Case Summary: Motilal Padampat Sugar Mills Co. Ltd. vs State of Uttar Pradesh & Others (1978)
**Name of the Court:** Supreme Court of India
**All Citations:** AIR 1979 SC 621; (1979) 118 ITR 326; (1979) 2 SCC 409; (1979) 2 SCR 641; (1979) 44 STC 42
**Case No.:** Appeal Civil 1597 of 1972
**Date of Decision:** 12-12-1978
**Bench:** V.D. Tulzapurkar, J; P.N. Bhagwati, J (Division Bench)
**Final Decision:** Allowed
[Judgment Source]
https://www.courtkutchehry.com/Judgement/Search/AdvancedV2?docid=290580
Facts of the Case
The appellant, a sugar manufacturing company, planned to set up a Vanaspati manufacturing unit in Uttar Pradesh after a public announcement by the State Government offering sales tax exemption for three years to new industrial units under Section 4A of the U.P. Sales Tax Act, 1948. The appellant received multiple written assurances from senior state officials, including the Chief Secretary, confirming exemption. Relying on these assurances, the appellant made substantial investments. However, before production began, the Government altered its policy, reducing the exemption to concessional rates, and later withdrew the concession altogether. The appellant challenged this decision in the Allahabad High Court, invoking promissory estoppel. The High Court dismissed the petition, leading to this appeal.
Law Points Raised
- Applicability and scope of the doctrine of promissory estoppel against the Government.
- Whether assurances made by senior government officials bind the State.
- Interpretation of Section 4A of the U.P. Sales Tax Act, 1948 regarding exemption notifications.
- Waiver of rights: whether acceptance of reduced concession rates amounts to waiver of full exemption.
- Constitutional implications under Article 226 in enforcing promissory estoppel.
Acts / Provisions / Articles Referred
- Constitution of India, 1950 — Article 226, Article 299
- Uttar Pradesh Sales Tax Act, 1948 — Section 4A
Judgements Referred
Several English, American, and Indian precedents on promissory estoppel, including Union of India v. Anglo Afghan Agencies.
Obiter Dicta
The Supreme Court emphasized that promissory estoppel is a principle of equity intended to prevent injustice, and can be applied against the Government when it acts in a manner contrary to its representations, unless overriding public interest demands otherwise.
Ratio Decidendi
The State is bound by the doctrine of promissory estoppel when it makes a clear and unequivocal promise intended to create legal relations, knowing it will be relied upon, and the promisee acts on it to their detriment. Financial or policy changes alone do not justify breaching such promises.
Final Ruling
The appeal was allowed. The Court directed the State Government to honour its promise and grant the appellant exemption from sales tax for three years from the commencement of production (2 July 1970).
Relevant Paragraph Numbers
Paras: 1-3, 5-10, 22-30, 35-38, 41-44
**Case Stats:** Landmark judgment on promissory estoppel, reinforcing that government assurances to industrial entities are binding when relied upon.
Summary
This landmark 1978 decision expanded the doctrine of promissory estoppel in India, making it enforceable against the Government in commercial and industrial contexts. It established that state promises, when acted upon in good faith, cannot be retracted without overriding public interest, strengthening investor confidence in government commitments.
[Judgment Source]
https://www.courtkutchehry.com/Judgement/Search/AdvancedV2?docid=290580