MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA AND ORS.

AND ORS. [R.M. LODHA, J.] Each of the cases referred to above turned on such an A appreciation of the respective spheres of the two legislations. As pointed out in lshwari Khetan, the mere declaration of a law of Parliament that it is expedient for an industry or the regulation and development of mines and minerals to be under the control of the Union under Entry B 52 or entry 54 does not denude the State legislatures of their legislative powers with respect to the fields covered by the several entries in List II or List Ill. Particularly, in the case of a declaration under Entry 54, this legislative power is eroded only to the extent control is assumed by the c Union pursuant to such declaration as spelt out by the legislative enactment which makes the declaration. The measure of erosion turns upon the field of the enactment framed in pursuance of the declaration. While the legislation in Hingir-Rampur and Tulloch was found to fall within the pale of the prohibition, those in Chanan Mal, lshwari Khetan and Western Coalfields were general in nature and traceable to specific entries in the State List and did not encroach on the field of the Central enactment except by way of incidental impact. The Central Act, considered in Chanan Mal, seemed to envisage and indeed permit State legislation of the nature in question."

"50. To turn to the respective spheres of the two legislations we are here concerned with, the Central Act (M.M.R.D. Act, 1957) demarcates the sphere of Union F control in the matter of mines and mineral development. While concerning itself generally with the requirements regarding grants of licences and leases for prospecting and exploitation of minerals, it contains certain provisions which are of direct relevance to the issue before us. G Section 9, which deals with the topic of royalties and specifies not only the quantum but also the limitations on the enhancement thereof, has already been noticed. Section 9A enacts a like provision in respect of dead rent. ......." H

p. 754

A "51. If one looks at the above provisions and bears in mind that, in assessing the field covered by the Act of Parliament in question, one should be guided (as laid down in Hingir- Rampur and Tulloch) not merely by the actual provisions of the Central Act or the rules made thereunder but should B also take into account matters and aspects which can legitimately be brought within the scope of the said statute, the conclusion seems irresistible, particularly in view of Hingir-Rampur and Tulloch, that the State Act has trespassed into the field covered by the Central Act. The c nature of the incursion made into the fields of the Central Act in the other cases were different. The present legislation, traceable to the legislative power under Entry 23 or Entry 50 of the State List which stands impaired by the Parliamentary declaration under Entry 54, can hardly be equated to the law for land acquisition or municipal administration which were considered in the cases cited and which are traceable to different specific entries in List 11 or List Ill.

"53. These observations establish on the one hand that the distinction sought to be made between mineral development and mineral area development is not a real one as the two types of development are inextricably and int.egrally interconnected and, on the other, that, fees of the nature we are concerned with squarely fall within the scope of the provisions of the Central Act. The object of Section 9 of the Central Act cannot be ignored. The terms of Section 13 of the Central Act extracted earlier empower the Union to frame rules in regard to matters concerning roads and environment. Section 18(1) empowers the G Central Government to take all such steps as may be necessary for the conservation and development of minerals in India and for protection of environment. These, in the very nature of things, cannot mean such amenities only in the mines but take in also the areas leading to and H all around the mines. The development of mineral areas

p. 755

AND ORS. [R.M. LODHA, J.] is implicit in them. Section 25 implicitly authorises the levy of rent, royalty, taxes and fees under the Act and the rules. The scope of the powers thus conferred is very wide. Read as a whole, the purpose of the Union control envisaged by Entry 54 and the M.M.R.D. Act, 1957, is to provide for proper development of mines and mineral areas and also to bring about a uniformity all over the country in regard to the minerals specified in Schedule I in the matter of royalties and, consequently prices ......... "

lndia11_ Metals and Ferro Alloys Ltd. c

95. In Indian Metals and Ferro Alloys Ltd.p , a two-Judge Bench or this Court was concerned with the principal question as to whether the petitioners therein were entitled to obtain leases for the mining of chrome. While dealing with the principal question and other incidental questions, the Court considered D Entry 54 of List I, Entry 23 of List 11, the 1957 Act, particularly, Sections 2, 4, 10, 11, 17A and 19 thereof and the 1960 Rules including Rules 58, 59 and 60 thereof. While dealing with the reservation policy of the State Government in having the area reserved for exploitation in the public sectors, the Court E observed in paragraphs 39 and 40 (Pg. 133) as follows :

"39. The principal obstacle in the way of ORIND as well as the other private parties getting any leases was put up by the S.G., OMC and IDCOL. They claimed that none of F the private applications could at all be considered because the entire area in all the districts under consideration is reserved for exploitation in the public sector by the notification dated August 3, 1977 earlier referred to. All the private parties have therefore joined hands to fight the case of reservation claimed by the S.G., OMC and IDCOL. G We have indicated earlier that the S.G. expressed its preparedness to accept the Rao report and to this extent waive the claim of reservation. Interestingly, the OMC and IDCOL have entered caveat here and claimed that as H

p. 756

A public sector corporations they could claim, independently of the S.G.'s stand, that the leases should be given only to them and that the Rao report recommending leases to IMFA, FACOR and AIKATH should not be accepted by us.

40. The relevant provisions of the Act and the rules have B been extracted by us earlier. Previously, Rule 58 did not enable the S.G. to reserve any area in the State for exploitation in the public sector. The existence and validity of such a power of reservation was upheld in A.Kotiah Naidu v. State of A.P. (AIR 1959 AP 485) and Amritlal c Nathubhai Shah v. Union Government of India (AIR 1973 Guj. 117), the latter of which was approved by this Court in Amritlal Nathubhai Shah v. Union of India ([1977] 1 SCR 372). (As pointed out earlier, Rule 58 has been amended in 1980 to confer such a power on the S.G.). It D is also not in dispute that a notification of reservation was made on August 3, 1977. The S.G., OMC and IDCOL are, therefore, right in contending that, ex facie, the areas in question are not available for grant to any person other than the S.G. or a public sector corporation [rule 59(1 ), proviso] E unless the availability for grant is renotified in accordance with law [rule 59(1)(e)] or the C.G. decides ,to relax the provisions of Rule 59(1) [rule 59(2) ]. None of those contingencies have occurred since except as is indicated later in this judgment. There is, therefore, no answer to the plea of reservation put forward by the S.G., OMC and IDCOL."

Then in paragraph 45 (Pgs. 136-138), while considering Section 17A (1) that was inserted in 1957 Act by amendment in 1987, the Court held:

"45. Our conclusion that the areas in question before us were all duly reserved for public sector exploitation does not, however, mean that private parties cannot be granted any lease at all in respect of these areas for, as pointed H

p. 757

AND ORS. [R.M. LODHA, J.] out earlier, it is open to the C.G. to relax the reservation A for recorded reasons. Nor does this mean, as contended for by OMC and IDCOL, that they should get the leases asked for by them. This is so for two reasons. In the first place, the reservation is of a general nature and does not directly confer any rights on OMC and IDCOL. This B reservation is of two types. Under Section 17A (1 ), inserted in 1986, the C.G. may after consulting the S.G. just reserve any area- not covered by a PL or a ML-with a view to conserving any mineral. Apparently, the idea of such reservation is that the minerals in this area will not c be exploited at all, neither by private parties nor in the public sector. It is not necessary to consider whether any area so reserved can be exploited in the public sector as we are not here concerned with the scope of such reservation, there having been no notification Under D Section 17A(1) after 1986 and after consultation with the S.G. The second type of reservation was provided for in Rule 58 of the rules which have already been extracted earlier in this judgment. This reservation could have been made by the S.G. (without any necessity for approval by the C.G.) and was intended to reserve areas for exploitation, broadly speaking, in the public sector. The notification itself might specify the Government, Corporation or Company that was to exploit the areas or may be just general, on the lines of the rule itself. Under Rule 59(1 ), once a notification under Rule 58 is made, the area so reserved shall not be available for grant unless the two requirements of Sub-rule (e) are satisfied: viz. an entry in a register and a Gazette notification that the area is available for grant. It is not quite clear whether the notification of March 5, 1974 complied with these requirements but it is perhaps unnecessary to go into this question because the reservation of the areas was again notified in 1977. These notifications are general. They only say that the areas are reserved for exploitation in the public sector. Whether such areas are to be leased out to OMC H

p. 758

A or IDCOL or some other public sector corporation or a Government Company or are to be exploited by the Government itself is for the Government to determine de hors the statute and the rules. There is nothing in either of them which gives a right to OMC or IDCOL to insist that B the leases should be given only to them and to no one else in the public sector. If, therefore the claim of reservation in 1977 in favour of the public sector is upheld absolutely, and if we do not agree with the findings of Rao that neither OMC nor IDCOL deserve any grant, all that we can do is to leave it to the S.G. to consider whether any portion of c the land thus reserved should be given by it to these two corporations. Here, of course, there are no competitive applications from organisations in the public sector controlled either by the S.G. or the C.G., but even if there were, it would be open to the S.G. to decide how far the lands or any portion of them should be exploited by each of such Corporations or by the C.G. or S.G. Both the Corporations are admittedly instrumentalities of the S.G. and the decision of the S.G. is binding on them. We are of the view that, if the S.G. decides not to grant a lease in respect of the reserved area to an instrumentality of the S.G., that instrumentality has no right to insist that a ML should be granted to it. It is open to the S.G. to exercise at any time, a choice of the State or any one of the instrumentalities specified in the rule. It is true that if, eventually, the S.G. decides to grant a lease to one or other of them in respect of such land, the instrumentality whose application is rejected may be aggrieved by the choice of another for the lease. In particular, where there is competition between an instrumentality of the C.G. and one of the S.G. or between instrumentalities of the C.G. inter se or between the instrumentalities of the S.G. inter se, a question may well arise how far an unsuccessful instrumentality can challenge the choice made by the S.G. But we need not enter into these controversies here. The H question we are concerned with here is whether OMC or

p. 759

AND ORS. [R.M. LODHA, J.] IDCOL can object to the grant to any of the private parties on the ground that a reservation has been made in favour of the public sector. We think the answer must be in the negative in view of the statutory provisions. For the S.G. could always denotify the reservation and make the area available for grant to private parties. Or, short of actually dereserving a notified area, persuade the C.G. to relax the restrictions of Rule 59(1) in any particular case. It is. therefore, open to the S.G. to grant private leases even in respect of areas covered by a notification of the S.G. and this cannot be challenged by any instrumentality in the c public sector."

The legal position post amendment in 1957 Act by Central Act 37 of 1987 was explained (para 46; Pgs. 138-139) in the following manner: D "46. Before leaving this point, we may only refer to the position after 1986. Central Act 37 of 1986 inserted Sub- section (2) which empowers the State Government to reserve areas for exploitation in the public sector. This provision differs from that in Rule 58 in some important E respects-

(i) the reservation requires the approval of the C.G.;

(ii) the reservation can only be of areas not actually held under a PL or ML; F

(iii) the reservation can only be for exploitation by a Government company or a public sector corporation (owned or controlled by the S.G. or C.G.) but not for exploitation by the Government as such. G Obviously, Section 17A(2) and rule 58 could not stand together as Section 17A empowers the S.G, to reserve only with the approval of the C.G. while Rule 58 contained no such restriction. There was also a slight difference in H

p. 760

A their wording. Perhaps because of this Rule 58 has been omitted by an amendment of 1988 (G.S.R. 449E of 1988) made effective from April 13, 1988. Rule 59, however, contemplates a relaxation of the reservation only by the C.G. By an amendment of 1987 effective on February 10, B 1987, (G.S.R. 86-E of 87) the words "reserved by the State Government" were substituted for the words "reserved by the Government" in Rule 59(1)(e). Later, Rule 59(1) has been amended by the insertion of the words "or Under Section 17-A of the Act" after the words "under Rule 58" c in Clause (e) as well as in the second proviso. The result appears to be this:

(i) After March 13, 1988, certainly, the S.G. cannot notify any reservations without the approval of the C.G., as Rule 58 has been deleted. Presumably, the position is the D same even before this date and as soon as Act 37of1986 came into force.

(ii) However, it is open to the S.G. to denotify a reservation made by it under Rule 58 or Section 17A. Presumably, E dereservation of an area reserved by the S.G. after the 1986 amendment can be done only with the approval of the C.G. for it would be anomalous to hold that a reservation by the S.G. needs the C.G.'s approval but not the dereservation. Anyhow, it is clear that relaxation in F respect of reserved areas can be permitted only by the C.G.

(iii) It is only the C.G. that can make a reservation with a view to conserve minerals generally but this has to be done with the concurrence of the S.G." G Dharambir Singh

96. In Dharambir Singh vs. Union of India & Ors.PP, a

H pp. 1996 (6) sec 102.

p. 761

AND ORS. [R.M. LODHA, J.] three-Judge Bench of this Court while considering Section A 10(3) and 11 (2) of the 1957 Act, observed that in grant of mining lease of a property of the State, the State Government has a discretion to grant or refuse to grant any prospective licence or licence to any applicant. No applicant has a right, much less vested right, to the grant of mining lease for mining B operations in any place within the State. But, the State Government is required to exercise its discretion subject to the requirement of the law.

Bhupatrai Maganlal Joshi c

97. In Bhupatrai Magan/al Joshi•, a Constitution Bench of this Court was concerned with the correctness of the High Court's decision on the question whether the reservation of land for exploitation of mineral resources in the public sector was permissible under the 1957 Act read with 1960 Rules. The High D Court had answered the question in the affirmative from which the matter reached this Court. In a very brief order this Court agreed with the reasoning and conclusion of the High Court.

M.P. Ram Mohan Raja E

98. In the case of M.P. Ram Mohan Raja vs. State of T.N.& Ors.qq, this Court relied upon the decision of this Court in M/s. Hind Stoneo and reiterated that so far as grant of mining and mineral lease is concerned no person has a vested right in it. F

Sandur Manganese and Iron Ores Limited

99. In a comparatively recent decision in Sandur Manganese and Iron Ores Limited.,m the diverse issues which were under consideration are noted in paragraph 6 of the G Report. The Court considered statutory provisions contained in the 1957 Act, 1960 Rules and decisions of this Court in Hingir- Rampur Coal Co.a , M.A. Tulloch & Co.b, Baijnath Kadioc,

qq. 2001 (9) sec 78. H

p. 762

A Bharat Coking Coal; and few other decisions, and it was observed with reference to Section 2 of the 1957 Act that State Legislature was denuded of its legislative power to make any law with respect to the regulation of mines and minerals development to the extent provided in the 1957 Act. In B paragraphs 61, 62 and 63 (Pgs. 30-31) of the Report, the Court held as follows :

"61.- In addition to what we have stated, it is relevant to note that Section 11 (5) again carves out an exception to the preference in favour of prior applicants in the main c provision of Section 11 (2). It permits the State Government, with the prior approval of the Central Government, to disregard the priority in point of time in the main provision of Section 11 (2) and to make a grant in favour of a latter applicant as compared to an earlier applicant for special reasons to be recorded in writing. It also gives an indication that it can have no application to cases in which a notification is issued because, in such a case, both the first proviso to Section 11 (2) and Section 11 (4) make it clear that all applications will be considered together as having been received on the same date. In view of our interpretation, the proceedings of the Chief Minister and the recommendation dated 06.12.2004 are contrary to the Scheme of the MMDR Act as they were based on Section 11 (5) which had no application at all to the applications made pursuant to the notification dated 15.03.2003.

62. We have already extracted Rules 59 and 60 and analysis of those rules confirms the interpretation of Section 11 above and the conclusion that it is Section G 11 (4) which would apply to a Notification issued under Rule 59( 1). Rule 59( 1) provides that the categories of areas listed in it including, inter alia, areas that were previously held or being under a mining lease or which have been reserved for exploitation by the State Government or under H

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 763 AND ORS. [R.M. LODHA, J.] Section 17A of the Act, shall not be available for grant A unless (i) an entry is made in the register and (ii) its availability for grant is notified in the Official Gazette specifying a date not earlier than 30 days from the date of notification. Sub-rule (2) of Rule 59 empowers the Central Government to relax the conditions set out in Rule B 59(1) in respect of an area whose availability is required to be notified under Rule 59 if no application is issued or where notification is issued, the 30-days black-out period specified in the notification pursuant to Rules 59(1)(i) and (ii) has not expired, shall be deemed to be premature and c shall not be entertained.

63. As discussed earlier, Section 11 (4) is consistent with Rules 59 and 60 when it provides for consideration only of applications made pursuant to a Notification. On the other hand, the consideration of applications made prior to the Notification, as required by the first proviso to Section 11 (2), is clearly inconsistent with Rules 59 and 60. In such circumstances, a harmonious reading of Section 11 with Rules 59 and 60, therefore, mandates an interpretation under which Notifications would be issued under Section 11 (4) in the case of categories of areas covered by Rule 59(1). In these circumstances, we are unable to accept the argument of the learned senior counsel for Jindal and Kalyani with reference to those provisions." F

Paragraph 7 of Amritlal Nathubhai Shahd was considered in paragraph 65 of the Report and then in paragraph 66 (Pg. 32), the Bench observed as follows :

"66.- Even thereafter, this Court has consistently taken the G position that applications made prior to a Notification cannot be entertained. In our view, the purpose of Rule 59(1), which is to ensure that mining lease areas are not given by the State Governments to favour persons of their H

p. 763 — page break not located

p. 764

A choice without notice to the general public would be defeated. In fact, the learned single Judge correctly interpreted Section 11 read with Rules 59 and 60. The said conclusion also finds support in the decision of this Court in State of Tamil Nadu v. Hindstone, (1981) 2 SCC B 205 at page 218, where it has been held in the context of the rules framed under the MMDR Act itself that a statutory rule, while subordinate to the parent statute, is otherwise to be treated as part of the statute and is effective. The same position has been reiterated in State of UP. v. Babu c Ram Upadhya (1961) 2 SCR 679 at 701 and Gujarat Pradesh Panchayat Parishad v. State of Gujarat (2007) 1 sec 718." As regards the legislative and executive power of the State under Entry 23 List II read with Article 162 of the Constitution, D the Court in Sandur Manganese and Iron Ores Limited"' in paragraph 80 (Pg. 36) stated as under :

"80. It is clear that the State Government is purely a delegate of Parliament and a statutory functionary, for the purposes of Section 11 (3) of the Act, hence it cannot act in a manner that is inconsistent with the provisions of Section 11 (1) of the MMDR Act in the grant of mining leases. Furthermore, Section 2 of the Act clearly states that the regulation of mines and mineral development comes within the purview of the Union Government and not the State Government. As a matter of fact, the respondents have not been able to point out any other provision in the MMDR Act or the MC Rules permitting grant of mining lease based on past commitments. As rightly pointed out, the State Government has no authority under the MMDR G Act to make commitments to any person that it will, in future, grant a mining lease in the event that the person makes investment in any project. Assuming that the State Government had made any such commitment, it could not be possible for it to take an inconsistent position and H

p. 765

AND ORS. [R.M. LODHA, J.] proceed to notify a particular area. Further, having notified A the area, the State Government certainly could not thereafter honour an alleged commitment by ousting other applicants even if they are more deserving on the merit criteria as provided in Section 11 (3)." B Whether 1962 and 1969 Notifications are ultra vires?

100. Now, in light of the above, I have to consider whether 1962 and 1969 Notifications issued by the Government of erstwhile State of Bihar notifying for the information of public that iron ore in the subject area was reserved for exploitation C in the public sector are ultra vires and de hors 1957 Act and 1960 Rules.

Constitutional philosophy about law making in relation to mines and minerals D

101. Entry 36 in List I (Federal List) and Entry 23 in List II (Provincial List) in the Seventh Schedule of Government of India Act, 1935 correspond to Entry 54 in List I (Union List) and Entry 23 in List II (State List) in our Constitution. It is interesting to note that in the course of debate in respect of the above entries in the Government of India Bill, the Solicitor General in the House of Commons stated that the rationale of including only the 'regulation of mines' and 'development of minerals' and that too only to the extent it was considered expedient in the public interest by a Federal law was to ensure that the Provinces were not completely cut-out from the law relating to mines and minerals and if there was inaction at the Centre, then the Provinces could make their own laws. Thus, powers in relation to mines and minerals were accorded to both the Centre and States. The same philosophy is reflected in our Constitution. G The management of the mineral resources has been left with both the Central Government and State Governments in terms of Entry 54 in List I and Entry 23 in List II. In the scheme of our Constitution, the State Legislatures enjoy power to enact legislation on the topics of 'mines and mineral development'. H

766 SUPREME COURT REPORTS [20121 7 S.C.R.

A The only fetter imposed on the State Legislatures under Entry 23 is by the latter part of the said entry which says 'subject to the provisions of List I with respect to regulation and development under the control of the Union'. In other words, State Legislature loses its jurisdiction to the extent to which B Union Government had taken over control, the regulation of mines and development of minerals as manifested by legislation incorporating the declaration and no more. If Parliament by its law has declared that regulation of mines and development of minerals should in the public interest be under c the control of Union, which it did by making declaration in Section 2 of the 1957 Act, to the extent of such legislation incorporating the declaration, the power of the State Legislature is excluded. The requisite declaration has the effect of taking out regulation of mines and development of minerals from Entry 23, List II to that extent. It needs no elaboration that to the extent 0 to which the Central Government had taken under 'its control' 'the regulation of mines and development of minerals' under 1957 Act, the States had lost their legislative competence. By the presence of expression 'to the extent hereinafter provided' in Section 2, the Union has assumed control to the extent provided in 1957 Act. 1957 Act prescribes the extent of control and specifies it. We must bear in mind that as the declaration made in Section 2 trenches upon the State Legislative power, it has to be construed strictly. Any legislation by the State after such declaration, trespassing the field occupied in the declaration cannot constitutionally stand. To find out what is left within the competence of the State Legislature on the declaration having been made in Section 2 of the 1957 Act, one does not have to look outside the provisions of 1957 Act but as observed in Baijnath Kadioc , 'have to work it out from the terms of that Act'. In order that the declaration made by the Parliament should be effective, the making of rules or enforcement of rules so made is not decisive.

102. The declaration made by Parliament in Section 2 of H 1957 Act states that it is expedient in the public interest that

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 767

AND ORS. [R.M. LODHA, J.]

the Union should take under its control the regulation of mines A and the development of minerals to the extent provided in the Act itself. Legal regime relating to regulation of mines and development of minerals is thus guided by the 1957 Act and 1960 Rules. Whether reservation made by 1962 and 1969 Notifications is in any manner contrary or inconsistent with 1957 B Act? In my view not at all. Whether the impugned Notifications impinge upon the legislative power of the Central Government? My answer is in negative. Whether the Government of erstwhile State of Bihar did not have the power to make reservation which it did by 1962 and 1969 Notifications? I think there was c no lack of power in the State in making such reservation. I indicate the reasons therefor.

Management of minerals : general observations

103. First, few general observations. Minerals - like rivers and forests - are a valuable natural resource. Minerals constitute our national wealth and are vital raw-material for infrastructure, capital goods and basic industries. The conservation, preservation and intelligent utilization of minerals are not only need of the day but are also very important in the interest of mankind and succeeding generations. Management of minerals should be in a way that helps in country's economic development and which also leaves for future generations to conserve and develop the natural resources of the nation in the best possible way. For proper development of economy and industry, the exploitation of natural resources cannot be permitted indiscriminately; rather nation's natural wealth has to be used judiciously so that it may not be exhausted within a few years.

No fundamental right in mining G

104. The appellants have applied for mining leases in a land belonging to Government of Jharkhand (erstwhile Bihar) and it is for iron-ore which is a mineral included in the First Schedule to the 1957 Act in respect of which no mining lease H

pp. 766–767 — page break not located

p. 768

A can be granted without the prior approval of the Central Government. It goes without saying that no person can claim any right in any land belonging to Government or in any mines in any land belonging to Government except under 1957 Act and 1960 Rules. No person has any fundamental right to claim B that he should be granted mining lease or prospecting licence or permitted reconnaissance operation in any land belonging to the Government. It is apt to quote the following statement of

0. Chinnappa Reddy, J. in Mis. Hind Stone0 , albeit in the context of minor mineral, 'The public interest which induced c Parliament to make the declaration contained in Section 2 ...... . has naturally to be the paramount consideration in all matters concerning the regulation of mines and the development of minerals'. He went on to say, 'The statute with which we are concerned, the Mines and Minerals (Development and Regulation) Act, is aimed ........... at the conservation and the 0 prudent and discriminating exploitation of minerals. Surely, in the case of a scarce mineral, to permit exploitation by the State or its agency and to prohibit exploitation by private agencies is the most effective method of conservation and prudent E exploitation. If you want to conserve for the future, you must prohibit in the present.'

State Government's ownership in mines and minerals within its territory and the power of reservation

105. It is not in dispute that all rights and interests, including rights in mines and minerals in the subject area, had vested absolutely in the erstwhile State of Bihar free from all encumbrances. At the commencement of Constitution, the erstwhile State of Bihar was a Part-A State specified in the First G Schedule of the Constitution and prior thereto the Province of Bihar. By virtue of Article 294, all properties and assets which were vested in His Majesty for the purposes of the Government of Province of Bihar stood vested in the corresponding State of Bihar. By 1950 Bihar Act, all other lands i.e., estates and H tenures of whatever kind, including the mines and minerals

p. 769

AND ORS. [R.M. LODHA, J.] therein, stood vested in the State of Bihar. Thus, all lands and A minerals on or under land situate in the erstwhile State of Bihar came to vest in it. Thereafter with effect from November 15, 2000, the State of Jharkhand was carved out of the State of Bihar pursuant to the Bihar Re-Organisation Act, 2000. Accordingly, all lands, inter alia, belonging to the then State of B Bihar and situated in the transferred territories of Singhbhum (East) and Singhbhum (West) Districts, passed to the newly created State of Jharkhand. The admitted position is that the State Government (erstwhile Bihar and now Jharkhand) is the owner of the subject area. Mines and minerals within its territory c vest in it absolutely. As a matter of fact it is because of this position that the appellants made their application for grant of mining lease to the State Government. The question now is, the regulation of mines and development of minerals having been taken under its control by the Central Government, whether the provisions contained in 1957 Act or 1960 Rules come in the way of the State Government to reserve any particular area for exploitation in the public sector.

106. The legislation on the subject of mines and minerals as contained in 1957 Act and 1960 Rules has been extensively quoted in the earlier part of the judgment. Suffice it to say that Section 4 is a pivotal provision around which the legal framework for the regulation of mines and development of minerals as laid down in 1957 Act revolves. F

107. The character of the impugned Notifications making reservation of the area set out therein for exploitation of iron ore in public sector has to be judged in light of the provisions in 1957 Act and 1960 Rules. The object and effect of declaration made by Parliament in Section 2 and the provisions G that follow Section 2 in 1957 Act, which have been extensively referred to above, even remotely do not suggest that the Government of the erstwhile State of Bihar lacked authority or competence to make reservation of subject mining areas within its territory relating to iron ore which vested in it for public sector H

p. 770

A undertaking by 1962 and 1969 Notifications. Whatever way it is seen, whether 'reservation' topic was covered by 1957 Act when 1962 and 1969 Notifications were issued and published by the State Government or whether the provisions of 1957 Act, as were then existing, enabled the State Government to B reserve the subject area for its own use through the agency in public sector, I am of the opinion that since the State Government's paramount right over the iron ore being the owner of the mines did not get affected by 1957 Act, the power existed with the State Government to reserve subject areas of c mining for exploitation in public sector undertaking. It was, however, argued that by 1957 Act the State's ownership rights insofar as 'development of minerals' was concerned stood frozen. 'Development' includes exploitation of mineral resources and to allow to exploit or not to allow to exploit is all covered by 1957 Act and by Section 4 the right of the State Government 0 with regard to development of minerals was taken away and the State Government ceased to have any inherent right of reservation.

108. I do not agree. In the first place, the declaration made by Parliament in Section 2 and the provisions that follow Section 2 in 1957 Act have left untouched the State's ownership of mines and minerals within its territory although the regulation of mines and the development of minerals have been taken under the control of the Union. Section 4 deals with activities in relation to land and does not extend to extinguish the State's right of ownership in such land. Section 4 regulates the right to transfer but does not divest ownership of minerals in a State and does not preclude the State Government from exploiting its minerals. Section 4(1) can have no application where the G State Government wants to undertake itself mining operations in the area owned by it. On consideration of Section 5, I am of the view that the same conclusion must follow. Section 5 or for that matter Sections 6, 9, 10, 11 and 13(2)(a) also do not take away the State's ownership rights in the mines and minerals H within its territory. The power to legislate for regulation of mines

p. 771

AND ORS. [R.M. LODHA, J.] and development of minerals under the control of the Union may definitely imply power to acquire mines and minerals in the larger public interest by appropriate legislation, but by 1957 Act that has not been done. There is nothing in 1957 Act to suggest even remotely - and there is no express provision at all - that the mines and minerals that vested in the States have been acquired. Rather, the scheme and provisions of 1957 Act themselves show that Parliament itself contemplated State legislation for vesting of lands containing mineral deposits in the State Government and that Parliament did not intend to trench upon powers of State Legislatures under Entry 18, List c II. As noted above, the declaration made by Parliament in Section 2 of 1957 Act states that it is expedient in the public interest that the Union should take under its control the regulation of mines and development of minerals to the extent provided in the Act itself. The declaration made in Section 2 is, thus, not all comprehensive.

109. The regulation of mines and development of minerals has been taken over under its control by the Central Government to the extent it is manifested in 1957 Act which does not contemplate acquisition of mines and minerals. By the presence of keynote expression 'to the extent hereinafter provided' in Section 2, the Union has assumed control to the extent specified in the provisions following Section 2. In my view, although the word ·regulation' must in the context receive wide interpretation, but the extent of control by Union as specified in 1957 Act has to be construed strictly. The decisions of this Court in M.A. Tulloch & Co. b, Baijnath Kadio 0 , Bharat Coking Coal and few other decisions where this Court has held with reference to declaration made by Parliament in Section 2 of 1957 Act and the provisions of that Act that the whole of the legislative field was covered were in the context of specific State legislations under consideration. In the context of subject State legislation, the whole legislative field was found to be occupied by the Central law. The same is the position in the case of Hingir-Rampur Coal Co.• where whole of the H

p. 772

A legislative field relating to 'minerals' was found to be covered by the declaration made in Section 2 of the 1948 Act in the context of the State legislation under consideration. In Hingir- Rampur Coal Co.• while examining the constitutional validity of the Orissa Mining Areas Development Fund Act, 1952 this B Court held that the State Act was covered by the 1948 Act. In M.A. Tulloch & Companyl' , this Court was concerned with the same Orissa Act which was under consideration in Hingir- Rampur Coal Co.• and in light of Section 18(1) of the 1957 Act which was under consideration it was held that the intention c of Parliament was to cover the entire field. In Baijnath Kadio", this Court was concerned with the constitutional validity of proviso (2) to Section 10(2) added by Bihar Land Reforms (Amendment) Act, 1964. While examining the constitutional validity of the above provision, the Constitution Bench of this Court analysed 1957 Act. In light of Entry 54 in List I and Entry 0 23 in List II the observation that whole of the legislative field was covered by the Parliamentary declaration read with 1957 Act was with reference to the State legislations under consideration and the whole of the legislative field was found to be occupied by 1957 Act. Similar observations in various other decisions by this Court were made in the context of the topic under consideration.

110. I am supported in my view by a three-Judge Bench decision of this Court in Orissa Cement Limitecf wherein it was emphatically asserted that in the case of a declaration under Entry 54, the legislative power of the State Legislatures is eroded only to the extent control is assumed by the Union pursuant to such declaration as spelt out by the legislative enactment which makes the declaration. The three-Judge G Bench on careful consideration said, 'The measure of erosion turns upon the field of the enactment framed in pursuance of the declaration. While the legislation in Hingir-Rampur Coal Co.• and M.A. Tulloch & Co.b was found to fall within the pale of the prohibition, those in Chanan Ma/X, lshwari Khetan Sugar H Mif/sY and Western Coalfield" Limitedoo were general in nature

p. 773

AND ORS. [R.M. LODHA, J.] and traceable to specific entries in the State List and did not A encroach on the field of the Central enactment except by way of incidental impact'.

111. Secondly, after enactment of 1957 Act and 1960 Rules made thereunder, the Central Government has all 8 throughout understood that the State Governments as owner of mines and minerals within their territory have inherent right to reserve any particular area for exploitation in the public sector. This position is reflected from the order of the Central Government that was passed by it and which was under challenge in Amritlal Nathubhai Shahd. In its order the Central C Government had stated, ' .... The State Government had the inherent right to reserve any particular area for exploitation in the public sector. Mineral vest in them and they are owners of minerals ....... and Central Government are in agreement with the State Government in so far as the reservation of areas is D concerned ..... "

112. The above position held by the Central Government has been approved by this Court in Amritlal Nathubhai Shahd. I have already referred to the facts in the case of Amritlal E Nathubhai Shahd and the issue involved therein - an issue similar to the controversy presented before us - in earlier part of this judgment. In Amritlal Nathubhai Shahd, the Court referred to Section 4 of 1957 Act and it was held that there was nothing in 1957 Act or 1960 Rules to conclude as to why the F State Government could not, if it so desired, 'reserve' any land for itself, for any purpose, and such reserved land would then not be available for the grant of a prospecting licence or a mining lease to any person. The Court then pointed out, 'the authority to order reservation flows from the fact that the State G is the owner of the mines and the minerals within its territory'. It was also held that quite apart from that, Rule 59 of 1960 Rules clearly contemplated reservation by an order of the State Government. The above legal position has been reiterated by this Court in Indian Metals and Ferr° Alloys Ltd.P. H

p. 774

A Whether Amritlal Nathubhai Shah is not a binding precedent

113. Learned senior counsel for the appellants, however, vehemently contended that Amritlal Nathubhai Shahd is not a B binding precedent being per incuriam inasmuch as earlier judgments of this Court have not been considered and applied. It was argued that decision in Amritlal Nathubhai Shahd was limited to its own facts and that decision did not deal with reservation prior to amendment in Rule 59. In that case Notification was of December 31, 1963 whereunder lands in C particular areas had been reserved for exploitation of bauxite in the public sector. At that time Rule 59 of 1960 Rules had been amended and, moreover, that was a case of exploitation of mineral by the State itself and in case of exploitation other than by State it could only be done in accord with the 1957 Act D and 1960 Rules.

114. I am afraid that the distinguishing features highlighted by learned senior counsel for the appellants are not substantial and do not persuade me not to follow Amritlal Nathubhai E Shahd. The judgment of this Court in Amritlal Nathubhai Shahd establishes the distinction between the power of reservation to exploit a mineral as its own property on the one hand and the regulation of mines and mineral development under the 1957 Act and the 1960 Rules on the other. The authority of the S.tate F Government to make reservation of a particular mining area within its territory for its own use is the offspring of ownership; and it is inseparable therefrom unless denied to it expressly by an appropriate law. By 1957 Act that has not been done by Parliament. Setting aside by a State of land owned by it for its G exclusive use and under its dominance and control, in my view, is an incident of sovereignty and ownership. There is no incongruity or inconsistency in the decisions of this Court in Hingir-Rampur Coal Co. 0 , M.A. Tulloch & Co. b, Baijnath Kadioc and Amritlal Nathubhai Shahd. The Bench in Amritlal Nathubhai Shahd was alive to the legal position highlighted by H

p. 775

AND ORS. [R.M. LODHA, J.] this Court in Hingir-Rampur Coal Co.•, M.A. Tulloch & Co.b A and Baijnath Kadio 0 although it did not expressly refer to these decisions. This is apparent from the observations made in para 3 wherein it has been stated that in pursuance of its exclusive power to make laws with respect to the matters enumerated in Entry 54 of List I in the Seventh Schedule, Parliament specifically B declared in Section 2 of the 1957 Act that it was expedient in the public interest that the Union should take under its control, regulation of mines and the development of minerals to the extent provided therein. The Bench noticed that State Legislature's power under Entry 23 of List II was, thus, taken c away and regulation of mines and mineral development had therefore to be in accordance with the 1957 Act and 1960 Rules. The legal position exposited in Amritlal Nathubhai Shahct is that even though the field of legislation with regard to regulation of mines and development of minerals has been covered by the declaration of the Parliament in Section 2 of the 1957 Act, but that can not justify the inference that the State Government has lost its right to the minerals which vest in it as a property within its territory and hence no person has a right to exploit the mines other than in accordance with the provisions of the 1957 Act and the 1960 Rules. The authority of the State Government to order reservation flows from the fact that it is the owner of the mines and the minerals within its territory. Such authority is also traceable to Rule 59 of 1960 Rules.

115. Yet another considerable point was made that 1962 F and 1969 Notifications are not relatable to statutory provisions contained in 1957 Act and 1960 Rules. Reference was made to Sections 17 and 18 and Rules 58 and 59 of 1960 Rules and it was argued that these provisions are indicative of the position that reservation made by the State Government for exploitation G of minerals in public sector was unsupportable and unsustainable in law.

Section 17 - not all - comprehensive provision

116. I am of the opinion that Section 17 is not all - H

776 SUPREME COURT REPORTS [2012J 7 S.C.R.

A comprehensive on the subject of refusal to grant prospecting licence or mining lease. Section 17 has nothing to do with public or private sector. It does not deal directly or indirectly with the State Government's right for reservation of its own mines and minerals. Its application is not general but it is confined to B a specific situation where the Central Government proposes to undertake prospecting or mining operations in any area not already held under any prospecting licence or mining lease. The above view with regard to Section 17 finds support from Amritlal Nathubhai Shahd. Insofar as Section 18 is concerned, c it basically confers additional rule making power upon the Central Government for achieving the objectives, namely, conservation and systematic development of minerals articulated therein. If the State Government makes reservation in public interest with respect to minerals which vest in it for exploitation in public sector, I fail to see how such reservation 0 can be seen as impairing the obligation cast upon the Central Government under Section 18.

Rule 59 and Janak Lal

117. It is true that Rule 58 as it existed originally did not enable the State Government to reserve any area in the State for exploitation of minerals in public sector. But Rule 59 did recognise the State Government's authority to make reservation for any purpose. It was, however, argued by Dr. Rajiv Dhavan F that Rule 59, as it then stood, allowed reservation for any purpose other than prospecting or mining for minerals. He relied upon decision of this Court in Janak La/i. In Janak La/i, admittedly the disputed area was reserved for nistar purposes. When an application for grant of mining lease was earlier made by a third party it was rejected on the ground that it was so reserved. It was also an admitted position before this Court that the procedure under Rule 58 was not followed before grant was made in favour of respondent no. 4 therein and no opportunity was given to any other perscn before entertaining application of respondent no. 4. In the backdrop of the above admitted

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 777

AND ORS. [RM. LODHA, J.] position, the Court considered the question whether Rule 59 A was attracted or not. The High Court had accepted the argument of the respondents that the expression 'reserved for any purpose' in Rule 59 did not cover a case where the area was reserved for nistar purposes or for any purpose other than mining. This Court did not accept the High Court's view. While B construing Rule 59 as it originally existed and the amendment brought in Rule 59 by deleting the words, 'other than prospecting or mining for minerals', the Court said that the result of the amendment was to extend the rule and not to curtail its area of operation. It was held that words 'any purpose' was of wide c connotation and there was no reason to restrict its meaning.

118. Janak La/,i in my opinion, does not help the contention canvassed on behalf of the appellants. The expression, 'other than prospecting or mining for minerals' that formed part of original Rule 59, in my view, was not of much significance and did not impede the State Government's authority to make reservation of any area for exploitation in public sector founded on its ownership over that area. It was because of this that this insignificant and inconsequential expression was later on deleted from Rule 59 in 1963. Rule 59, accordingly, continued to recognise the State Government's right to reserve any area for mining within its territory for any purpose including exploitation in public sector. In Amritlal Nathubhai Shahd, this position has been expressly affirmed when it said, "but quite apart from that, we find that Rule 59 of the Rules which have been made under Section 13 of the Act, clearly contemplates such reservation by an order of the State Government".

Repeal of Rule 58 and Section 17A

119. Rule 58 was amended in 1980 whereby it expressly provided that the State Government may by Notification in the official gazette reserve any area for exploitation by the Government, a corporation established by the Central, State or Provincial Act or a Government company within the meaning of Section 617 of the Companies Act. Rule 58 has been H

pp. 776–777 — page break not located

p. 778

A omitted from 1960 Rules as the provision for reservation has now been expressly made by insertion of Section 17A in 1957 Act. According to Section 17A(2), the State Government with the approval of the Central Government may reserve any area not already held under any prospecting licence or mining lease B to undertake prospecting or mining operations through a Government company or a corporation owned or controlled by it. In terms of Section 17A(2), any reservation made by the State Government after coming into force of that Section must bear approval of the Central Government. c 120. From the above, it becomes clear that what was implied by the provisions originally contained in 1957 Act and 1960 Rules insofar as authority of the State Government to reserve any area within its territory for mining in public sector has been made explicit first by amendment in Rule 58 in 1980 D and later on by introduction of Section 17A in 1957 Act by virtue of amendment effective from 1987.

121. It was also argued by Mr. C.A. Sundaram, learned senior counsel for one of the appellants that even if 1962 and E 1969 Notifications were held to be validly issued with proper authority of law at that point of time, the fact that Rule 58 was omitted in 1988 without any saving clause necessarily meant that these Notifications were no longer valid and could not be relied upon. He argued that current power of reservation F contained in Section 17A of 1957 Act is consistent with erstwhile Rules 58/59 since Section 17A expressly requires the approval of the Central Government before any State Government issues any notification for reservation of mining area in public sector.

122. The impact of omission of Rule 58 in 1988 from 1960 Rules and the introduction of Section 17A in 1957 Act in the context of reservation of the mining area by the State Government for public sector exploitation came up for direct consideration by this Court in Indian Metals and Ferro Alloys H Ltd.P. In the earlier part of the judgment I have already quoted

p. 779

AND ORS. [R.M. LODHA, J.] the relevant portion of the decision of this Court in Indian Metals A and Ferro Alloys Ltd.P. The Court referred to the relevant amendments in 1957 Act and 1960 Rules and categorically held that reservations made prior to insertion of Section 17A continue in force even after the introduction of Section 17A. The reservations made by the State Government in 1977 before B omission of Rule 58 and amendment in Rule 59 and insertion of Section 17A in 1957 Act were, thus, held to be unaffected.

123. Having carefully considered Section 17A, I have no hesitation in holding that the said provision is prospective. There C is no indication in Section 17A or in terms of the Amending Act that by insertion of Section 17A the Parliament intended to alter the pre-existing state of affairs. The Parliament does not seem to have intended by bringing in Section 17A to undo the reservation of any mining area made by the State Government earlier thereto for exploitation in public sector. The Parliament D has no doubt plenary power of legislation within the field assigned to it to legislate prospectively as well as retrospectively. As early as in 1951 this Court in Keshavan Madhava Menon v. State of Bombay" had stated abo.ut a cardinal principle of construction that every statue is prima facie E prospective unless it 1s expressly or by necessary implication made to have retrospective operation. Unless there are words in the statute sufficient to show the intention of the Legislature to affect existing rights, it is deemed to be prospective only. In Principles of Statutory Interpretation (Seventh Edition, 1999) by F Justice G.P. Singh, the statement of Lord Blanesburg in Colonial Sugar Refining Co. v. lrvings• and the observations of Lopes, L.J. in Pu/borough Parish School Board Election, Bourke v. Nuftlt have been noted as follows : G "In the words of Lord Blanesburg, "provisions which touch

rr. AIR 1951 SC 128. ss. (1905) AC 369. tt. (1894) 1 QB 725, p. 737. H

p. 780

A a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment." "Every statute, it has been said", observed Lopes, L.J., "which takes away or impairs vested rights acquired under existing laws, or B creates a new obligation or imposes a new duty, or attaches a new disability in respect of transactions already past, must be presumed to be intended not to have a retrospective effect".

124. Where an issue arises before the Court whether a C statute is prospective or retrospective, the Court has to keep in mind presumption of prospectivity articulated in legal maxim nova constitutio futuris formam imponere debet non praeteritis, i.e., 'a new law ought to regulate what is to follow, not the past'. The presumption of prospectivity operates unless D shown to the contrary by express provision in the statute or is otherwise discernible by necessary implication.

125. The aspects, namely, (i) 1993 mineral policy framed by the Central Government envisaged permission of captive E cons1:1mption of minerals across the country; (ii) in 1994 Central Government asked all the state governments to de-reserve 13 minerals including iron ore and directed them to take steps accordingly; (iii) confirmation by the Government of Bihar to the Central Government in 1994 that no mining areas were reserved for public sector undertaking in the then State of Bihar; (iv) confirmation by the State Government in 2001 to Central Government that there are no reserved areas in the State and (v) in 2004, the recommendation by the State Government in favour of the appellants to the Central Government for grant of prior approval and reminder in 2005, in my view, have no impact and effect on the validity of 1962 and 1969 Notifications. The above acts of the Government of Bihar and the Government of Jharkhand in ignorance of 1962 and 1969 Notifications cannot be used as a sufficient ground for invalidating these Notifications. If a state government has power to reserve H

MONNET ISPAl & ENERGY LTD. v. UNION OF INDIA 781 AND ORS. [R.M. LODHA, J.] mineral bearing area for exploitation in public sector - and I A have already held that the then Government of Bihar had such power - the act of reservation vide 1962 and 1969 Notifications is not rendered illegal or invalid. I am clearly of the view that lack of knowledge on the part of the State Government about the reservation of areas for exploitation in public sector vide B 1962 and 1969 Notifications does not affect in any manner the legality and validity of these Notifications once it has been found that these Notifications have been issued by the erstwhile State of Bihar in valid exercise of power which it had.

Validity of 2006 Notification c

126. On October 27, 2006, the State Government issued a Notification declaring its decision that the iron ore deposits at Ghatkuri would not be thrown open for grant of prospecting licence, mining licence or otherwise for private parties. In the said Notification, it was noted that the deposits were at all material times kept reserved by 1962 and 1969 Notifications issued by the State of Bihar. It was further mentioned in the Notification that mineral reserved in Ghatkuri area has now been decided to be utilized for exploitation by public sector undertaking or joint venture project of the State Government as they would usher in maximum benefits to the State and would generate substantial amount of employment in the State. 2006 Notification states that it has been issued in the public interest and in the larger interest of the State for optimum utilization and exploitation of the mineral resources in the State and for establishment of mineral based industry with value addition thereon. It was argued that 2006 Notification is bad for the same reasons for which 1962 and 1969 Notifications are bad in law and invalid. The argument is noted to be rejected. For G 1962 and 1969 Notifications are not and have not been found by me to suffer from any legal infirmity. 2006 Notification mentions factum of reservation made by 1962 and 1969 Notifications. It is founded on the policy of the State Government that such reservation will usher in maximum benefits to the State H

p. 781 — page break not located

p. 782

A and would also generate substantial amount of employment in the State. The public interest is, thus, paramount. The State Government had authority to do that under Section 17A(2) of 1957 Act read with Rule 59(1)(e) of 1960 Rules.

127. It was, however, argued on behalf of the appellants 8 that 2006 Notification has attempted to reserve the area for exploitation by public sector undertaking or in joint venture project whereas Section 17A(2) of 1957 Act allows the State Government to reserve area for a government company or corporation owned or controlled by it and not in joint venture C project. The submission was that 2006 Notification is an attempt to bring in indirectly private companies through joint venture project although, Section 17A clearly does not envisage private participation.

128. The mineral reserved in the said area by 2006 Notification has been decided to be utilized for exploitation by public sector undertaking or joint venture project of the State Government. 2006 Notification does mention reservation for joint venture project of the State Government but, in my opinion, the said expression must be understood to be confined to an instrumentality having the trappings and character of a government company or corporation owned or controlled by the State Government and not outside of such instrumentality.

129. The types of reservation under Section 17A and their scope have been considered by this Court in Indian Metals and Ferro Alloys Ltd.Pin paragraphs 45 and 46 (pgs. 136-139) of the Report. I am in respectful agreement with that view. However, it was argued that Section 17A(2) requires prior approval of the Central Government before reservation of any area by the State Government for the public sector undertaking. The argument is founded on incorrect reading of Section 17A(2). This provision does not use the expression, 'prior approval' which has been used in Section 11. On the other hand, Section 17A(2) uses the words, 'with the approval of the H Central Government'. These words in Section 17A(2) can not

p. 783

AND ORS. [R.M. LODHA, J.] be equated with prior approval of the Central Government. A According to me, the approval contemplated in Section 17A may be obtained by the State Government before the exercise of power of reservation or after exercise of such power. The approval by the Central Government contemplated in Section 17A(2) may be express or implied. In a case such as the present B one where the Central Government has relied upon 2006 Notification while rejecting appellants' application for grant of mining lease, it necessarily implies that the Central Government has approved reservation made by State Government in 2006 Notification otherwise it would not have acted on the same. In c any case, the Central Government has not disapproved reservation made by the State Government in 2006 Notification.

130. Two more contentions advanced on behalf of the appellants, one, with regard to 2006 Notification and the other with regard to 1962 and 1969 Notifications may be briefly D noticed. As regards 2006 Notification it was contended that it was not legally valid as it has been made operative with retrospective effect. In respect of 1962 and 1969 Notifications, it was argued that the State Government had never adopted these Notifications and, accordingly, these Notifications lapsed. E None of these two arguments has any merit. 2006 Notification has not been given retrospective operation as contended on behalf of the appellants. I have already held that 2006 Notification is prospective. Mere reference to 1962 and 1969 Notifications in 2006 Notification does not make 2006 F Notification retrospective.

131. The other argument that 1962 and 1969 Notifications had lapsed as the State Government never adopted them is also without any merit and substance. The new State of Jharkhand was carved out of the erstwhile State of Bihar and G it came into existence by virtue of the Bihar Reorganisation Act, 2000. Section 85 of that Act provides that the appropriate Government may before expiration of two years adapt and/or modify the law and every such law shall have effect subject to adaptation and modification so made until altered, repealed or H

p. 784

A amended by a competent Legislature. In light of Section 85 of the Bihar Reorganisation Act read with Sections 84 and 86 thereof, position that emerges is that the existing law shall have effect until it is altered, repealed and/or amended. Since the new State of Jharkhand had not altered, repealed and/or s amended 1962 and 1969 Notifications issued by the erstwhile State of Bihar, it cannot be said that 1962 and 1969 Notifications had lapsed. Moreover, in 2006 Notification, 1962 and 1969 Notifications and their effect have been mentioned and that also shows that 1962 and 1969 Notifications continued c to operate. The expression, 'the deposit was at all material times kept reserved vide Gazette Notification No. NMM-40510/ 62-6209/M dated 21st December, 1962 and No. B/M-6-1019/ 68-1564/M dated 28th February, 1969 of the State of Bihar' leaves no manner of doubt that 1962 and 1969 Notifications D continued to operate and did not lapse.

Principles of promissory estoppal

132. The doctrine of promissory estoppel is now firmly established and is well accepted in India. Its nature, scope and extent have come up for consideration before this Court time and again. One of the leading cases of this Court on the doctrine of promissory estoppel is the case of Motila/ Padampat Sugar Mills' . In that case, the Court elaborately and extensively considered diverse facets and aspects of doctrine of promissory estoppel. That was a case where the appellant was primarily engaged in the business of manufacture and sale of sugar and it had also a cold storage plant and a steel foundry. On October 10, 1968 a news item was carried in the newspaper/s that the State of Uttar Pradesh had decided to give exemption from sales tax for a period of three years under G Section 4-A of the U.P. Sales Tax Act to all new industrial units in the State with a view to enabling them, "to come on firm footing in developing stage". Motilal Padampat Sugar Mills' on the basis of the above news, addressed a letter to the Director of the Industries stating that in view of the Sales Tax H

p. 785

AND ORS. [R.M. LODHA, J.] Holiday announced by the Government, it intended to set up a A hydrogeneration plant for manufacture of vanaspati and sought confirmation whether proposed industrial unit would be entitled to sales tax holiday for a period of three years from the date it commenced production. Tl1e Director of Industries replied that there would be no sales tax for three years on the finished B product of the vanaspati from the date it got power connection for commencing production. Motilal Padampat Sugar Mills' then started taking steps for establishment of the factory. It entered into agreement for procuring plant and machinery and also took diverse steps and considerable progress in the c setting up of the vanaspati factory took place. Later on, the State Government had a second thought on the question of exemption of sales tax and, ultimately, the government took a policy decision that new vanaspati units in the State which go into commercial production by September 30, 1970 would be given only partial concession in sales tax for a period of three years. Motilal Padampat Sugar Mills' took up the matter with the Government and in the meanwhile its production started on July 2, 1970 which was also intimated to the functionaries of the State. Having been denied total sales tax holiday 31though promised earlier by the Director of Industries, it filed a writ petition before the High Court. The principal argument advanced on behalf of Motilal Padampat Sugar Mills' was that on a categorical assurance of the State Government that it would be exempted from payment of sales tax for a period of three years from the date of commencement of production that it established a hydrogeneration plant for manufacture of vanaspati. The assurance was given by the State Government intending or knowing that it would be acted on by it and in fact by acting on it, it altered its position and, therefore, the State Government was bound on the principle of promissory estoppel to honour the as~urance and exempt it from sales tax for a period of three years. In backdrop of these facts, when the matter reached this Court, the Court considered the nature, scope and extent of the doctrine of promissory estoppel. In paragraph 8 of the Report, the Court considered the view of H

p. 786

A Justice Denning, as he then was, in the Central London Property Trust Ltd. v. High Trees House Ltd. uu wherein Denning, J. had considered Jorden v. Money"'. This Court also referred to in paragraph 8, the opinions in Hughes v. Metropolitan Railway Company-, Birmingham and District B Land Co., v. London and North Western Rail Co.xx which were considered by Justice Denning in the High Trees"" case. The Court also considered the decisions in Durham Fancy Goods Ltd. v. Michael Jackson (Fancy Goods) Ltd.YY, Evenden v. Guildford City Association Football Club Ltd. zz and Crabb v. C Arun District Council••• and culled out the legal position as follows:

"8 ....... The true principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not."

Then in para 9, the Court stated that it was a doctrine evolved by equity in order to prevent injustice. The Court pointed out uu. (1956) 1 All ER 256. G w. (1854) 5 HLC 185. ww. (1877) 2 AC 439. xx. (1889) 40 Ch D 268. Y'f· (1968) 2 All ER 987. zz (1975) 3 All ER 269. H aaa. (1975) 3 All ER 865.

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 787 AND ORS. [R.M. LODHA, J.) that where promise is made by a person knowing that it would A be acted on by the person to whom it is made and in fact it is so acted on, it is inequitable to allow the party making the promise to go back upon it.

133. In para 13, the development of doctrine of promissory 8 estoppel in England was noticed by observing, "that even in England where the Judges, apprehending that if a cause of action is allowed to be founded on promissory estoppel it would considerably erode, if not completely overthrow, the doctrine of consideration, have been fearful to allow promissory estoppel to be used as a weapon of offence, it is interesting to find that promissory estoppel has not been confined to a purely defensive role".

134. In Motilal Padampat Sugar Mills', the Court also referred to American law on the subject. In para 14 after observing, 'the doctrine of promissory estoppel has displayed remarkable vigour and vitality in the hands of American Judges and it is still rapidly developing and expanding in the United States", the Court referred to Article 90 of Americ.an Law lnstitute's "Restatement of the Law of Contracts" and the statement at page 657 of Volume 19 of American Jurisprudence.

135. The Court then considered the view of Justice Cardozo in Allengheny College v. National Chautauque F County BanJ<bbb and Drennan v. Star Paving Companyxc and noted as follows :

"14. There are also numerous cases where the doctrine of promissory estoppel has been applied against the Government where the interest of justice, morality and G common fairness clearly dictated such a course. We shall refer to these cases when we discuss the applicability of the doctrine of equitable estoppel against the Government. bbb. 57 ALR 980. CCC. (1958) 31 Cal 2d 409. H

p. 787 — page break not located

p. 788

A Suffice it to state for the present that the doctrine of promissory estoppel has been taken much further in the United States than in English and Commonwealth ·jurisdictions and in some States at least, it has been used to reduce, if not to destroy, the prestige of consideration B as an essential of valid contract. Vide Spencer Bower and Turner's Estoppel by Representation (2d) p. 358.

136. The Court then considered to what extent the doctrine of promissory estoppel was applicable against the C Government. After referring to few decisions of the English courts and the American courts, the decisions of this Court in Union of India v. lndo-Afghan Agenciesddd, Collector of Bombay v. Municipal Corporation of the City of Bombaye••, Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council'", M. Ramanatha Pillai v. State of D Keralaggg' Assistant Custodian v. Brij Kishore Agarwa/ahhh, State of Kera/av. Gwalior Rayon Silk Manufacturing Co. Ltd.iii, Excise Commissioner, UP., Allahabad v. Ram Kumariil, Bihar Eastern Gangetic Fishermen Co-operative Society Ltd. v.

Sipahi Singhkkk and Radhakrishna Agarwal v. State of Bihar 11

E were considered.

137. After entering into detailed consideration as noted above, in Moti/al Padampat Sugar Mills2, this Court exposited the legal position that the doctrine of promissory estoppel may F be applied against the State even in its governmental, public

ddd. (1968) 2 SCR 366. eee. (1952) SCR 43. fff. (1970) 1 sec 582. G ggg. (1974) 1 SCR 515. hhh. (1975) 1sec 21. iii. (1973) 2 sec 713. iii· (1976) 3 sec 540. kkk. (1977) 4 sec 145.

H 111. (1977) 3 sec 457.

p. 789

AND ORS. [R.M. LODHA, J.] or sovereign capacity where it is necessary to prevent fraud or A manifest injustice. The following position was culled out:

''The promissory estoppel cannot be invoked to compel the Government or even a private party to do an act prohibited by law. B To invoke the doctrine of promissory estoppel it is not necessary for the promisee to show that he suffered any detriment as a result of acting in reliance on the promise. The detriment is not some prejudice suffered by the promisee by acting on the promise but the prejudice which would be caused to the promisee, if the promiser were allowed to go back on the promise.

Whatever be the nature of function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential ingredients of this rule are satisfied the Government can be compelled to carry out the promise made by it."

138. In Union of India and Others v. Godfrey Philips India Limitedmmm (para 9, page 383 of the Report), this Court stated as follows:

"9. Now the doctrine of promissory estoppel is well established in the administrative law of India. It represents a principle evolved by equity to avoid injustice and, though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. The basis of this doctrine is the interposition of equity which has always, true to its form, stepped in to mitigate the rigour of strict law. This doctrine, though of ancient vintage, was rescued from obscurity by the decision of Mr. Justice Denning as he then was, i.n his celebrated judgment in Central London Property Trust Ltd. v. High Trees House

mmm.(1985) 4 sec 369. H

p. 790

A Ltd. The true principle of promissory estoppel is that where one party has by his word or conduct made to the other a clear and unequivocal promise or representation which is intended to create legal relations or effect a legal relationship to arise in the future, knowing or intending that B it would be acted upon by the other party to whom the promise or representation is made and it is in fact so acted upon by the other party, the promise or representation would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings which c have taken place between the parties. It has often been said in England that the doctrine of promissory estoppel cannot itself be the basis of an action: it can only be a shield and not a sword: but the law in India has gone far ahead of the narrow position adopted in England and as D a result of the decision of this Court in Motilal Padampat Sugar Mills v. State of U.P. it is now well settled that the doctrine of promissory estoppel is not limited in its application only to defence but it can also found a cause of action. The decision of this Court in Motilal Sugar Mills E case contains an exhaustive discussion of the doctrine of promissory estoppel and we find ourselves wholly in agreement with the various parameters of this doctrine outlined in that decision."

139. The doctrine of promissory estoppel also came up for consideration before this Court in Delhi Cloth and General Mills Limited v. Union of lndiannn_ In para 18 (page 95) of the Report the Court stated as follows :

"18. Here the Railways Rates Tribunal apparently, appears to have gone off the track. The doctrine of promissory estoppel has not been correctly understood by the Tribunal. It is true, that in the formative period, it was generally said that the doctrine of promissory estoppel cannot be invoked nnn. (1988) 1 sec 86.

p. 791

AND ORS. [R.M. LODHA, J.] by the promisee unless he has suffered "detriment" or A "prejudice". It was often said simply, that the party asserting the estoppel must have been induced to act to his detriment. But this has now been explained in so many decisions all over. All that is now required is that the party asserting the estoppel must have acted upon the B assurance given to him. Must have relied upon the representation made to him. It means, the party has changed or altered the position by relying on the assurance or the representation. The alteration of position by the party is the only indispensable requirement of the c doctrine. It is not necessary to prove further any damage, detriment or prejudice to the party asserting the estoppel. The court, however, would compel the opposite party to adhere to the representation acted upon or abstained from acting. The entire doctrine proceeds on the premise that D it is reliance based and nothing more."

140. A two-Judge Bench of this Court in Amrit Banaspati Company Limitedaa entered into consideration of the extent and applicability of doctrine of promissory estoppel and after considering earlier decisions of this Court in lndo-Afghan E Agenciesddd, Motilal Padampat Sugar Mil/S', Godfrey Philips India Limitecrmm and Delhi Cloth and General Mills Limited""" culled out the legal position that if a representation was made by an official on behalf of the Government then unless such representation is established to be beyond scope of authority F it should be held binding on the Government. However, if such representation was contrary to law then such representation was unenforceable. Then the Court stated (para 10, page 424) as follows: G "10. But promissory estoppel being an extension of principle of equity, the basic purpose of which is to promote justice founded on fairness and relieve a promisee of any injustice perpetrated due to promisor's going back on its promise, is incapable of being enforced H

p. 792

A in a court of law if the promise which furnishes the cause of action or the agreement, express or implied, giving rise to binding contract is statutorily prohibited or is against public policy ...... "

141. In Kasinka Trading & Anr. v. Union of India and 8 Anr. , the Court was principally concerned with the invocation 000

of the doctrine of promissory estoppel in the facts and circumstances of the case obtaining therein. The Court considered the decision of this Court in Inda-Afghan C Agencies<Jdd and the successive decisions. The Court held in (paras 11-12, pages 283-284) as under:

"11. The doctrine of promissory estoppel or equitable estoppel is well established in the administrative law of the country. To put it simply, the doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in the future, knowing as well as intending that the representation, assurance or the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, the promise, assurance or representation should be binding on the party making it and that party should not be permitted to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings, which have taken place or are intended to take place between the parties.

12. It has been settled by this Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public

H ooo. 1995 (1) sec 274.

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 793 AND ORS. [R.M. LODHA, J.]

authority "to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make". There is preponderance of judicial opinion that to invoke the doctrine of promissory estoppel clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that bald expressions, without any supporting material, to the effect that the doctrine is attracted because the party invoking the doctrine has altered its position relying on the assurance of the Government would not be sufficient to c press into aid the doctrine. In our opinion, the doctrine of promissory estoppel cannot be invoked in the abstract and the courts are bound to consider all aspects including the results sought to be achieved and the public good at large, because while considering the applicability of the doctrine, the courts have to do equity and the fundamental principles of equity must for ever be present to the mind of the court, while considering the applicability of the doctrine. The doctrine must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation."

Then in paragraph 20 of the Report while distinguishing the facts under consideration which were not found to be analogous to the facts in Inda-Afghan Agencies<Jdd and Matilal Padampat Sugar Mills, the Court stated (Para 20-21, pages 287-288) as follows:

"20. The facts of the appeals before us are not analogous to the facts in Inda-Afghan Agencies or M.P. Sugar Mills. In the first case the petitioner therein had acted upon the unequivocal promises held out to it and exported goods on the specific assurance given to it and it was in that fact situation that it was held that Textile Commissioner who H

p. 793 — page break not located

p. 794

A had enunciated the scheme was bound by the assurance thereof and obliged to carry out the promise made thereunder. As already noticed, in the present batch of cases neither the notification is of an executive character nor does it represent a scheme designed to achieve a B particular purpose. It was a notification issued in public interest and again withdrawn in public interest. So far as the second case (M.P. Sugar Mills case) is concerned the facts were totally different. In the correspondence exchanged between the State and the petitioners therein it was held out to the petitioners that the industry would be c exempted from sales tax for a particular number of initial years but when the State sought to levy the sales tax it was held by this Court that it was precluded from doing so because of the categorical representation made by it to the petitioners through letters in writing, who had relied upon the same and set up the industry.

21. The power to grant exemption from payment of duty, additional duty etc. under the Act, as already noticed, flows from the provisions of Section 25( 1) of the Act. The power to exempt includes the power to modify or withdraw the same. The liability to pay customs duty or additional duty under the Act arises when the taxable event occurs. They are then subject to the payment of duty as prevalent on the date of the entry of the goods, An exemption notification issued under Section 25 of the Act had the effect of suspending the collection of customs duty. It does not make items which are subject to levy of customs duty etc. as items not leviable to such duty. It only suspends the levy and collection of customs duty, etc., wholly or partially and subject to such conditions as may be laid down in the notification by the Government in "public interest". Such an exemption by its very nature is susceptible of being revoked or modified or subjected to other conditions. The supersession or revocation of an exemption notification in the "public interest" is an exercise of the statutory power H

p. 795

AND ORS. [R.M. LODHA, J.] of the State under the law itself as is obvious from the A language of Section 25 of the Act. Under the General Clauses Act an authority which has the power to issue a notification has the undoubted power to rescind or modify the notification in a like manner. From the very nature of power of exemption granted to the Government under B Section 25 of the Act, it follows that the same is with a view to enabling the Government to regulate, control and promote the industries and industrial production in the country. Notification No. 66 of 1979 in our opinion, was not designed or issued to induce the appellants to import c PVC resin. Admittedly, the said notification was not even intended as an incentive for import. The notification on the plain language of it was conceived and issued on the Central Government "being satisfied that it is necessary in the public interest so to do". Strictly speaking, therefore, the notification cannot be said to have extended any 'representation' much less a 'promise' to a party getting the benefit of it to enable it to invoke the doctrine of promissory estoppel against the State. It would bear repetition that in order to invoke the doctrine of promissory estoppel, it is necessary that the promise which is sought to be enforced must be shown to be an unequivocal promise to the other party intended to create a legal relationship and that it was acted upon as such by the party to whom the same was made. A notification issued under Section 25 of the Act cannot be said to be holding out of any such unequivocal promise by the Government which was intended to create any legal relationship between the Government and the party drawing benefit flowing from of the said notification. It is, therefore, futile to contend that even if the public interest so demanded and the Central Government was satisfied that the exemption did not require to be extended any further, it could still not withdraw the exemption."

The Court went on to observe (paras 24 and 25, pages 289- 290) as under: H

p. 796

A "24. It needs no emphasis that the power of exemption under Section 25(1) of the Act has been granted to the Government by the Legislature with a view to enabling it to regulate, control and promote the industries and industrial productions in the country. Where the B Government on the basis of the material available before it, bona fide, is satisfied that the "public interest" would be served by either granting exemption or by withdrawing, modifying or rescinding an exemption already granted, it should be allowed a free hand to do so. We are unable to c agree with the learned counsel for the appellants that Notification No. 66 of 1979 could not be withdrawn before 31 ··3-1981. First, because the exemption notification having been issued under Section 25(1) of the Act, it was implicit in it that it could be rescinded or modified at any time if the public interest so demands and secondly it is not permissible to postpone the compulsions of "public interest" till after 31-3-1981 if the Government is satisfied as to the change in the circumstances before that date. Since, the Government in the instant case was satisfied that the very public interest which had demanded a total exemption from payment of customs duty now demanded that the exemption should be withdrawn it was free to act in the manner it did. It would bear a notice that though Notification No. 66of1979 was initially valid only up to 31- 3-1979 but that date was extended in "public interest", we see no reason why it could not be curtailed in public interest. Individual interest must yield in favour of societal interest.

25. In our considered opinion therefore the High Court was perfectly right in holding that the doctrine of promissory estoppel had no application to the impugned notification issued by the Central Government in exercise of its powers under Section 25(1) of the Act in view of the facts and circumstances, as established on the record." H

p. 797

AND ORS. [R.M. LODHA, J.]

142. In State of Orissa and Ors. v. Mangalam Timber A Products LimitedPPP, this Court held that to attract applicability of the principle of estoppel it was not necessary that there must be a contract in writing entered into between the parties. Having regard to the facts of the case under consideration, the Court held that it was not satisfied even prima facie that it was a case B of an error committed by the State Government of which it was not aware. While observing that the State cannot take advantage of its own omission, the Court held that having persuaded the respondent therein to establish an industry and that party having acted on the solemn promise of the State c Government, purchased the raw material at a fixed price and also sold its products by pricing the same taking into consideration the price of the raw material fixed by the State Government, the State Government cannot be permitted to revise the terms for supply of raw material adversely to the D interest of that party.

143. In Nestle India Limitecft>b, the applicability of doctrine of promissory estoppel again came up for consideration before this Court. Inter alia, the Court considered the earlier decisions of this Court in Inda-Afghan Agenciesddd, Motilal Padampat E Sugar Mills', Godfrey Philips India Limitedmmm, Mangalam Timber Products LimitedPPP, Amrit Banaspati Company Limited"" and Kasinka Trading" 00 • The Court followed Godfrey Philips India Limitecrmm which was found to be close to the facts of that case. The Court did not accept the argument F canvassed on behalf of the State of Punjab that the overriding public interest would make it inequitable to enforce the estoppel against the State Government.

144. In Bannari Amman Sugars Ltd. v. Commercial Tax G Officer & Ors. qqq, the development of doctrine of promissory estoppel was noted (paras 5-7, pages 631-633) and it was held as under: ppp. (2004) 1 sec 139. qqq. c2005) 1 sec 625. H

p. 798

A "5. Estoppel is a rule of equity which has gained new dimensions in recent years. A new class of estoppel has come to be recognised by the courts in this country as well as in England. The doctrine of "promissory estoppel" has assumed importance in recent years though it was dimly B noticed in some of the earlier cases. The leading case on the subject is Central London Property Trust Ltd. v. High Trees House Ltd., (1947) 1 K.B. 130 The rule laid down in High Trees case again came up for consideration before the King's Bench in Combe v. Combe [(1951) 2 KB 215]. Therein the Court ruled that the principle stated in c High Trees case is that, where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the party who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relationship as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced, even though it is not supported in point of law by any consideration, but only by his word. But that principle does not create any cause of action, which did not exist before; so that, where a promise is made which is not supported by any consideration, the promise cannot bring an action on the basis of that promise. The principle enunciated in High Trees case was also recognised by the House of Lords in Tool Metal Mfg. Co. Ltd. v. Tungsten Electric Co. Ltd. [(1955) 2 All ER 657]. That principle was adopted by this Court in Union of India v. Anglo Afghan Agencies (AIR G 1968 SC 718) and Turner Morrison and Co. Ltd. v. Hungerford Investment Trust Ltd.[(1972) 1 SCC 857]. Doctrine of "promissory estoppel" has been evolved by the courts, on the principles of equity, to avoid injustice. "Promissory estoppel" is defined in Black's Law Dictionary H as an estoppel.

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 799 AND ORS. [R.M. LODHA, J.] "which arises when there is a promise which promisor should reasonably expect to induce action or forbearance of a definite and substantial character on part of promisee, and which does induce such action or forbearance, and such promise is binding if injustice can be avoided only by enforcement of promise".

So far as this Court is concerned, it invoked the doctrine in Anglo Afghan Agencies case in which it was, inter alia, laid down that even though the case would not fall within the terms of Section 115 of the Indian Evidence Act, 1872 (in short "the Evidence Act") which enacts the rule of estoppel, it would still be open to a party who had acted on a representation made by the Government to claim that the Government should be bound to carry out the promise made by it even though the promise was not recorded in the form of a formal contract as required by Article 299 of the Constitution. [See Century Spg. & Mfg. Co. Ltd. v. Ulhasnagar Municipal Council, ((1970) 1 SCC 582]. Radhakrishna Agarwal v. State of Bihar, [(1977)3 SCC 457], Motilal Padampat Sugar Mills Co. Ltd. v. State of E UP., [(1979) 2 SCC 409], Union of India v. Godfrey Philips India Ltd. [(1985) 4 SCC 369] and Ashok Kumar Maheshwari (Dr.) v. State of U.P. [(1998) 2 SCC 502].

6. In the backdrop, let us travel a little distance into the past to understand the evolution of the doctrine of "promissory estoppel". Dixon, J., an Australian jurist, in Grundt v. Great Boulder Gold Mines Pty. Ltd. [(1939) 59 CLR 641 (Aust HC) laid down as under:

"It is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a H

p. 799 — page break not located

p. 800

A detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give B protection is that which would flow from the change of position if the assumptions were deserted that led to it."

The principle, set out above, was reiterated by Lord Denning in High Trees case. This principle has been c evolved by equity to avoid injustice. It is neither in the realm of contract nor in the realm of estoppel. Its object is to interpose equity shorn of its form to mitigate the rigour of strict law, as noted in Anglo Afghan Agencies case and Sharma Transport v. Govt. of A.P. [(2002) 2 SCC 188] D

7. No vested right as to tax-holding is acquired by a person who is granted concession. If any concession has been given it can be withdrawn at any time and no time-limit should be insisted upon before it was withdrawn. The rule E of promissory estoppel can be invoked only if on the basis of representation made by the Government, the industry was established to avail benefit of exemption. In Kasinka Trading v. Union of India [(1995) 1 SCC 274] it was held _ that the doctrine of promissory estoppel represents a principle evolved by equity to avoid injustice." F

145. In M.P. Mathurcc"c, the Court was concerned with the question whether on the facts of the case, the plaintiffs could compel transfer of tenements in their favour on the basis of promissory estoppel. The Court (para 14, page 716 of the G Report) observed as follows :

" ......... The term "equity" has four different meanings, according to the context in which it is used. Usually it means "an equitable interest in property". Sometimes, it H means "a mere equity", which is a procedural right ancillary

p. 801

AND ORS. [RM. LODHA, J.] to some right of property, for example, an equitable right to have a conveyance rectified. Thirdly, it may mean "floating equity", a term which may be used to describe the interest of a beneficiary under a will. Fourthly, "the right to obtain an injunction or other equitable remedy". In the present case, the plaintiffs have sought a remedy which is discretionary. They have instituted the suit under Section 34 of the 1963 Act. The discretion which the court has to exercise is a judicial discretion. That discretion has to be exercised on well-settled principles. Therefore, the court has to consider-the nature of obligation in respect of which c performance is sought, circumstances under which the decision came to be made, the conduct of the parties and the effect of the court granting the decree. In such cases, the court has to look at the contract. The court has to ascertain whether there exists an element of mutuality in the contract. If there is absence of mutuality the court will not exercise discretion in favour of the plaintiffs. Even if, want of mutuality is regarded as discretionary and not as an absolute bar to specific performance, the court has to consider the entire conduct of the parties in relation to the subject-matter and in case of any disqualifying circumstances the court will not grant the relief prayed for (Snell's Equity, 31st Edn., p. 366) ........ "

146. In my view, the following principles must guide a Court where an issue of applicability of promissory estoppel arises: F

(i) Where one party has by his words or conduct made to the other clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or G intending that it would be acted upon by the other party to whom the promise is made and it is, in fact, so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be H