{"id":226767,"date":"2010-07-07T00:00:00","date_gmt":"2010-07-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ras-resorts-apart-hotels-anr-vs-union-of-india-and-ors-on-7-july-2010"},"modified":"2019-01-19T13:11:46","modified_gmt":"2019-01-19T07:41:46","slug":"ras-resorts-apart-hotels-anr-vs-union-of-india-and-ors-on-7-july-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ras-resorts-apart-hotels-anr-vs-union-of-india-and-ors-on-7-july-2010","title":{"rendered":"Ras Resorts &amp; Apart Hotels &amp; Anr vs Union Of India And Ors on 7 July, 2010"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Ras Resorts &amp; Apart Hotels &amp; Anr vs Union Of India And Ors on 7 July, 2010<\/div>\n<div class=\"doc_author\">Author: Aftab Alam<\/div>\n<div class=\"doc_bench\">Bench: Aftab Alam, Swatanter Kumar<\/div>\n<pre>                                                                NON REPORTABLE\n\n                 IN THE SUPREME COURT OF INDIA\n\n                  CIVIL APPELLATE JURISDICTION\n\n                CIVIL APPEAL NOS. 4986-4987 OF 2010\n (Arising out of Special Leave Petition (Civil) Nos. 17068-17069 of 2005)\n\n\n\nRas Resorts &amp; Apart Hotels Limited &amp; Anr.                   ....Appellants\n\n\n                                   Versus\n\nUnion of India and Ors.                                   ....Respondents\n\n\n\n                             JUDGMENT\n<\/pre>\n<p>AFTAB ALAM, J<\/p>\n<p>1.    Leave granted.\n<\/p>\n<p>2.    Heard learned counsel for the parties.\n<\/p>\n<p>3.    Appellant no.1 is a public limited company incorporated and<\/p>\n<p>registered under the Companies Act and appellant no.2 is one of its share<\/p>\n<p>holders and Managing Director. The appellants went to the Bombay High<\/p>\n<p>Court seeking a direction to the respondents to grant the company interest<\/p>\n<p>subsidy and to pay to the financial institutions\/banks 5% of the amount of<br \/>\n<span class=\"hidden_text\">                                      2<\/span><\/p>\n<p>interest charged by them on the loans taken by the appellants for<\/p>\n<p>construction of their hotel at Silvassa. In support of the claim, the appellants<\/p>\n<p>tried to invoke the plea of promissory estoppel relying upon the Draft<\/p>\n<p>Seventh Five Year Plan 1985-90 and certain communications received by<\/p>\n<p>the company from the officers in the Department of Tourism, Dadra and<\/p>\n<p>Nagar Haveli, UT. The Bombay High Court rejected the appellants&#8217; claim<\/p>\n<p>and dismissed the writ petition (No.2705 of 1990) by judgment and order<\/p>\n<p>dated November 4, 2004. The appellants then filed a review petition (bearing<\/p>\n<p>No.19 of 2005). This too was dismissed summarily by the High Court by<\/p>\n<p>judgment and order dated March 17, 2005. This appeal is brought to this<\/p>\n<p>court against these two orders.\n<\/p>\n<p>4.    The brief facts relevant for the purpose of these appeals may be stated<\/p>\n<p>thus. Another public limited company, (described as a sister concern of<\/p>\n<p>appellant no.1) made an application before the respondents on May 28, 1984<\/p>\n<p>for grant of lease of a piece of land. It was given 1.35 hectares of land in<\/p>\n<p>Silvassa, Dadra and Nagar Haveli on lease on June 12, 1984. The lease was<\/p>\n<p>for construction of a three-star hotel over the leased out land. Appellant no.1<\/p>\n<p>took another piece of land measuring 1.39 hectares, adjoining the piece of<\/p>\n<p>land earlier allotted to its sister concern, on lease on February 6, 1985 but it<\/p>\n<p>was not for any specific purpose. Since no construction was made on the<br \/>\n<span class=\"hidden_text\">                                     3<\/span><\/p>\n<p>leased out land within the stipulated period of one year, the appellant no.1<\/p>\n<p>was given a show cause notice dated May 9, 1985 why the allotted plot<\/p>\n<p>should not be forfeited to the government without any notice? The company<\/p>\n<p>gave its reply on May 11, 1985 explaining the circumstances leading to the<\/p>\n<p>delay in the construction of the hotel. On October 14, 1985, appellant no.1<\/p>\n<p>got the piece of land given on lease to its sister concern conveyed in its<\/p>\n<p>favour. And finally on September 2, 1986 the appellants began the<\/p>\n<p>construction of the hotel building after performing Bhoomi Puja.<\/p>\n<p>5.    It is stated by the appellants that the Union Territory of Dadra and<\/p>\n<p>Nagar Haveli being a backward area failed to draw any significant tourist<\/p>\n<p>inflow. Hence, with a view to attract investments in the area, which in turn<\/p>\n<p>would help in the promotion of tourism industry the government of the<\/p>\n<p>Union Territory offered a number of incentives to the hoteliers. One such<\/p>\n<p>offer, according to the appellants, was to subsidise interest on loan by 5%.<\/p>\n<p>One of the materials on which the appellants strongly rely in support of their<\/p>\n<p>case is the draft seventh five year plan 1985-90 and Annual plan 1985-86.<\/p>\n<p>In the plan document it was provided as follows:\n<\/p>\n<blockquote><p>       &#8220;&#8230;It is proposed to subsidise interest on loan by 5%. Besides,<br \/>\n      Administration offers 25% subsidy on fixed assets as the<br \/>\n      territory has been declared as &#8220;No Industry District by<br \/>\n      Government of India&#8221;&#8230;&#8221;\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">                                      4<\/span><\/p>\n<p>6.    There is no dispute that the appellants have received 25% subsidy on<\/p>\n<p>fixed assets and the present proceeding relates to their claim for 5% interest<\/p>\n<p>subsidy.\n<\/p>\n<p>7.    We completely fail to see how the draft seventh five year plan or the<\/p>\n<p>annual plan for the year 1985-86 can support the appellants&#8217; claim based on<\/p>\n<p>the plea of promissory estoppel. The annual plan for the year 1985-86, as<\/p>\n<p>part of the seventh five year plan was prepared by the Administration of<\/p>\n<p>Dadra and Nagar Haveli in or about January 1985. The first piece of land<\/p>\n<p>was given on lease to the sister concern of appellant no.1 on June 12, 1984,<\/p>\n<p>on the basis of an application made on May 28, 1984. The lease was for the<\/p>\n<p>express purpose of constructing a three-star hotel over the leased out land. It<\/p>\n<p>is, thus, evident that the land was taken at a point of time when there was not<\/p>\n<p>even a scent of any interest subsidy. Though, the land was formally<\/p>\n<p>conveyed in favour of appellant no.1 by its `sister concern&#8217; on October 14,<\/p>\n<p>1985, it appears that the allotment in favour of the so called sister concern<\/p>\n<p>was benami in nature, for the show cause notice for not completing the<\/p>\n<p>construction in terms of the lease was given (before the formal conveyance<\/p>\n<p>of the land in its favour) to appellant no.1 and it was appellant no.1 that had<\/p>\n<p>given reply to the show cause notice. Appellant no.1 was, thus, fully aware<\/p>\n<p>that the only purpose for which the land could be used was construction of a<br \/>\n<span class=\"hidden_text\">                                     5<\/span><\/p>\n<p>hotel and further that the condition to construct a hotel over it was attached<\/p>\n<p>to the lease from before the proposal for interest subsidy was mooted. After<\/p>\n<p>formally acquiring it, they amalgamated with it the other piece of land taken<\/p>\n<p>on lease by them, thus bringing for all intent and purpose the second piece of<\/p>\n<p>land too under the same condition that was attached to the first one. In the<\/p>\n<p>aforesaid facts and circumstances, we fail to see, how it can be contended by<\/p>\n<p>the appellants that they made huge investments and altered their position on<\/p>\n<p>the basis of any representation made by the respondents.<\/p>\n<p>8.    More importantly, there was no firm offer or representation. The<\/p>\n<p>seventh five year plan was in the draft form and the subsidy on interest was<\/p>\n<p>merely a proposal. According to the respondents, the proposal for interest<\/p>\n<p>subsidy was only mooted in the seventh five year plan pertaining to the<\/p>\n<p>period 1985-90 and the proposal for grant of 5% interest subsidy was<\/p>\n<p>included for consideration as part of overall comprehensive plan for<\/p>\n<p>development of tourism in the Union Territory. This plan was to be included<\/p>\n<p>in the annual plans for subsequent years subject to the approval and sanction<\/p>\n<p>by the Planning Commission and the Government of India. But the Planning<\/p>\n<p>Commission declined sanction to the proposal. Hence, no specific scheme<\/p>\n<p>was formulated to grant interest subsidy and the terms and conditions<\/p>\n<p>subject to which payment of 5% interest subsidy would be made was also<br \/>\n<span class=\"hidden_text\">                                      6<\/span><\/p>\n<p>not spelled out. The necessary details in this regard are furnished by the<\/p>\n<p>respondents in their counter affidavits filed before the High Court and this<\/p>\n<p>Court. In paragraphs 5 and 6 of their counter affidavit filed in this Court the<\/p>\n<p>respondents have even reproduced the relevant extracts from the minutes of<\/p>\n<p>the meetings held at the Planning Commission on February 28, 1985 and<\/p>\n<p>March 6, 1986 from which it is clear that the proposal mooted out in the<\/p>\n<p>draft five year plan 1985-90 failed to get the Planning Commission&#8217;s<\/p>\n<p>approval. For want of the sanction from the Planning Commission the<\/p>\n<p>proposal did not get finalised and the scheme of interest subsidy never came<\/p>\n<p>into being for enforcement. It is contended by the respondents, and in our<\/p>\n<p>view rightly, that a mere proposal in the plan that was yet to be finalised<\/p>\n<p>cannot be taken as an offer or a representation to the appellants.<\/p>\n<p>9.    The next material on which the appellants rely heavily is an exchange<\/p>\n<p>of correspondence with respondent no.4, the Deputy Conservator Forests &amp;<\/p>\n<p>Tourism In-charge. On August 6, 1985 the appellants wrote a letter to him<\/p>\n<p>seeking confirmation that 5% interest subsidy was available. Respondent<\/p>\n<p>no.4 gave his reply by letter dated August 29, 1985 stating:<\/p>\n<blockquote><p>      &#8220;&#8230;.I am to inform that we have proposed to provide for<br \/>\n      adequate incentive to hotel industry&#8230;.It is proposed to<br \/>\n      subsidise interest on loan by 5% besides 25% subsidy on<br \/>\n      fixed asset under the VIIth Five Year Plan&#8221;\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">                                       7<\/span><\/p>\n<p>10.   The appellants once again wrote to respondent no.4 on March 24,<\/p>\n<p>1986 asking him to confirm about the interest subsidy. This time the<\/p>\n<p>appellants got the desired reply. Respondent no.4 without the loss of a single<\/p>\n<p>day wrote back on March 25, 1986 stating:\n<\/p>\n<blockquote><p>             &#8220;&#8230;.I am to inform that Hotel is entitled for 5%<br \/>\n             interest subsidy besides 25% subsidy on fixed<br \/>\n             asset&#8230;&#8221;\n<\/p><\/blockquote>\n<p>11.   There is nothing in the government records to sanction or justify the<\/p>\n<p>assurance given by respondent and the alacrity with which the appellants<\/p>\n<p>were able to get the desired assurance does not leave the communication<\/p>\n<p>with much credibility. As a matter of fact the respondents maintain that<\/p>\n<p>respondent no.4 was not competent or authorised to give any such assurance<\/p>\n<p>to the appellants. In regard to the letter dated March 25, 1986 given by<\/p>\n<p>respondent no.4 to the appellants it is stated by the respondents in paragraph<\/p>\n<p>16 of their counter affidavit as follows:\n<\/p>\n<blockquote><p>             &#8220;16. With reference to paragraph 10 of the petition,<br \/>\n             it is submitted that on 25.3.1986, when Ext. E was<br \/>\n             written there was no sanctioned proposal or<br \/>\n             scheme pertaining to any assistance muchless the<br \/>\n             alleged 5% interest subsidy in favour of the<br \/>\n             petitioners or other hoteliers. The letter, Ext. E.<br \/>\n             was, therefore, patently irrelevant and is without<br \/>\n             any basis. Significantly, the letter dated 25.3.1986<br \/>\n             is in reply to the petitioner&#8217;s letter dated 24.3.1986.<br \/>\n             The very fast action of the employees concerned<br \/>\n             shows that it was issued without application of<br \/>\n<span class=\"hidden_text\">                                      8<\/span><\/p>\n<p>             mind even to the facts from record. The writer of<br \/>\n             the letter did not obviously bother to find out<br \/>\n             whether the Planning Commission or the Govt. of<br \/>\n             India or even the administration under whom he<br \/>\n             worked had in fact introduced or brought into<br \/>\n             existence a scheme of giving 5% interest subsidy<br \/>\n             to the petitioners. No alleged assurance or promise<br \/>\n             or representation could have been made firstly,<br \/>\n             because there was no such sanctioned plan<br \/>\n             proposal or sanctioned scheme, and secondly, the<br \/>\n             officer had no authority to make any assurance or<br \/>\n             promise or representation so as to bind the<br \/>\n             respondents.&#8221;\n<\/p><\/blockquote>\n<p>12.   From the other materials on record it becomes clear that the appellants<\/p>\n<p>were having serious difficulties in getting loan for their project. The Gujarat<\/p>\n<p>State Financial Corporation whom the appellants had approached for loan<\/p>\n<p>did not seem to consider their request favourably. The appellants were<\/p>\n<p>anxious to secure the loan for their project. In those circumstances, even<\/p>\n<p>before writing the second letter to respondent no.4 the appellants had<\/p>\n<p>addressed a letter to the Lt. Governor, Goa, Daman and Diu plainly asking<\/p>\n<p>him to canvass for the grant of their loan by the Gujarat State Financial<\/p>\n<p>Corporation and in particular &#8220;to impress upon two of the important<\/p>\n<p>members on the board of Gujarat State Financial Corporation (viz. Shri R.<\/p>\n<p>D. Shah, Chairman, GSFC &amp; Shri H.K. Khan, Addl. Chief Secretary,<\/p>\n<p>Government of Gujarat) to reconsider their decision and grant a term loan of<\/p>\n<p>Rs.60\/- lakhs&#8221;. (We are surprised that not only such a letter was written to<br \/>\n<span class=\"hidden_text\">                                       9<\/span><\/p>\n<p>the Lt. Governor but quite unabashedly it has also been brought on record<\/p>\n<p>before this court!) Arguing its case for grant of the term loan of rupees sixty<\/p>\n<p>lakhs it was stated in paragraph 9 of the letter:\n<\/p>\n<blockquote><p>             &#8220;9.The Administration saw an opportunity to help<br \/>\n             improve the Union Territory&#8217;s economy by<br \/>\n             supporting this hotel and hence has made provision<br \/>\n             in its Seventh 5-Year Plan for giving a 5% interest<br \/>\n             subsidy on term loans and 25% capital subsidy<br \/>\n             limited to Rs.25\/- lakhs. The purpose of both these<br \/>\n             subsidies is to provide a cushion in case of any<br \/>\n             setback due to lack of marketability of hotel<br \/>\n             rooms. This is an important aspect and must be<br \/>\n             considered hotel for all hotels setup in Backward<br \/>\n             Area.&#8221;\n<\/p><\/blockquote>\n<p>13.   Having thus based their case for grant of loan inter alia on the basis<\/p>\n<p>that interest on the loan would be subsidised by 5% it was essential for them<\/p>\n<p>to secure the assurance. And that is how the appellants seem to have<\/p>\n<p>obtained the assurance from respondent no.4.\n<\/p>\n<p>14.   It thus appears that even though the proposal for interest subsidy was<\/p>\n<p>actually aborted for want of sanction and approval by the Planning<\/p>\n<p>Commission, the appellants were using it for their own ends.<\/p>\n<p>15.   In support of the plea of promissory estoppel the appellants also rely<\/p>\n<p>upon a communication from the Central Government in reply to the request<\/p>\n<p>of approval made to it. It appears that some officer in the Union Territory<\/p>\n<p>wrote to the Central Government requesting the approval of the payment of<br \/>\n<span class=\"hidden_text\">                                     10<\/span><\/p>\n<p>interest subsidy and asking for the necessary procedure to be followed. The<\/p>\n<p>Central Government gave its reply by letter dated February 24, 1989 stating:<\/p>\n<blockquote><p>            As the scheme of 5% interest subsidy is operated<br \/>\n            by the Union Territory of Dadra and Nagar Havel<br \/>\n            and the payment involved is to be made from their<br \/>\n            own funds, the Central Department of Tourism<br \/>\n            does not come into the picture for giving No<br \/>\n            Objection for the disbursement of the subsidy.&#8221;\n<\/p><\/blockquote>\n<p>16.   This letter too is of no help to the appellants. Firstly, it was a<\/p>\n<p>government to government communication and not a representation to the<\/p>\n<p>appellants. Secondly, the reply of the Central Government cannot be read to<\/p>\n<p>hold that in fact there was in existence a scheme of interest subsidy of the<\/p>\n<p>Administration of the Union Territory. All that the Central Government said<\/p>\n<p>was that it had no concern with the matter.\n<\/p>\n<p>17.    Mr. Anand Grover, learned counsel for the appellants strenuously<\/p>\n<p>argued that the company was granted loan by financial institutions and<\/p>\n<p>banks and the repayment of the loans were scheduled on the basis that<\/p>\n<p>interest on the loans would be subsidised by the respondents by 5%. Mr.<\/p>\n<p>Grover submitted that non-payment of the interest subsidy by the<\/p>\n<p>respondents caused acute financial stringency to the appellants. Further, in<\/p>\n<p>April 1986 the appellants had issued a prospectus for public issue clearly<br \/>\n<span class=\"hidden_text\">                                      11<\/span><\/p>\n<p>stating that subsidy was available both on capital assets and interest and on<\/p>\n<p>that basis had received a large amount of public investments.<\/p>\n<p>18.   We are quite unimpressed by the submissions. The loan repayment<\/p>\n<p>schedule was drawn up by the banks on the representation made by the<\/p>\n<p>appellants themselves for which apparently there was no basis. Similarly,<\/p>\n<p>they tried to attract public investments in the company by saying something<\/p>\n<p>in the prospectus for which there was no sanction. We, thus, again see the<\/p>\n<p>same picture emerging. Rather than making huge investments and, acting on<\/p>\n<p>the basis of any representation made by the respondents, altering their<\/p>\n<p>position adversely, the appellants tried to use the issue of interest subsidy to<\/p>\n<p>their advantage even though it was only a proposal that in fact never<\/p>\n<p>materialised into a scheme.\n<\/p>\n<p>19.   Mr. Grover lastly took us through the letters sent by the appellants and<\/p>\n<p>their creditors to the respondents making demand for disbursement of the<\/p>\n<p>5% interest subsidy. Learned counsel submitted that in reply to these letters<\/p>\n<p>the respondents never squarely denied the appellants entitlement to interest<\/p>\n<p>subsidy but they only tried to hedge the issue.\n<\/p>\n<p>20.   In our considered view the letters referred to by the Counsel too are of<\/p>\n<p>no help to the appellants.\n<\/p>\n<p><span class=\"hidden_text\">                                   12<\/span><\/p>\n<p>21.   On a careful consideration of the materials on record and the<\/p>\n<p>submissions made on behalf of the appellants we find ourselves in complete<\/p>\n<p>agreement with the view taken by the Bombay High Court.\n<\/p>\n<p>22.   In the end we find no merit in these appeals, which are, accordingly<\/p>\n<p>dismissed. No order for costs.<\/p>\n<pre>\n\n\n\n\n                                          .......................................J\n                                          (AFTAB ALAM )\n\n\n\n                                         ......................................J\n                                            (SWATANTER              KUMAR)\n\n\n\n\nNew Delhi,\nJuly 7, 2010\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Ras Resorts &amp; Apart Hotels &amp; Anr vs Union Of India And Ors on 7 July, 2010 Author: Aftab Alam Bench: Aftab Alam, Swatanter Kumar 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 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-226767","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Ras Resorts &amp; 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