Court Upholds Vested Rights, Applies Promissory Estoppel

Hindustan Lever Ltd. and another Versus State of West Bengal and others

Hindustan Lever Ltd. and another Versus State of West Bengal and others - [2007] 5 VST 92 (Cal) Issues Involved:
1. Retrospective effect of the Resolution dated May 23, 1997.
2. Vested right to promotional assistance under the 1994 Resolution.
3. Application of the doctrine of promissory estoppel against the Government.
4. Nature of relief entitled to the petitioner.

Detailed Analysis:

1. Retrospective effect of the Resolution dated May 23, 1997:
The court examined whether the 1997 Resolution could retrospectively negate the benefits granted under the 1994 Resolution. The petitioner argued that the 1997 Resolution, which sought to amend the original scheme, could not have retrospective effect as it would unfairly withdraw benefits already granted. The court agreed, stating that the retrospective application of the 1997 Resolution would be inequitable, especially since the petitioner had acted upon the earlier promise and manufactured and marketed banaspati based on the 1994 Resolution.

2. Vested right to promotional assistance under the 1994 Resolution:
The petitioner claimed a vested right to receive industrial promotion assistance for the period from July 1995 to March 1997, based on the 1994 Resolution. The court recognized that the petitioner had a legitimate expectation and a vested right to the promotional assistance as the scheme had been extended annually and the petitioner had relied on this extension to continue production despite incurring losses. The court held that the right to such assistance could not be arbitrarily withdrawn by the executive without legislative sanction.

3. Application of the doctrine of promissory estoppel against the Government:
The petitioner contended that the Government was estopped from reneging on its promise under the 1994 Resolution due to the doctrine of promissory estoppel. The court affirmed the applicability of promissory estoppel against the Government, referencing several Supreme Court decisions. It was established that the Government's promise, which induced the petitioner to alter its position, created a binding obligation that could not be withdrawn arbitrarily or without overriding public interest. The court found no evidence of such overriding public interest in the Government's action to withdraw the benefit.

4. Nature of relief entitled to the petitioner:
The court concluded that the petitioner was entitled to relief but not in the form of direct payment. Instead, the court directed that the amount of industrial promotion assistance for the period from July 1995 to March 1997 should be adjusted against the sales tax payable by the petitioner over the next five years. The court did not award interest on the amount, as it was not considered a debt but rather a form of financial assistance or bounty.

Conclusion:
The court held that the retrospective application of the 1997 Resolution was invalid, recognized the petitioner's vested right to promotional assistance under the 1994 Resolution, and applied the doctrine of promissory estoppel against the Government. The petitioner was granted relief through adjustment of the assistance amount against future sales tax liabilities, but no interest was awarded.