State's Power to Modify OTS Scheme Upheld; Promissory Estoppel Protects Petitioners

The court held that the State could modify the One Time Settlement Scheme (OTS) in the interest of public policy, limiting benefits to non-profit-making companies. However, the modification could not have retrospective effect without statutory provision. The State and the Corporation were bound by promissory estoppel, preventing them from altering the terms of the OTS agreement. The petitioners were entitled to the benefits of the OTS scheme, and the Corporation was directed to implement the OTS where payments were made, falling back on the Financial Collaboration Agreement where necessary.

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Issues Involved:
1. Whether the State was permitted to alter the terms of the OTS on the ground that it being a public policy, could be modifiedRs.
2. If question no. (i) is answered in favour of the State, whether the said decision could be with retrospective effect in the absence of any statutory provisionRs.
3. Whether the State and the Corporation are bound by the principle of promissory estoppel and can go back on the terms of the OTS agreement which had been duly acted upon by the petitioner by materially altering its positionRs.

Issue-Wise Detailed Analysis:

Issue No. 1:
Whether the State was permitted to alter the terms of the OTS on the ground that it being a public policy, could be modifiedRs.

The court concluded that the State was within its rights to alter the terms of the One Time Settlement Scheme (OTS) on the grounds of public interest. The initial OTS dated 26.03.2003, which provided benefits irrespective of the unit's status, led to financial imprudence as even profit-making companies benefitted, causing revenue loss to the State. The State Government was justified in modifying the policy to restrict benefits to non-profit-making companies. The modification aimed to correct the economic harm caused by the initial policy. The Government's power to issue and alter directives under Article 135 of the Articles of Association of the respondent-Corporation was upheld. The court referenced several judgments, including Amrit Banaspati Company Ltd. Vs. State of Punjab and Kaniska Trading & Industry Vs. Union of India, to support the State's right to change policies in public interest.

Issue No. 2:
If question no. (i) is answered in favour of the State, whether the said decision could be with retrospective effect in the absence of any statutory provisionRs.

The court held that the amendment to the OTS could not have retrospective effect. An amendment order cannot be retrospective unless expressly stated or implied by statute. The court referenced several judgments, including Sri Vijayalakshmi Rice Mills Vs. State of Andhra Pradesh and I.T.C. Bhadrachalam Paperboards Vs. Mandal Revenue Officer, to support this view. The petitioner had entered into an agreement with the Corporation, made payments, and acted upon the OTS. The Corporation could not withdraw from a concluded contract. The amendment by way of notification could only be from the date of the decision and not retrospectively. The court concluded that the State could review its decision and restrict the OTS benefits but not with retrospective effect.

Issue No. 3:
Whether the State and the Corporation are bound by the principle of promissory estoppel and can go back on the terms of the OTS agreement which had been duly acted upon by the petitioner by materially altering its positionRs.

The court held that the State and the Corporation were bound by the principle of promissory estoppel. The petitioner had materially altered his position based on the promise held out by the State. The petitioner had opted for the OTS, made payments, and entered into agreements based on the OTS. The Corporation had also agreed to the terms of the OTS and modified its claims under the Financial Collaboration Agreement (FCA). The principle of promissory estoppel, as established in cases like Union of India Vs. Indo-Afgan Agencies Ltd. and Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh, applied. The State and the Corporation could not resile from the promise made. The court concluded that the State and the Corporation were bound by the terms of the OTS, and the petitioners were entitled to the benefits of the lesser interest rate as per the OTS scheme.

Conclusion:

The court concluded that the State could alter the terms and conditions of the OTS on the grounds of public interest and restrict the benefits to non-profit-making companies. However, the decision could not be retrospective in the absence of statutory power. The State and the Corporation were bound by the principle of promissory estoppel and could not go back on the terms of the OTS agreement. The writ petitions and LPA No. 1635 of 2010 were disposed of with a direction to the Corporation to give necessary effect to the OTS where payments had been made in pursuance of the OTS. Where complete amounts had not been paid, the Corporation could proceed as per the terms of the OTS and fall back on the FCA.

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