BIHAR STATE FINANCIAL CORPN. AND ORS. versus MIS. CHEMICOT INDIA PVT. LTD. AND ORS.

Citation: [2006] SUPP. 5 S.C.R. 312 · Decided: 24-08-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
BIHAR STATE FINANCIAL CORPN. AND ORS. 
v. 
MIS. CHEM I COT INDIA PVT. LTD. AND ORS. 
AUGUST 24, 2006 
B 
[S.B. SINHA AND DAL VEER BHANDARI, JJ.] 
Constitution of India, 1950: 
Articles 136 and 226-Statutory organization-Orders-Judicial review 
C of-State Financial Corporation-Entering into agreement with a small scale 
unit to disburse loan to it-Later, refusal to disburse the loan on the ground 
that the condition of producing DGTD registration certificate not fit!jilled by 
the Unit-Writ petition of the Unit allowed by High Court-Held, Corporation 
being a statuto1y organization, ordinarily Court in its writ jurisdiction should 
D not interfere wirh a decision taken by Corporation, but doctrine of promissory 
estoppel would apply against Financial Corporation if a case is made out 
therefor-However, in view of the subsequent events i.e., Unit lying closed for 
years and its revival disputed, it would be futile to issue a writ of mandamus 
directing the Corporation to pay the amount lo the Unit-Administrative La11~ 
Promissory Estoppe/-Subsequent events. 
E 
Respondent no. I, a small scale industrial unit, applied to the 
appellant-State Financial Corporation, for sanction of loan. The loan was 
approved and agreements for loan were executed. Later, the respondent 
decided to expand its existing unit, and the Corporation agreed to sanction 
an additional amount of Rs.IS lakhs on the terms and conditions, inter 
F alia, that the concern would submit DGTD Registration Certificate. The 
agreement was registered though no DGTD certificate was furnished. 
However, the Corporation refused to advance the amount as respondent 
no. I had failed to furnish the requisite certificate. Respondent no. I filed 
a writ petition before the High Court which directed the Corporation to 
G disburse the loan to respondent no. I. Aggrieved, the Corporation filed 
the present appeal. 
It was contended for the appellant-Corporation that as respondent 
no. I did not fulfil its obligation to repay the amount in terms of the earlier 
agreements, no writ of mandamus could issue. It was also submitted that 
I-I 
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BIHAR STATEFINANCIALCORPN. v. CHEMICOTINDIA PVT.LTD. [S.B. SINHA,!.) 3 J 3 
the factory was closed for years and was not in a position of revival. 
Allowing the appeal, the Court 
HELD: I. I. The appellant-Corporation is a statutory organization. 
A 
Ordinarily, the Court in exercise of its writ jurisdiction, should not 
interfere with a decision taken by the Corporation, but, it is well settled, 
that the doctrine of promissory estoppel would apply as against the B 
Financial Corporation if a case is made out therefor. The High Court 
proceeded on the basis that the Corporation being a statutory organization, 
could not take a stand different from the one taken in its order. The High 
Court may not be entirely correct in its approach as the transactions were 
governed by a statute and were essentially commercial in character. C 
Unfortunately, however, the contentions, which have been raised before 
this Court, were not raised before the High Court. 1315-G-H; 316-BJ 
2.1. This Court in exercise of its jurisdiction under Article 136 of 
the Constitution of India, indisputably, can take note of the subsequent 
events. Rightly or wrongly the amount of subsidy has not been paid to D 
the Corporation for more than 15 years. Admittedly, now the unit is lying 
closed. No purpose would be served by directing the Corporation to pay 
unto the respondent the said amount of Rs.15 lakhs at this point of time. 
There is a serious dispute in regard to the viability of revival of the entire 
unit. This Court evidently cannot determine such a disputed question of 
fact in these proceedings. In the peculiar facts of the case, it would be futile E 
to issue a writ of or in the nature of mandamus directing the Corporation 
to pay the amount of Rs.15 lakhs to the respondent-Company. The 
impugned judgment cannot be sustained and is set aside. 1316-C-GJ 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 908 of2000. 
From the Judgment and Order dated 5.6.1995 of the High Court of 
Judicature at Patna, in C.W.J.C. No. 1691/1990. 
M.P. Jha, Ram Ekbal Roy, Harshwardhan Jha and Anil K. Chopra for 
the Appellants. 
F 
S.B. Sanyal, Ranjan Mukherjee, Gopal Singh and Anukul Raj (for B.B. G 
Singh) for the Respondents. 
The Judgment of the Court was delivered by 
S.B. SINHA, J. The I st respondent herein had set up a small scale 
industrial unit. The

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