D.C.M. LTD. AND ANR. versus UNION OF INDIA AND ANR.

Citation: [1996] SUPP. 4 S.C.R. 589 · Decided: 13-08-1996 · Supreme Court of India · Bench: M.M. PUNCHHI · Disposal: Dismissed

Judgment (excerpt)

D.C.M. LTD. AND ANR. 
A 
v. 
UNION OF INDIA AND ANR. 
AUGUST 13, 1996 
B 
[M.M. PUNCHHI AND K VENKATASWAMI, JJ.] 
Administrative Law : Doctrine <>f Promissory Estoppef-Applicability 
of-Held : Doctrine of Promissory Estoppel not applicable-17wugh benefit 
of doctrine available against Govemment, but it cannot bar future executive C 
action or executive necessity-Doctrine of Promissory Estoppel to yield when 
equity so require-If it is inequitable to hold the Government or public 
authority to promise or representation made by it, equity not to be in-
voked-Moreover, expansion earned out by the appellants in pursuance of 
licence issued in February, 1975 was independent of incentive announced in D 
December, 1975. 
The appellants owners two sugar factories, where the business of 
manufacturing and selling sugar was carried on. From 10.6.66 the sale of 
sugar was controlled by the Government. Later on, in November, 1975, the 
Government announced certain incentives for establishment of new sugar E 
factories and for expansions carried out in the existing ones to those who 
had applied for and completed their expansions during 1/11/75 to 20/10/80. 
· The incentives mainly consisted in providing a higher quota of levy-free 
sugar. In the year 1978, as a result of withdrawal of sugar control by the 
Government, the incentives were no longer required/available. Later on, 
F 
the Government on December 17, 1979 once again provided for partial 
control of sugar as was the situation prior to August 16, 1978. Then the 
Government revised the scheme to provide incentives w.e.f. 1980-81. This 
made the percentage of levy-free sugar announced in the 1975 scheme 
higher than the percentage announced in the 1980 scheme. The 1980 G 
scheme was even applicable to those who were otherwise entitled to the 
benefit of 1975 scheme. The appellants after carrying out the expansion at 
their two factories on 6/8/80 and 13/8/80 sought additional free-sale sugar 
as per the incentives announced. Though the appellants claimed incentives 
as per 1975 scheme, the respondents allowed them incentives only as per 
the revised scheme of 1980. 
H 
589 
A 
B 
c 
D 
E 
F 
590 
SUPREME COURT REPORTS (1996) SUPP. 4 S.C.R. 
Aggrieved, they moved the High Court seeking additional free-sale 
sugar over and above the entitlement allowed to them on the basis of 1980 
scheme. The writ petition was dismissed by the High Court. 
In appeal to this Court it was contended for the appellants that the 
principle of promissory estoppel applied to this case here as the appellants 
had spent huge amounts towards the expansion of sugar factories at two 
places on the incentives announced in the year 1975 and therefore, they 
cannot be denied on account of decontrol of the sugar for a short period. 
It was contended on behalf of the respondents that during the period when 
there was no control, the producers sold their total production in the open 
market and the benefit flowing from such decontrol was fully reaped by 
them and, therefore appellants cannot be allowed to contend that the 
Government cannot change the scheme. 
Dismissing the appeal, this Court 
HELD : 1.1. The principle of promissory estoppel has no application 
at all on the facts of this case. It is well-settled that the doctrine of 
promissory estoppel represents a principle evolved by equity to avoid 
injustice and, though commonly named promissory estoppel, it is neither 
in the realm of contract not in the realm of estoppel. The basis of this 
doctrine is the inter-position of equity which has always, proved to its form, 
stepped in to mitigate the rigour of strict law. It is equally true that the 
doctrine of promissory estoppel is not limited in its application only to 
defence but it can also found a cause of action. This doctrine is applicable 
against the Government in the exercise of its governmental, public or 
executive functions and the doctrine of executive necessity or freedom of 
future executive action, cannot be invoked to defeat the applicability of this 
doctrine. It is further well-established that the doctrine of promissory 
estoppel must yield when the ec1uity so require. If it can be shown by the 
Government or public authority that having regard to the facts as they 
have transpired, it would be inequitable to hold the Government or public 
G authority to the promise or representation made by it, the court would not 
raise equity in favour of the person to whom the promise or repr

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