Hon'ble Het Singh Yadav, J.
1. We have heard Shri R.K. Chitra Gupta, learned counsel for the petitioner. Shri Rajeev Sharma appears for U.P. Khadi and Village Industries Board, respondent nos. 2,3 and 4. Shri Tarun Verma appears for the Punjab National Bank, Branch Parsa, District Siddharth Nagar, respondent no. 5. The Assistant Solicitor General of India has accepted notice on behalf of respondent no.1.
2. The petitioners, in all the writ petitions are engaged in agricultural farming. They have their agricultural holdings in Distt. Siddharth Nagar. All the petitioners applied under a scheme floated by Khadi and Village Industries Commission, Mumbai, for the benefit of margin money against the bank finance for purchase of harvester combine, used for mechanized farming. The scheme provide for the purchase of harvester for Rs.10 lacs in which the petitioner had to contribute Rs.2,45,700/-. The bank was to provide a term loan of Rs.7,50,000/- on which the Khadi and Village Industries Commission would deposit Rs.3 lacs, as 30% of the total cost, as margin money in the petitioners' account. The scheme provides for purchase of harvester and payment of term loan in installments. On the completion of the payment of installments the margin money deposited in the account was to be adjusted towards the cost of the harvester. All the petitioners made their own contributions and were given term loans, which they are regularly paying in installments. The margin money of Rs.3 lacs was deposited by the District Gramodyog Adhikari, Siddharthnagar in their accounts by forwarding drafts/ cheques directly to the Branch Manager of the Punjab National Bank.
3. The Chief Executive Officer in the Directorate of Rural Employment Generation Programme, in the office of the Commissioner for Khadi and Village Industries, issued a circular on 11.8.2005 directing all the Chairman and Managing Directors of all public sector banks, Chairman, Regional Rural Banks, all State/ Divisional Directors, all Chief Executive Officers of the State/ UT, Khadi and Village Industries Boards and the incharge of all RICS cells to withdraw the margin money from all harvester accounts. The Chief Executive Officer in the office of the Commissioner for Khadi and Village Industries, gave following reasons for withdrawing the margin money:-
"Sub-Banning of "Harvester" Activity under Rural Employment Generation Programme-Reg As per the norms of Rural Employment Generation Programme Scheme, a ceiling limit on per capita investment of Rs.50,000/- for creation of one full time employment has been prescribed. Instances were brought to the notice from the field that in certain village industries activities the per capita employment norm is not fulfilled. The matter regarding "Harvester" was brought to the notice of erstwhile Commissioner and the Commission in its decision No.524 dt. 23.12.2003 authorised Chief Executive Officer to examine the matter. Accordingly, physical verification have been conducted in respect of existing units in Karnataka and Uttar Pradesh. In both the cases it is found that against the project cost of Rs.10.00 lakhs the employment generation is 2 to 3 in number whereas the employment should be around 20. Moreover, it is also noted that this is a seasonal activity taking place during the harvesting season involving a tractor, one driver and one operator/ worker. In fact the activity is on agricultural activity involving the tractor during the harvesting season.
Since the Harvester project does not fulfill the main criteria of employment, it has been decided to ban the harvester activity under REGP and State/ Divisional Directors of OCK VI and C.E.Os. of State/ U.T. Khadi & V.I. Boards are advised not to sponsor/ sanction margin money claims pertaining to Harvester project with or without tractor under REGP since it does not fulfill the per capita norms of employment and also falls under agricultural activity which is under negative list of REGP scheme.
Since the issue pertains to fulfillment of REGP norms, the decision to call back margin money need not be prospective and has to be with retrospective effect Physical verification of existing units may be carried out on priority by the concerned field Directors of OCKVI and State/ U.T. Khadi and VI Boards and necessary action be initiated for recovery of Margin Money immediately under intimation to Directorate of REGP.
The above circular may be brought to the notice of all the Public Sector Banks, Regional Rural Banks and other Banks directly and through notices circulated to SLBC/DCC/BLBC etc. for information and corrective action.
(Maya S. Sinha) Chief Executive Officer"
4. It is submitted by learned counsel for the petitioner that the entire project of purchasing the harvester is based on financial viability worked out on the provision of 30% margin provided by Directorate Rural Employment Generation Programme. The deposit of margin money is the essential condition of the scheme. The petitioners purchased the harvester by making their contribution and are paying the installments of the loan in time. The Director, Rural Employment Generation Programme could not have withdrawn the scheme mid way after the harvester was purchased to frustrate the entire project. The counsel appearing for the petitioner submits that the principles of promissory estoppel are attracted and states that circular dated 11.8.2005 can not be given retrospective effect to recall and withdraw the deposit of margin money under the scheme.
5. Shri Rajeev Sharma, learned counsel appearing for the respondents submits that the scheme was prepared with the built in conditions to be fulfilled by the petitioner. The primary objective of the scheme is to generate rural employment. The Director of Rural Employment Generation Programme found that the harvester is not generating the targeted employment and thus, the scheme has been withdrawn. The petitioner has not yet availed the benefit of margin money. The margin money is deposited to be adjusted only if he will fulfill the conditions of the scheme including timely payment of installments. The Director was within his right to withdraw the margin money which does not otherwise affect the scheme, under which the petitioner has received the benefit of loan and purchased the harvester.
6. We have considered the submissions and find that the scheme to purchase the harvester was initiated by the Directorate of Rural Employment Generation Programme, for the benefit of the farmers and for generating rural employment. The employment generation was one of the objectives of the scheme. The Directorate should have conducted studies of the capacity of employment generation prior to the initiation of the scheme. Once the benefit was offered and has been availed by the petitioner and margin money has been deposited in his account, unless the petitioners are found to be ineligible or if he commits a breach of any of the conditions of the loan, the margin money could not have been withdrawn. Having accepted the invitation to offer, and changed their financial position to their detriment, the benefit could not be withdrawn. The scheme of providing 30% of margin money affects the entire financial viability of the project and thus attracts the principles of promissory- estoppel against the respondents.
7. The doctrine of promissory estopple as developed in the administrative law in the country has been explained in Kasinka Trading v. Union of India, (1995) 1 SCC 274 as follows:-
"The doctrine of promissory estoppel or equitable estoppel is well established in the administrative law of the country. To put it simply, the doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in the future, knowing as well as intending that the representation, assurance or the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, the promise, assurance or representation should be binding on the party making it and that party should not be permitted to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings, which have taken place or are intended to take place between the parties.
It has been settled by this Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. There is preponderance of judicial opinion that to invoke the doctrine of promissory estoppel clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that bald expressions, without any supporting material, to the effect that the doctrine is attracted because the party invoking the doctrine has altered its position relying on the assurance of the Government would not be sufficient to press into aid the doctrine. In our opinion, the doctrine of promissory estoppel cannot be invoked in the abstract and the courts are bound to consider all aspects including the results sought to be achieved and the public good at large, because while considering the applicability of the doctrine, the courts have to do equity and the fundamental principles of equity must for ever be present to the mind of the court, while considering the applicability of the doctrine. The doctrine must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation."
8. In STO v. Durga Oil Mills, (1998) 1 SCC 572; Bakul Cashew Co. v. STO, (1986) 2 SCC 365; Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409; DCM Ltd. v. Union of India, (1996) 5 SCC 468; Pawan Alloys & Casting (P) Ltd. v. UPSEB, (1997) 7 SCC 251; Bannari Amman Sugars Ltd. v. Commercial Tax Officer, (2005) 1 SCC 625; State of Jharkhand v. Ambay Cements, (2005) 1 SCC 368 and State of Bihar & Ors. v. Kalyanpur Cements Ltd., (2010) 3 SCC 274, the doctrine of promissory estopple has been firmly established.
9. In the present case the respondents made an unequivocal promise by conduct, which was also carried out, providing for margin money of Rs.3 lacs in the purchase of harvester, on the contribution made by the petitioners, and on which the term loan was sanctioned and granted by the Punjab National Bank. The applications were processed and on fulfilling all terms and conditions margin money was also deposited creating the legal relationship, which was to continue till the entire term loan was repaid. There is no allegation of any misrepresentation by the petitioner in the deposit of margin money in their account.
10. The reasons given in the circular dated 11.8.2005 relate to the verifications conducted in respect of the existing units in Karnataka and U.P. There is no explanation as to why such physical verification were not conducted earlier. The ceiling limit on per capita investment of Rs.50,000/- for creating one full time employment was applicable even at the time of floating of the programme. The Commissioner for Khadi and Village Industries was required to carry out the entire verification prior to offering the scheme on which the petitioners have changed their financial position. The decision to call back the margin money with retrospective effect, has nothing to do with the petitioner. The petitioners did not at any stage mislead or misrepresent in the matter of violation of the norms for generation of employment. The error, if any, was on the part of the Commissioner for Khadi and Village Industries. The Commissioner was required to satisfy itself before inviting application for offer and depositing the amount in the accounts of the petitioners. There is no rationale in withdrawing the programme with retrospective effect causing financial loss to the petitioners, affecting their farming operations and livelihood.
11. We do not find that the scheme was made against any statute or that any public interest is going to suffer, if the scheme is withdrawn prospectively. The exceptions to the principles of promissory estoppel are thus not attracted. It was also not a case of exemption or concession, which has been withdrawn. The scheme provided for margin money by way of positive action in supporting the purchase of harvester combine for agricultural operations. The Commissioner could not have withdrawn the programme retrospective causing injustice to the petitioners.
12. We do not find that it will be unequitable to hold that the Commissioner should not withdraw the programme retrospectively, as after the purchase and use of harvester has not only benefited the petitioner as farmers but has also created rural employment by engaging labour in running the harvester.
13. All the writ petitions are allowed with declaration that Circular dated 11.8.2005 issued by the Chief Executive Officer in the Directorate of Rural Employment Generation Programme in the office of the Commissioner of Khadi and Village Industries will not apply retrospectively to the petitioners. The margin money deposited in the accounts of the petitioners shall not be withdrawn. The order dated 30.9.2005 issued by the District Village Industries Officer, Siddharth Nagar is set aside. The margin money deposited in the accounts of the petitioner shall be adjusted in their loan account in accordance with the conditions of the scheme.
Dt.23.05.2012 R/SP/