Promissory estoppel bars retrospective withdrawal of policy concessions by departmental circular; High Court quashes the impugned change.

Administrative concessions granted under an existing government policy could not be withdrawn retrospectively through a departmental circular, particularly where dealers had altered their position in reliance on the concessions. The Bombay High Court applied promissory estoppel against the State in the exercise of executive powers and held that a circular styled as a clarification could not, in substance, alter the policy from an earlier date. Because the change was within the Government's policy domain and not within the competence of a departmental authority acting by administrative circular, the retrospective withdrawal was invalid. The impugned circular was quashed to the extent it sought to withdraw the concessions under clauses (ii) and (iii).

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Issues: Whether the impugned circular withdrawing the administrative concessions earlier granted under the State's policy could operate retrospectively and whether such withdrawal was within the competence of the issuing authority.

Analysis: The concessions had been granted by earlier government circulars as part of a settled policy and had been acted upon by dealers over time. The governing principle applied was that promissory estoppel operates against the State in the exercise of executive functions, and a concession or benefit already extended under a policy cannot be withdrawn retrospectively to the prejudice of those who altered their position on its basis. The impugned circular, though styled as a clarification, in substance altered the policy and attempted to withdraw the concessions from an earlier date. Such a change in policy could be made only by the Government and not by a departmental authority through a mere administrative circular.

Conclusion: The retrospective withdrawal of the concessions was impermissible and the circular was invalid to the extent it purported to withdraw the concessions under clauses (ii) and (iii).

Final Conclusion: The petition succeeded, and the impugned circular was quashed to the extent challenged, leaving the earlier concessions operative on a prospective basis only.

Ratio Decidendi: Administrative concessions granted as a matter of government policy cannot be withdrawn retrospectively by a departmental circular, and the State is bound by promissory estoppel where persons have altered their position on the faith of the concession.

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