a period of ten years. 5. The preamble of the Policy indicated that the Policy was in the interest not only of sugar industry but in public interest as well. The Policy was amended vide G.O. No.2591SC/18-2-2004-57/2004 dated 17.12.2004 to extend the benefits under the Policy also to investments made for expansion of existing sugar mills and establishment of ancillary industries like distilleries for manufacture of Ethanol and also for cogeneration of power. The implementation and commissioning of the new sugar mills or expansion of existing mills or establishing distillery or cogeneration facility were required to be completed within 3 years from 1.4.2004 to 31.3.2007. The implementation and commissioning of the new sugar mills or expansion of existing mills or establishing distillery or cogeneration facility were required to be completed within 3 years from 1.4.2004 to 31.3.2007. However, the period for implementation and commissioning of the new projects under the Policy was extended by another year from 31st March 2007 up to 31st March 2008 vide G.O. No.1965SC/18-2-2006-185/2006 dated 14th November 2006. The duration and validity of the Policy was thus extended up to 31.03.2008. 6. The promised benefits in the form of exemptions and reimbursements on the investments made for setting up of new sugar mills as well for carrying out expansion in the crushing capacities of the existing sugar mills along with the ancillary plants, are summarized as follows: Exemption/Remission (a)-Uttar Pradesh Trade Tax (now called VAT) and Central Sales Tax on Sale of Molasses (b) -Administrative Charges on Molasses (c) -Entry Tax on Sale of Non-Levy sugar (d) -Purchase Tax on Sugarcane (e) -Registration Charges and Stamp Duty on Land purchase Reimbursement (a) -10% Capital Subsidy (one-time) (b)-Society Commission on purchase of Cane (c)-Sugar Transportation (d) -Additional cost on Sugarcane Transportation The Policy also stipulated that aggregate of benefits shall under no circumstances exceed the total investments made under the Policy. 7. A company/unit making the requisite investment under the Policy, and starting commercial production from the new project(s) within the stipulated period, was required to make an application in the prescribed proforma to the Cane Commissioner for being declared “Eligible” to avail the benefits promised under the Policy. The State Government laid down a detailed and meticulous procedure to consider and examine the eligibility of the applicant for grant of benefits under the Policy. A High Powered Committee under the Chairmanship of the Chief Secretary to the Government was constituted by the State Government vide G.O. No. 1614 SC /18-2-2004-57/2004 dated 23.06.2005, with other senior officers of the rank of Principal Secretary/Secretary to the Government as members, to examine the applications for declaration of an applicant to be Eligible for claiming/availing benefits promised under the Policy. This High Powered Committee would examine those applications which were recommended to it by another Committee constituted vide G. O. No. 1625/18-2-2005-57/04 dated 18.07.2005 under the Chairmanship of the Cane Commissioner of the State Government. This High Powered Committee would examine those applications which were recommended to it by another Committee constituted vide G. O. No. 1625/18-2-2005-57/04 dated 18.07.2005 under the Chairmanship of the Cane Commissioner of the State Government. The Committee headed by Cane commissioner would do the preliminary scrutiny/examination of the application to ensure compliance with the requirements of the Policy to claim benefits. All applications were mandated to be accompanied with various documents including the details of item wise investment in the projects duly certified by a Chartered Accountant, a certificate relating to employment of 1000 persons and a certificate from the Cane Commissioner to the effect that the entire cane price including arrears, if any, had been paid by the applicant. Without these documents, the applications for seeking Eligibility were not to be entertained. 8. After detailed and extensive examination of each application by two high level committees, a certificate of ‘Eligibility’ would be issued by the Cane Commissioner to the applicant. Such company/unit who had been granted Eligibility Certificate would be able to avail various benefits promised under the Policy for a period of 5 years or 10 years as the case may be. The State Government through its various departments issued notifications from time to time permitting availment of benefits under the Policy to those who were declared eligible for availing such benefits. 9. The petitioners, relying and acting upon the promise of benefits made by the State Government under the Policy invested large sums of money in establishing new sugar mills or expanding the crushing capacities of the existing mills and/or establishing ancillary projects like distilleries for manufacture of Ethanol or co-generation of power facilities and irrevocably altered their positions significantly. Some of the petitioners were granted Eligibility Certificates for the level of investments made by them and such petitioners started availing the benefits promised under the Policy. The remaining petitioners, believing the validity of the Policy to be upto 31.03.2008, continued to make investments in the hope that they would be able to complete the projects and start commercial production within the validity period of the Policy; that is 31.03.2008. 10. The remaining petitioners, believing the validity of the Policy to be upto 31.03.2008, continued to make investments in the hope that they would be able to complete the projects and start commercial production within the validity period of the Policy; that is 31.03.2008. 10. Upon the change of the Government in the State, the new Government vide its G.O. No. 1216SC/18-2-2007-185/2006 dated 04.06.2007 (the impugned order) withdrew the Policy with immediate effect without assigning any reason therefor or giving any notice of such withdrawal to the petitioners who had already invested large amounts of money pursuant to the promises and assurances made by the State government under the Policy. 11. Upon sudden withdrawal of the Policy by the State Government through the impugned order, various departments of the Government declined to extend the benefits to even those who had already been granted the Eligibility Certificate on the ground of withdrawal of the Policy by the State Government. 12. Aggrieved by such sudden withdrawal of the Policy and upon denial of benefits already accrued to various petitioners under the Policy, the petitioners filed the present writ petitions. A co-ordinate Bench of this Court vide an Order dated 08.05.2008 granted interim relief to the petitioners who had been granted Eligibility Certificate by inter-alia holding that: “Considering the arguments of the parties counsel and the question involved, we are prima facie, satisfied that the State has not been able to indicate any supervening public interest, which required the scheme to be withdrawn and that the petitioners are entitled to the limited protection of the exemptions at this stage, which they were enjoying on the date when the policy is said to have been revoked i.e. 4th June, 2007. So far as the further benefits/incentives are concerned, that is the matter which is to be considered at the time of hearing of the case”. 13. During the pendency of these writ petitions in this Court, the State Government revoked and cancelled various notifications issued by it from time to time even though the utility of such Notifications had come to an end after 10 years from the expiry of the validity of the Policy on 31.03.2018. In the above compendium of facts, we have heard Shri P.K.Bhalla, the learned counsel for Mawana sugars Limited and other counsel also for other petitioners, namely, Sri Akhilesh Kalra, Sri Altaf Mansoor, Dr. In the above compendium of facts, we have heard Shri P.K.Bhalla, the learned counsel for Mawana sugars Limited and other counsel also for other petitioners, namely, Sri Akhilesh Kalra, Sri Altaf Mansoor, Dr. R. K. Srivastava and Shri Ramesh Kumar Singh, learned Additional Advocate General along with Sri Rakesh Bajpai on behalf of the Respondents. Sri Dhruv Mathur appeared for the intervenor. Shri Bhalla would submit that the Policy was issued by the State Government after deep consideration of the prevailing condition of the sugar industry in the State. The declaration of the Policy was primarily to encourage and attract fresh investment into otherwise dwindling sugar industry in the State causing distress to the cane growers as well as general rural economy. He would further submit that the preamble to the Policy stated that the Policy would on one hand promote the sugar industry in the State generating fresh direct employment to thousands of persons besides indirect employment to many more and on the other hand would also improve the prevailing financial condition of the cane growers and improve the rural economy of the State. He would further submit that the State Government had considered all aspects of the Policy including the financial burden that the Policy would initially cause to the State exchequer but also realized that State would earn higher revenue in the long run in the form of taxes and levies on the larger base after the expiry of the benefit period ie; 10 years on 31.03.2018. He contends that seen from this perspective, the State government saw the Policy to be in the larger public interest as well as huge improvement to the State exchequer. Shri Bhalla would further submit that the Policy was a well considered document which held unequivocal promise of certain benefits in the form of exemptions/remissions from taxes/levies and reimbursement of certain expenses and onetime cash subsidy of 10% on the total investment made. These benefits under the Policy were available for limited period of 5/10 years depending upon the level of investment. According to him, absence of such incentives/benefits would not have brought any fresh investment in the sugar industry in the State and the health of the sugar industry would have further deteriorated. These benefits under the Policy were available for limited period of 5/10 years depending upon the level of investment. According to him, absence of such incentives/benefits would not have brought any fresh investment in the sugar industry in the State and the health of the sugar industry would have further deteriorated. It is submitted that relying upon the solemn and unequivocal promise and assurance of the State Government to allow the promised benefits to eligible companies/units, most of the petitioners raised loans from the banks and financial institutions to make investments for setting up of new sugar mills and/or expanding the existing crushing capacities of sugar mills and establishing ancillary industries like distilleries for production of Ethanol and for co-generation of power. Some of the petitioners like Mawana Sugars were able to complete and commission their projects of setting up of new mills/enhancing crushing capacities and ancillary units of distillery and power generation and were therefore granted ‘Eligibility Certificate’ by the State Government under the Policy to enable them to avail the promised benefits under the Policy as per the level of investment made by them. Some other petitioners continued to make the investments in new projects under the Policy in the hope that these would be able to complete and commence commercial production on or before 31.03.2008; the period of validity of the Policy. Such companies/units who were granted Eligibility Certificate indeed availed the benefits under the Policy till such time that the Policy was suddenly withdrawn/revoked on 04.06.2007 by an executive order issued under G.O. No. 1261SC/18-2-2007-185/2006 dated 4th June 2007. Aggrieved by the sudden withdrawal of the Policy, the petitioners filed these writ petitions before this court and this court, after its prima facie satisfaction that the State has not been able to indicate any supervening public interest which warranted the Policy to be withdrawn, granted an interim relief to the petitioners vide its order dated 08.05.2008. Shri Bhalla would contend that the action of the State to suddenly withdraw the Policy through a non-speaking order, without giving any reason or justification and without any notice to the petitioners is in clear violation of principle of ‘promissory estopple, natural justice and legitimate expectations of the petitioners and therefore is bad in law and illegal. Shri Bhalla would contend that the action of the State to suddenly withdraw the Policy through a non-speaking order, without giving any reason or justification and without any notice to the petitioners is in clear violation of principle of ‘promissory estopple, natural justice and legitimate expectations of the petitioners and therefore is bad in law and illegal. He contends that such withdrawal of the unequivocal promise and assurance held out by the State Government under the Policy has caused grave prejudice to the petitioners who had relied upon and irrevocable promises and have irretrievably altered their positions acting on such solemn promise. The petitioners have borrowed large amounts from the banks in the form of expensive loan to make huge investments pursuant to the Policy. According to Mr. Bhalla, promissory estopple can be the basis of an independent cause of action in which detriment does not need to be proved. It is enough that a party has acted upon the representation made. He would contend that the central principle of the doctrine of promissory estopple is that the law will not permit unconscionable departure by one party from the subject matter of an assumption which has been adopted by the other party as a basis of course of conduct which would affect the other party if the assumption be not adhered to. He further submits that where the Government makes a promise knowing or intending that it would be acted upon by the promisee and, in fact the promisee acting in reliance on that alters his position, the Government would be held bound by the promise and the promise would be enforced against the Government at the instance of the promise. Counsel also referred to an affidavit filed by the State Government in this Court in the case of ‘Kanhaiya Lal Gidwani Vs. State of Uttar Pradesh & Others (Writ Petition No. 4031 of 2006) in which the State Government has stoutly defended the Policy being in the ‘public interest’, non-discriminatory and in the interest of the farmers and workers and for the benefit of the State in the long run. It is contended by him that the State Government cannot be allowed to now resile from the stand taken by it on an affidavit in this Court. It is contended by him that the State Government cannot be allowed to now resile from the stand taken by it on an affidavit in this Court. He contends that there can be no quarrel with the proposition that the promissory estopple must yield to overriding public interest except that in present case there is no such overriding public interest. Mr. Bhalla would further submit that the impugned order dated 04.06.2007 is an executive order and is subject to the same tests in administrative law as to its validity and one of these tests being the well known ‘Wednesbury principle’ under which a court may strike down an abuse of discretionary power on grounds that irrelevant circumstances have been taken into account or relevant circumstances have not been taken into account. Shri Bhalla referred to the Counter affidavit and supplementary Counter affidavit which have been filed by the State Government in reply to the petitions and various other supplementary affidavits filed from time to time during the course of hearing of these writ petitions and pointed out that the State Government has been taking varying stance from time to time regarding the withdrawal of the Policy like first it was due to Policy being discriminatory and causing huge burden on the State Exchequer, then shifting it to the delay in payments of cane price and subsequently to the public interest without substantiating any of these stances. It was urged on behalf of the petitioners, citing judgment of the Constitution Bench of the Supreme Court in case of ‘Mohinder Singh Gill Vs. Chief Election Commissioner (1978) 1 SCC 405 , that when a statutory functionary makes an order on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavits or otherwise. Finally Shri Bhalla would submit that this Policy has been the subject matter of scrutiny before this Court in Civil Misc Writ Petition No. 1853 and 1854 of 2009 in the case of ‘Bajaj Hindustan Limited Vs. State of Uttar Pradesh & Others’ wherein a detailed Order/Judgment had been passed by a co-ordinate Bench of this Court on 17.09.2014. Finally Shri Bhalla would submit that this Policy has been the subject matter of scrutiny before this Court in Civil Misc Writ Petition No. 1853 and 1854 of 2009 in the case of ‘Bajaj Hindustan Limited Vs. State of Uttar Pradesh & Others’ wherein a detailed Order/Judgment had been passed by a co-ordinate Bench of this Court on 17.09.2014. Shri Bhalla has read out the following observations from the said judgment of this Court: “We are of the opinion that the attempt of the respondents in taking away the benefit of exemption with effect from 04.06.2007 and thereby deprive the benefit of the exemption for the remaining period is wholly arbitrary and unreasonable. The petitioner entered into a solemn exercise and discharged its performance pursuant to a promise made by the State Government. The petitioner acted upon the promise. The respondents cannot be allowed to act arbitrarily so as to cause harm and injury following from such unreasonable conduct which in the instant case is writ large and is apparent. In such a situation, the Court is not powerless in directing the respondents to keep its promise. The Court has the power to issue a writ directing the respondents to enforce its promise and perform its obligation”………. “……….In the light of the aforesaid, we are of the opinion that the principles of promissory estoppel are fully applicable. The State Government issued a sugar policy inviting entrepreneurs to invest in the sugar industry and, in return, incentives/exemptions would be given. The petitioner responded and invested Rs. 3000.00 crores and gave employment to over 1,000 persons. The exemption granted by the State Government was availed of by the petitioner. The State Government, at this stage, cannot resile and contend that since the policy has been discontinued, the exemption would no longer be made available to the petitioner. Having acted on the promise made by the State Government , the action of the respondent in issuing the demand notice on the ground that no further exemption would be granted is wholly arbitrary and cannot be sustained. The petitioner has been benefited by the promise made by the State Government. The petitioner has been granted exemption which the petitioner availed of in the past. The petitioner should be permitted to continue to enjoy the exemption till the remainder of the period as per the original promise. The petitioner has been benefited by the promise made by the State Government. The petitioner has been granted exemption which the petitioner availed of in the past. The petitioner should be permitted to continue to enjoy the exemption till the remainder of the period as per the original promise. This is part of the legitimate expectation which is reasonable and which has to be given due weight failing which the action of the respondents in denying the exemption would be unreasonable and arbitrary. The petitioner has a legitimate expectation of being treated in a certain way on account of the promise made by the State Government. “………A bona fide decision of the State Government would justify the requirement of non-arbitrariness and would withstand the test of judicial scrutiny failing which the rule of law would prevail. The ground urged is, that the policy was bringing losses to the State Government and that it was in public interest to withdraw the sugar policy. No detail of the loss incurred has been specified nor any reason given for invoking public interest. Merely stating that the policy was bringing a loss to the State exchequer or that it was not in public interest to continue with the policy was not sufficient. Something more was required to be stated to justify its stand which in the instant case was totally lacking. “……….The contention of the State that the Government can change the policy in public interest cannot be doubted. Their contention that the Government cannot be compelled to do something, which is not allowed by law or prohibited by law, again cannot be doubted. The doctrine of promissory estoppel cannot be invoked for enforcement of a promise made contrary to law because none can be compelled to act against the statute, as held by the Supreme Court in Shree Sidhbali Steels Limited and others Vs. State of Uttar Pradesh and others, (2011) 3 SCC 193 . However, this contention is patently unwarranted as nothing has been brought on record to indicate that the policy was withdrawn on account of public interest or that the policy was contrary to law. In fact, according to us, the policy was issued and implemented in public interest, which has benefited not only the entrepreneurs but the public at large as well as to the State Government. In Dhampur Sugar (Kashipur) Ltd. Vs. In fact, according to us, the policy was issued and implemented in public interest, which has benefited not only the entrepreneurs but the public at large as well as to the State Government. In Dhampur Sugar (Kashipur) Ltd. Vs. State of Uttaranchal and others, (2007) 8 SCC 418 , the Supreme Court held that public authorities have liberty and freedom in framing policies and has a power to withdraw the policy in public interest but such withdrawal, in our opinion, is not absolute unqualified or uncannalized. There is no doubt that the Government while framing policies keep in view several factors and it is not possible for the Courts to consider competing claims and conflict interest but, nonetheless, the Government cannot change its stand arbitrarily merely because it will not follow the policy laid down by the earlier Government, the moment the new Government comes into power. “……………….In the light of the aforesaid admission by the State Government, it is no longer open to the successive Government to take a contradictory stand without supporting it with any documentary evidence. The State Government may be relieved from the liability to carry out its promise on the ground of necessity or expediency. The burden to prove such ground is upon the State Government. The standard of proof required to discharge such burden is strict, heavy and rigorous which the State Government has failed miserably. The State Government has failed to show the material by which action was taken to withdraw the sugar policy. Consequently, we are of the opinion that the principle of promissory estoppel is fully attracted. (emphasis supplied) “…………………The State Government has the competence to float a policy, modify it or to rescind it. That is the executive power given to it by law. The discretion to withdraw the policy is wide enough, but what is imperative is that the withdrawal of the policy must be fairly made on the ground of necessity or expediency and should not be arbitrary. Every action of the State has to be tested on the touchstone of the basic requirement of Article 14, namely, fairness in the action by the State. Every action of the State has to be tested on the touchstone of the basic requirement of Article 14, namely, fairness in the action by the State. We find that in the instant case, the decision taken by the State Government in withdrawing the policy was not taken in public interest and that the decision taken was arbitrary, and unreasonable.(emphasis supplied) “……The Government Order, by which the policy was withdrawn, is an executive order. Such Government Order can only apply prospectively and at the same time cannot unsettle the vested right that has already accrued in favour of the petitioner. The promise made in the policy was changed from a purely executive order to a legislative measure. Once a legislative enactment is made by a notification under a statute, the same cannot be taken away by an executive order by revoking the policy. Such revocation of the policy does not affect the existence of the notification which will continue to remain operative till it is revoked. The submission of the learned standing counsel appearing for the State, in this regard, cannot be accepted. So long as the notifications are in force, the petitioner would be eligible to avail the benefits available therein. The action of the respondents in not allowing the benefits under the notification and raising a demand for payment of sugarcane purchase tax is wholly illegal. So long as a statutory notification exists, the same cannot be annulled by an executive order. In the light of the aforesaid, on the principle of promissory estoppel and legitimate expectation, the action of the respondents in denying the benefits under the sugar policy and the notifications issued under various Acts is deplorable, unreasonable and arbitrary which cannot be sustained. The petitioners are liable to be given the benefits under various notifications issued in pursuance of the sugar policy on the units established by it.(emphasis supplied) Shri Bhalla fairly conceded that the Co-ordinate Bench did not quash the impugned order dated 04.06.2007, despite being specifically pleaded by the petitioner in that petition, on the ground that ‘Even though the withdrawal of the sugar policy is arbitrary and has been passed without any application of mind, we are not inclined to quash the said order dated 04.06.2007 as we are of the opinion that the petitioner would get the relief even without quashing the order dated 04.06.2007’. He further submitted that the State Government and the intervener L.H. Sugar Factories had filed Special Leave Petitions in the Supreme Court challenging the above decision of this Court in writ petitions nos. 1853 and 1854 dated 17.09.2014. Hon’ble Supreme Court, after hearing the parties, issued Notice on the said SLPs and these SLPs were converted into Civil Appeals. While the State Government pleaded its power to change/modify the Policy as a policy decision, the Intervener raised various contentions and challenged the Policy being in violation of Article 14 and 19(1)(g) and other constitutional provisions. Hon’ble Supreme Court after hearing the parties in detail on various dates dismissed the Civil Appeals of the State Government and the intervener by its common Order dated 07.03.2018. The Hon’ble Supreme Court in its Order dated 07.03.2018 held as under: “Heard learned counsel for the parties and perused the record. We do not find any ground to interfere with the impugned order. The appeals are accordingly, dismissed” Shri Bhalla submits that following the doctrine of merger, the order of the Co-Ordinate Bench of this Court dated 17.09.2014 stands merged into the Order of the Supreme Court and has to be treated as the law declared by the Supreme Court which is binding on all Courts including this Court in terms of Article 141 of the Constitution. He would further submit that it shall now deemed to be held by the Hon’ble Supreme Court that the withdrawal of the Policy by the State Government is unreasonable, arbitrary, without application of mind and in violation of the principle of Promissory estopple and is illegal. Given this position, the Counsel urged that even though the Order dated 17.09.2014 did not quash the impugned order but given the above background, this Court should now quash the impugned order as most of the petitioners in these proceedings are not exactly placed as the petitioner in writ petition no. Given this position, the Counsel urged that even though the Order dated 17.09.2014 did not quash the impugned order but given the above background, this Court should now quash the impugned order as most of the petitioners in these proceedings are not exactly placed as the petitioner in writ petition no. 1853 and 1854 and therefore it will be in the interest of justice that the impugned order dated 04.06.2007 is quashed and the petitioners are allowed and granted all the benefits that they are eligible or would become eligible including grant of eligibility certificate for the level of investment made by them if such petitioners had completed their investment and commenced commercial production from their new units under the Policy before 31.03.2008 Following judgments have been cited by the Counsel for the petitioners in support of his contentions: 1. Motilal Padampat Sugar Mills Co. Ltd Vs. State of U.P. (1979) 2 SCC 409 2. Manuelsons Hotels Private Limited Vs. State of Kerala & Others (2016) 6 SCC 766 3. State of Punjab Vs. Nestle India Ltd., (2004) 6 SCC 465 4. Indian Express Newspapers (Bombay) Pvt Limited Vs. Union of India (1985) 1 SCC 641 5. Mohinder Singh Gill & Another Vs. Chief Election Commissioner (1978)1SCC 405 6. S.V.A. Steel Re-rolling Mills Limited Vs. State of Kerala and Others (2014) 4 SCC 186 7. Kunhayammed and Others Vs. State of Kerala & Others (2000) 5 SCC 359 8. Devi Multiplex and Another Vs. State of Gujrat and Others (2015) 9 SCC 132 9. Union of India and others Vs. Godfrey Philips India Ltd; (1985) 4 SCC 369 10. Union of India Vs. Shri Hanuman Industries and Another (2015) 6 SCC 600 11. Vacmet India Ltd., Vs State of U.P. (Civil Misc Writ Petition No. 2047 of 2015 and) Civil Misc Writ Petition No. 27962 of 2016) The State Government filed its counter affidavit claiming that G.O. dated 04.06.2007 withdrawing the Policy is infact a policy decision by the State Government taken after due application of mind due to huge financial burden and in the larger interest of the public specially the cane growers and the same is not amenable to writ jurisdiction. The petitioners filed rejoinder to the Counter affidavit by the State whereafter the State Government filed a Supplementary Counter Affidavit on the ground that due to oversight, certain relevant facts could not be mentioned in the Counter affidavit filed earlier in the matter. It is stated in the Supplementary Counter Affidavit that as a result of Sugar Industry Promotion Policy-2004, an unhealthy competition has been generated between the sugar factories. It is submitted that the state government was finding it impossible to meet the load of financial outlay required to fund the Policy and therefore the state Government in its wisdom decided to do away the Policy. Hostile discrimination within sugar sector itself was cited another reason for withdrawing the Policy. Various judgments from the Supreme Court were cited in support of the argument that the State Government is competent to take policy decisions and amend/modify/withdraw such policy decisions in the larger public interest. Shri Ramesh Kumar Singh, learned Additional Advocate General, appearing on behalf of the State Government submitted that the continuation of the Policy would cause heavy financial burden on the State Exchequer and also it has not served the objective of timely payment to the cane growers. It has also been stated on behalf of the State Government that the counter affidavit filed in case of Kanhaiya Lal Gidwani’s case was filed in different circumstances at the point in time when the State government was of the view that the Policy is going to succeed but later on the State experienced and wisdom dawn upon them that it is going to cause losses to the State Government and hence the Policy was withdrawn. The State Government also filed an affidavit dated 28.11.2017 stating that one of the reasons for withdrawal of the Sugar Industry Promotion Policy, 2004 was that the Sugar Mills were not paying the cane price dues regularly as and when due to the farmers causing immense hardship and suffering to them contrary to the objects of the Policy. It was further stated in the said affidavit that the decision to withdraw the Sugar Industry Promotion Policy, 2004 has been taken in the overwhelming public interest. It was further stated in the said affidavit that the decision to withdraw the Sugar Industry Promotion Policy, 2004 has been taken in the overwhelming public interest. Subsequently, by another affidavit dated 19.05.2018 filed in the case of Mawana Sugars Limited, it is stated on behalf of the State Government that inspite of the fact that the petitioner is entitled to have the benefit of the judgment and order dated 17.09.2014 the actual and net result is that the Petitioner is not entitled for any incentive/remission/ exemption since it remained in dues in respect to cane price in each quarter of the period of five years starting from the date of commercial production as well as during the subsequent period till date. It was further stated in the said affidavit that the order dated 04.06.2007 withdrawing the SIPP-2004 has not been quashed rather upheld by the judgment and order dated 17.09.2014, therefore, now the SIPP-2004 is not in existence since 2007, the effect of the same is that petitioner neither can claim Eligibility Certificate Level-2 nor the same can be granted by the respondents. This was the stance taken by the State even after its Civil Appeal in the Supreme Court had been dismissed. However, Shri Singh subsequently submitted that the State Government has constituted a Committee to look into the claims of all the petitioners and get it examined by “Vishesh Lekha Parikshan”. However, it was not clear whether that Committee would look into the claims of the petitioners by ignoring or without being influenced by the withdrawal of the Policy by the State Government’s Order dated 04.06.2007 and the Notifications which have been withdrawn subsequently during the pendency of these writ petitions before this Court. Shri Singh submitted that an affidavit would be filed by the State Government clarifying its stand. The State Government filed an affidavit on 10.09.2018 stating that the State Government vide G.O. dated 15.06.2018 constituted special Audit Team/Committee to examine the claims of the Companies/Units claiming the benefits/exemptions under SIPP-2004 in furtherance of the judgments of the Hon’ble Courts. The G.O. No. 1324/46-2-18-185/06TC dated 15.06.2018 constituting the Audit team was placed on record. The State Government filed an affidavit on 10.09.2018 stating that the State Government vide G.O. dated 15.06.2018 constituted special Audit Team/Committee to examine the claims of the Companies/Units claiming the benefits/exemptions under SIPP-2004 in furtherance of the judgments of the Hon’ble Courts. The G.O. No. 1324/46-2-18-185/06TC dated 15.06.2018 constituting the Audit team was placed on record. It was further stated in the affidavit dated 10.09.2018 that the Special Audit Team /Committee shall examine all Applications/claims preferred in furtherance of the Sugar Industry Promotion Policy-2004 in the light of the Notifications issued under different Statutes and Government Orders, as per their present legal status. Shri Singh also referred to the order and judgment dated 16.11.2010 of the co-ordinate bench of this Court in the case of Bajaj Hindustan Vs State of U.P. and Others (Civil Misc. Writ Petition No. 17118 of 2010) to emphasize the point that only applications made during the life time of the Policy were eligible to be considered by the State Government for extending the benefits of the Policy and according to him the life time of the Policy was only upto 04.06.2007 when it was withdrawn by the state government. Mr. Dhruv Mathur representing intervener L.H.Sugar Factories submitted that the Policy causes discrimination between the those sugar mills who opt for it and those which could not and therefore is in violation of Articles 14 and 19(1)(g) of the Constitution of India. He also challenged the competence of the State Government to bring the Policy. We have considered the rival contentions of the parties and have also perused the record. The common questions of facts and law involved in these petitions are:- (I) Whether the withdrawal of the Policy by the State Government vide the impugned order dated 04.06.2007 and denial of accrued benefits thereunder to the eligible petitioners suffers from breach of principle of ‘Promissory Estoppel’, Natural Justice and ‘Legitimate Expectation’? (II) Whether the benefits in the form of exemptions/reimbursements/capital subsidy as promised by the State Government under the Policy could have been suddenly withdrawn by the State Government despite the fact that the petitioners had already made large investments pursuant to the promise and assurance made by the State Government under the Policy and had significantly altered their position? (II) Whether the benefits in the form of exemptions/reimbursements/capital subsidy as promised by the State Government under the Policy could have been suddenly withdrawn by the State Government despite the fact that the petitioners had already made large investments pursuant to the promise and assurance made by the State Government under the Policy and had significantly altered their position? (III) Whether the application for declaration for eligibility of those petitioners who had completed their projects at either level on or before 31.03.2008 could be rejected on the ground that the Policy had been withdrawn on 04.06.2007? (IV) Whether those petitioners who have been granted Eligibility Certificate under the Policy could be deprived of the benefits under the Policy merely because there had been some delay in making cane payment to the farmers and whether delay in payment to the cane farmers could be a justification for revocation of the Policy, denying the benefit to the petitioners and whether for any default, if any, in an individual case, would be a valid ground for revoking the Policy itself? (V) Whether once the Notifications were issued to exempt the sugar industries covered by the policy from payment of various taxes and those Notifications having not been withdrawn during the period upto which benefits could be claimed by the petitioners under the Scheme, mere executive order passed by the State Government, would have the effect of revocation of the Policy as well as nullifying the Notifications already issued? (VI) Whether the State Government could have withdrawn the exemptions and revoke the incentive Scheme for no valid reasons and whether these pleas of promissory estoppal or legitimate expectation would render the action of the State government, a nullity or bad in law? (VII) Whether the incentives unequivocally promised and exemptions granted could have been taken back without there being any overwhelming public interest, by taking an entirely different stand? Most of the above questions would stand answered by the judgment of this Court dated 17.09.2014 in the case of Bajaj Hindustan Limited Vs. State of Uttar Pradesh in Civil Misc Writ Petition Nos. 1853 and 1854 of 2010. The said decision of this Court has merged with the Order dated 07.03.2018 of the Supreme Court in Civil Appeal Nos. 7121-7122 and C.A. Nos 7121-7122. State of Uttar Pradesh in Civil Misc Writ Petition Nos. 1853 and 1854 of 2010. The said decision of this Court has merged with the Order dated 07.03.2018 of the Supreme Court in Civil Appeal Nos. 7121-7122 and C.A. Nos 7121-7122. The Order of the Supreme Court came to be passed in Civil Appeals after grant of leave and therefore the Judgment dated 17.09.2014 of this Court stood merged with the Order of the Supreme Court dated 07.03.2018. As recently held by the Five Judge Bench of this Court in the case of ‘Dr. Archana Mishra and others Versus State of U.P. and others in Writ appeal No. 51212 of 2018 (AIR 2018 Allahabad 278), once the decision of this Court merged in the Order of the Supreme Court, it would not be legally permissible for this Court to consider the correctness or otherwise of the decision of this Court. This Court is thus bound by the Order of the Supreme Court dated 07.03.2018 which now included Order dated 17.09.2014 passed in case of Bajaj Hindustan Limited in writ petitions nos. 1853 and 1854. Hon’ble Supreme Court in the case of S.V.A. Re-Rolling Mills Vs. State of Kerala and others [ (2014) 4 SCC 186 ] has in para 30 of the report held that: “Before laying down any policy which would give benefits to its subjects, the State must think about pros and cons of the policy and its capacity to give the benefits. Without proper appreciation of all the relevant factors, the State should not give any assurance, not only because that would be in violation of the principles of promissory estopple but it would be unfair and immoral on the part f the State not to act as per its promise.” In the instant case, the petitioners made huge investment in the State of U.P. under a bona fide belief that the State Government shall grant all the benefits promised under the Policy. There is no reason why the State Government should not be compelled to make good such promise like any other individual. It is worthwhile to reiterate the principle of promissory estopple as explained by our Supreme Court as early as in 1978 in most celebrated case on the subject namely ‘Motilal Padampat Sugar Mills Vs. There is no reason why the State Government should not be compelled to make good such promise like any other individual. It is worthwhile to reiterate the principle of promissory estopple as explained by our Supreme Court as early as in 1978 in most celebrated case on the subject namely ‘Motilal Padampat Sugar Mills Vs. State of U.P. (1979) 3 SCC 409 as under: "The law may, therefore, now be taken to be settled as a result of this decision that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one, howsoever high or low, is above the law. Everyone is subject to the law as fully and completely as any other and the Government is no exception. It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter. It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel. Can the Government say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of "honesty and good faith"? Why should the Government not be held to a high "standard of rectangular rectitude while dealing with its citizens"? There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations, but let it be said to the eternal glory of this Court, this doctrine was emphatically negatived in the Indo-Afghan Agencies case and the supremacy of the rule of law was established. There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations, but let it be said to the eternal glory of this Court, this doctrine was emphatically negatived in the Indo-Afghan Agencies case and the supremacy of the rule of law was established. It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it. But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual. The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society and the constant endeavor of the Courts and the legislature must, therefore, be to close the gap between law and morality and bring about as near an approximation between the two as possible." As far as the issue of payment of cane dues to the farmers is concerned, it is to be noted that this condition was not contained in the Policy as originally announced on 24th August 3004 but was brought in by subsequent amendment dated 17.12.2004 to the Policy whereby it was stipulated that ‘various concessions/exemptions would be available only when the company/unit has paid the entire cane price including arrears. It is clear from the Policy documents that an application for being declared Eligible had to be accompanied with a certificate from the Cane Commissioner to the effect that the entire cane price has been paid. Without such a certificate from the Cane commissioner, the application for declaring eligibility would not have been entertained. It is therefore no brainer that the ‘Eligibility Certificate’ issued to some of the petitioners by the State Government would be only after the applicant had produced such a certificate. Without such a certificate from the Cane commissioner, the application for declaring eligibility would not have been entertained. It is therefore no brainer that the ‘Eligibility Certificate’ issued to some of the petitioners by the State Government would be only after the applicant had produced such a certificate. The concept of ‘timely payment’ or ‘always in compliance of timely payment’ of cane price payment throughout the life time of the Policy was not envisaged in the original or the amended Policy and the only requirement was that the payment of entire cane price including arrears, if any, be made before availing the benefits under the Policy. It is nobody’s case that those petitioners who had been granted the ‘Eligibility Certificate’ did not make the full payment of entire cane price even if there was some delay in making such payment to the farmers. It would be interesting to make a reference to ‘Co-generation and Distillery Promotion Policy-2013’ attached by the State Government to its affidavit dated 28.11.2017 filed in this Court, which stipulated that the benefits under that policy would be available only if the company/unit has made ‘timely payment’ of entire cane price. If ‘timely payment’ was so critical element of the Policy, State Government would have employed similar language as used in the case of Distillery Policy of 2013. The contention of the delay in ‘timely payment’ of cane price is therefore clearly an afterthought on the part of the State. It has been held by the Constitution Bench of the Supreme Court in the case of Mohinder Singh Gill (supra) that when statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the form of affidavits. Otherwise, an order bad in the beginning may, by the time it comes to the Court on account of a challenge, get validated by additional grounds later brought out. In any case, some delay in payment of cane price to the farmers could not be used as a ground to withdraw the Policy or deny the benefits thereunder when the petitioners had invested thousands of crore rupees acting and relying upon the solemn and irrevocable promise made by the State Government. In any case, some delay in payment of cane price to the farmers could not be used as a ground to withdraw the Policy or deny the benefits thereunder when the petitioners had invested thousands of crore rupees acting and relying upon the solemn and irrevocable promise made by the State Government. The case of Bajaj Hindustan Ltd (Civil Misc Writ Petition No. 17118 of 2010) relied upon by Shri Ramesh Kumar Singh, learned Additional Advocate General to buttress his argument regarding ‘life time of the Policy’ is of no help as context of that case was entirely different and the said judgment was does not define or clarify as to what is the life time of the Policy. When the State Government itself had extended the validity of the Policy till 31.03.2008 then the life time of the Policy would be till 31.03.2008. There is no quarrel with the legal proposition that the State is empowered to withdraw a Policy but if such Policy contained some unequivocal promise and assurance and someone has altered his position acting on such promise then such withdrawal shall have to pass the test of promissory estopple. There is also no quarrel with the proposition that promissory estopple must yield to overriding public interest except that the present case does not contain any such overriding public interest. We also do not find any merit in the submissions made on behalf of the intervener. The intervener had raised similar pleas before the Supreme Court in its Civil Appeal and argued his Civil Appeal including all these contentions but Hon’ble Supreme Court dismissed the Civil Appeal. The intervener in any case has very limited role in court proceedings and cannot be allowed to once again raise these contentions before this Court. In view of the above discussion, we have no hesitation to hold that withdrawal of the Policy by the State Government is in violation of the principles of Promissory Estopple, Natural Justice and Legitimate Expectations and the G.O. No. 1216SC/18-2-2007-185/2006 dated 04.06.2007 is vitiated and illegal. It is, therefore, hereby quashed and set aside. In view of the above discussion, we have no hesitation to hold that withdrawal of the Policy by the State Government is in violation of the principles of Promissory Estopple, Natural Justice and Legitimate Expectations and the G.O. No. 1216SC/18-2-2007-185/2006 dated 04.06.2007 is vitiated and illegal. It is, therefore, hereby quashed and set aside. As a consequence, we hold that the petitioners are entitled for consideration of all the benefits in the form of exemptions/ remission/reimbursements as per the Sugar Industry Promotion Policy-2004 and various Notifications issued thereunder from time to time for the entire period of the validity of the Policy in the light of the observations made above. Since the matter has become quite old it will be appropriate that the cases may be examined and benefits may be given within a maximum period of two months from the date of the order. In the result the Writ petitions are allowed with no order as to costs.