Case Note & Summary
The petitioners, M/s J.S. Cotton Industries and M/s Tiranga Pulses, were small scale industrial units engaged in manufacturing dal and cotton. They registered with the District Industries Centre, Akola under the Special Capital Incentives Scheme (Package Scheme of Incentives, 2001) floated by the Government of India on 31.03.2001. The petitioner in WP No.5429/2007 registered on 24.01.2003 and invested Rs.59,05,000/-, while the petitioner in WP No.3332/2007 registered on 06.03.2004 and invested Rs.76,00,000/-. Both were sanctioned additional amounts as incentives by the respondent no.2. However, the respondent no.2 issued communications cancelling those sanction orders. The petitioners challenged these cancellations as arbitrary and without jurisdiction. The court noted that the respondents did not file any affidavit in reply to controvert the petitioners' claims. The court held that the cancellations were bad in law because they were made without issuing any show cause notice or affording an opportunity of hearing to the petitioners, violating principles of natural justice. Additionally, the court applied the doctrine of promissory estoppel, as the petitioners had invested substantial amounts based on the sanctioned incentives. The court allowed both petitions, quashed the impugned communications, and directed the respondents to continue the incentives as per the original sanction orders.
Headnote
A) Administrative Law - Promissory Estoppel - Cancellation of Incentive - Government Scheme - The petitioners, small scale industries, were sanctioned additional capital incentives under the Special Capital Incentives Scheme, 2001. The respondent District Industries Centre subsequently cancelled the sanction orders without notice. The Court held that the cancellation was bad in law as it violated principles of natural justice and the doctrine of promissory estoppel applied since the petitioners had acted on the sanctioned orders to their detriment. (Paras 2-5) B) Constitutional Law - Right to Hearing - Cancellation of Benefits - The Court held that before cancelling the sanctioned incentives, the respondents ought to have issued a show cause notice and given the petitioners an opportunity of hearing. The impugned communications were set aside as they were issued in violation of natural justice. (Paras 4-5)
Issue of Consideration
Whether the communications issued by the District Industries Centre cancelling the orders sanctioning additional amount as incentive to the petitioners under the Special Capital Incentives Scheme are bad in law.
Final Decision
Both writ petitions are allowed. The impugned communications cancelling the sanction orders are quashed and set aside. The respondents are directed to continue the incentives as per the original sanction orders.
Law Points
- Doctrine of promissory estoppel
- legitimate expectation
- principles of natural justice
- interpretation of government schemes
- right to hearing before cancellation of benefits
