NON REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 4986-4987 OF 2010
(Arising out of Special Leave Petition (Civil) Nos. 17068-17069 of 2005)
Ras Resorts & Apart Hotels Limited & Anr. ....Appellants
Versus
Union of India and Ors. ....Respondents
JUDGMENT
AFTAB ALAM, J
1. Leave granted.
2. Heard learned counsel for the parties.
3. Appellant no.1 is a public limited company incorporated and
registered under the Companies Act and appellant no.2 is one of its share
holders and Managing Director. The appellants went to the Bombay High
Court seeking a direction to the respondents to grant the company interest
subsidy and to pay to the financial institutions/banks 5% of the amount of
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interest charged by them on the loans taken by the appellants for
construction of their hotel at Silvassa. In support of the claim, the appellants
tried to invoke the plea of promissory estoppel relying upon the Draft
Seventh Five Year Plan 1985-90 and certain communications received by
the company from the officers in the Department of Tourism, Dadra and
Nagar Haveli, UT. The Bombay High Court rejected the appellants’ claim
and dismissed the writ petition (No.2705 of 1990) by judgment and order
dated November 4, 2004. The appellants then filed a review petition (bearing
No.19 of 2005). This too was dismissed summarily by the High Court by
judgment and order dated March 17, 2005. This appeal is brought to this
court against these two orders.
4. The brief facts relevant for the purpose of these appeals may be stated
thus. Another public limited company, (described as a sister concern of
appellant no.1) made an application before the respondents on May 28, 1984
for grant of lease of a piece of land. It was given 1.35 hectares of land in
Silvassa, Dadra and Nagar Haveli on lease on June 12, 1984. The lease was
for construction of a three-star hotel over the leased out land. Appellant no.1
took another piece of land measuring 1.39 hectares, adjoining the piece of
land earlier allotted to its sister concern, on lease on February 6, 1985 but it
was not for any specific purpose. Since no construction was made on the
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leased out land within the stipulated period of one year, the appellant no.1
was given a show cause notice dated May 9, 1985 why the allotted plot
should not be forfeited to the government without any notice? The company
gave its reply on May 11, 1985 explaining the circumstances leading to the
delay in the construction of the hotel. On October 14, 1985, appellant no.1
got the piece of land given on lease to its sister concern conveyed in its
favour. And finally on September 2, 1986 the appellants began the
construction of the hotel building after performing Bhoomi Puja.
5. It is stated by the appellants that the Union Territory of Dadra and
Nagar Haveli being a backward area failed to draw any significant tourist
inflow. Hence, with a view to attract investments in the area, which in turn
would help in the promotion of tourism industry the government of the
Union Territory offered a number of incentives to the hoteliers. One such
offer, according to the appellants, was to subsidise interest on loan by 5%.
One of the materials on which the appellants strongly rely in support of their
case is the draft seventh five year plan 1985-90 and Annual plan 1985-86.
In the plan document it was provided as follows:
“…It is proposed to subsidise interest on loan by 5%. Besides,
Administration offers 25% subsidy on fixed assets as the
territory has been declared as “No Industry District by
Government of India”…”
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6. There is no dispute that the appellants have received 25% subsidy on
fixed assets and the present proceeding relates to their claim for 5% interest
subsidy.
7. We completely fail to see how the draft seventh five year plan or the
annual plan for the year 1985-86 can support the appellants’ claim based on
the plea of promissory estoppel. The annual plan for the year 1985-86, as
part of the seventh five year plan was prepared by the Administration of
Dadra and Nagar Haveli in or about January 1985. The first piece of land
was given on lease to the sister concern of appellant no.1 on June 12, 1984,
on the basis of an application made on May 28, 1984. The lease was for the
express purpose of constructing a three-star hotel over the leased out land. It
is, thus, evident that the land was taken at a point of time when there was not
even a scent of any interest subsidy. Though, the land was formally
conveyed in favour of appellant no.1 by its `sister concern’ on October 14,
1985, it appears that the allotment in favour of the so called sister concern
was benami in nature, for the show cause notice for not completing the
construction in terms of the lease was given (before the formal conveyance
of the land in its favour) to appellant no.1 and it was appellant no.1 that had
given reply to the show cause notice. Appellant no.1 was, thus, fully aware
that the only purpose for which the land could be used was construction of a
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hotel and further that the condition to construct a hotel over it was attached
to the lease from before the proposal for interest subsidy was mooted. After
formally acquiring it, they amalgamated with it the other piece of land taken
on lease by them, thus bringing for all intent and purpose the second piece of
land too under the same condition that was attached to the first one. In the
aforesaid facts and circumstances, we fail to see, how it can be contended by
the appellants that they made huge investments and altered their position on
the basis of any representation made by the respondents.
8. More importantly, there was no firm offer or representation. The
seventh five year plan was in the draft form and the subsidy on interest was
merely a proposal. According to the respondents, the proposal for interest
subsidy was only mooted in the seventh five year plan pertaining to the
period 1985-90 and the proposal for grant of 5% interest subsidy was
included for consideration as part of overall comprehensive plan for
development of tourism in the Union Territory. This plan was to be included
in the annual plans for subsequent years subject to the approval and sanction
by the Planning Commission and the Government of India. But the Planning
Commission declined sanction to the proposal. Hence, no specific scheme
was formulated to grant interest subsidy and the terms and conditions
subject to which payment of 5% interest subsidy would be made was also
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not spelled out. The necessary details in this regard are furnished by the
respondents in their counter affidavits filed before the High Court and this
Court. In paragraphs 5 and 6 of their counter affidavit filed in this Court the
respondents have even reproduced the relevant extracts from the minutes of
the meetings held at the Planning Commission on February 28, 1985 and
March 6, 1986 from which it is clear that the proposal mooted out in the
draft five year plan 1985-90 failed to get the Planning Commission’s
approval. For want of the sanction from the Planning Commission the
proposal did not get finalised and the scheme of interest subsidy never came
into being for enforcement. It is contended by the respondents, and in our
view rightly, that a mere proposal in the plan that was yet to be finalised
cannot be taken as an offer or a representation to the appellants.
9. The next material on which the appellants rely heavily is an exchange
of correspondence with respondent no.4, the Deputy Conservator Forests &
Tourism In-charge. On August 6, 1985 the appellants wrote a letter to him
seeking confirmation that 5% interest subsidy was available. Respondent
no.4 gave his reply by letter dated August 29, 1985 stating:
“….I am to inform that we have proposed to provide for
adequate incentive to hotel industry….It is proposed to
subsidise interest on loan by 5% besides 25% subsidy on
fixed asset under the VIIth Five Year Plan”
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10. The appellants once again wrote to respondent no.4 on March 24,
1986 asking him to confirm about the interest subsidy. This time the
appellants got the desired reply. Respondent no.4 without the loss of a single
day wrote back on March 25, 1986 stating:
“….I am to inform that Hotel is entitled for 5%
interest subsidy besides 25% subsidy on fixed
asset…”
11. There is nothing in the government records to sanction or justify the
assurance given by respondent and the alacrity with which the appellants
were able to get the desired assurance does not leave the communication
with much credibility. As a matter of fact the respondents maintain that
respondent no.4 was not competent or authorised to give any such assurance
to the appellants. In regard to the letter dated March 25, 1986 given by
respondent no.4 to the appellants it is stated by the respondents in paragraph
16 of their counter affidavit as follows:
“16. With reference to paragraph 10 of the petition,
it is submitted that on 25.3.1986, when Ext. E was
written there was no sanctioned proposal or
scheme pertaining to any assistance muchless the
alleged 5% interest subsidy in favour of the
petitioners or other hoteliers. The letter, Ext. E.
was, therefore, patently irrelevant and is without
any basis. Significantly, the letter dated 25.3.1986
is in reply to the petitioner’s letter dated 24.3.1986.
The very fast action of the employees concerned
shows that it was issued without application of
8mind even to the facts from record. The writer of
the letter did not obviously bother to find out
whether the Planning Commission or the Govt. of
India or even the administration under whom he
worked had in fact introduced or brought into
existence a scheme of giving 5% interest subsidy
to the petitioners. No alleged assurance or promise
or representation could have been made firstly,
because there was no such sanctioned plan
proposal or sanctioned scheme, and secondly, the
officer had no authority to make any assurance or
promise or representation so as to bind the
respondents.”
12. From the other materials on record it becomes clear that the appellants
were having serious difficulties in getting loan for their project. The Gujarat
State Financial Corporation whom the appellants had approached for loan
did not seem to consider their request favourably. The appellants were
anxious to secure the loan for their project. In those circumstances, even
before writing the second letter to respondent no.4 the appellants had
addressed a letter to the Lt. Governor, Goa, Daman and Diu plainly asking
him to canvass for the grant of their loan by the Gujarat State Financial
Corporation and in particular “to impress upon two of the important
members on the board of Gujarat State Financial Corporation (viz. Shri R.
D. Shah, Chairman, GSFC & Shri H.K. Khan, Addl. Chief Secretary,
Government of Gujarat) to reconsider their decision and grant a term loan of
Rs.60/- lakhs”. (We are surprised that not only such a letter was written to
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the Lt. Governor but quite unabashedly it has also been brought on record
before this court!) Arguing its case for grant of the term loan of rupees sixty
lakhs it was stated in paragraph 9 of the letter:
“9.The Administration saw an opportunity to help
improve the Union Territory’s economy by
supporting this hotel and hence has made provision
in its Seventh 5-Year Plan for giving a 5% interest
subsidy on term loans and 25% capital subsidy
limited to Rs.25/- lakhs. The purpose of both these
subsidies is to provide a cushion in case of any
setback due to lack of marketability of hotel
rooms. This is an important aspect and must be
considered hotel for all hotels setup in Backward
Area.”
13. Having thus based their case for grant of loan inter alia on the basis
that interest on the loan would be subsidised by 5% it was essential for them
to secure the assurance. And that is how the appellants seem to have
obtained the assurance from respondent no.4.
14. It thus appears that even though the proposal for interest subsidy was
actually aborted for want of sanction and approval by the Planning
Commission, the appellants were using it for their own ends.
15. In support of the plea of promissory estoppel the appellants also rely
upon a communication from the Central Government in reply to the request
of approval made to it. It appears that some officer in the Union Territory
wrote to the Central Government requesting the approval of the payment of
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interest subsidy and asking for the necessary procedure to be followed. The
Central Government gave its reply by letter dated February 24, 1989 stating:
As the scheme of 5% interest subsidy is operated
by the Union Territory of Dadra and Nagar Havel
and the payment involved is to be made from their
own funds, the Central Department of Tourism
does not come into the picture for giving No
Objection for the disbursement of the subsidy.”
16. This letter too is of no help to the appellants. Firstly, it was a
government to government communication and not a representation to the
appellants. Secondly, the reply of the Central Government cannot be read to
hold that in fact there was in existence a scheme of interest subsidy of the
Administration of the Union Territory. All that the Central Government said
was that it had no concern with the matter.
17. Mr. Anand Grover, learned counsel for the appellants strenuously
argued that the company was granted loan by financial institutions and
banks and the repayment of the loans were scheduled on the basis that
interest on the loans would be subsidised by the respondents by 5%. Mr.
Grover submitted that non-payment of the interest subsidy by the
respondents caused acute financial stringency to the appellants. Further, in
April 1986 the appellants had issued a prospectus for public issue clearly
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stating that subsidy was available both on capital assets and interest and on
that basis had received a large amount of public investments.
18. We are quite unimpressed by the submissions. The loan repayment
schedule was drawn up by the banks on the representation made by the
appellants themselves for which apparently there was no basis. Similarly,
they tried to attract public investments in the company by saying something
in the prospectus for which there was no sanction. We, thus, again see the
same picture emerging. Rather than making huge investments and, acting on
the basis of any representation made by the respondents, altering their
position adversely, the appellants tried to use the issue of interest subsidy to
their advantage even though it was only a proposal that in fact never
materialised into a scheme.
19. Mr. Grover lastly took us through the letters sent by the appellants and
their creditors to the respondents making demand for disbursement of the
5% interest subsidy. Learned counsel submitted that in reply to these letters
the respondents never squarely denied the appellants entitlement to interest
subsidy but they only tried to hedge the issue.
20. In our considered view the letters referred to by the Counsel too are of
no help to the appellants.
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21. On a careful consideration of the materials on record and the
submissions made on behalf of the appellants we find ourselves in complete
agreement with the view taken by the Bombay High Court.
22. In the end we find no merit in these appeals, which are, accordingly
dismissed. No order for costs.
.......................................J
(AFTAB ALAM )
......................................J
(SWATANTER KUMAR)
New Delhi,
July 7, 2010