Prior Executive Decision Does Not Bar State Legislature From Enacting Law Or Framing Policy In Conflict With It In Larger Public Interest: SC
The Supreme Court observed that a prior executive decision does not bar the State Legislature from enacting a law or framing any policy contrary to or in conflict with the same in furtherance of larger public interest.
The Court observed thus in a batch of civil appeals against the judgment of the Madhya Pradesh which decided a group of twelve petitions wherein the question involved was whether a transaction where the right to collect tolls is given in lieu of the amount spent by the Concessionaire in the construction of roads, bridges, etc. under the Build, Operate & Transfer Scheme (BOT) amounts to a ‘lease’ under the Transfer of Property Act, 1882 (TOPA) and Indian Stamp Act, 1899 (ISA).
The two-Judge Bench comprising Justice Vikram Nath and Justice Ahsanuddin Amanullah elucidated, “… it is an evident position of law that a prior executive decision does not bar the State legislature from enacting a law or framing any policy contrary to or in conflict with the previous executive decision in furtherance of larger public interest. Nor can it be canvassed that the law laid down by the legislature would be hit by principle of promissory estoppel or legitimate expectation because earlier the executive had expressed its view differently.”
The Bench said that the principle of promissory estoppel or legitimate expectation can be dealt with on the same status of the executive decision when the prior as well as the subsequent decisions are both taken by the same or similarly placed authorities.
Senior Advocate Dushyant Dave appeared for the appellants while Additional Advocate General (AAG) Saurabh Mishra appeared for the respondents.
Factual Background -
Madhya Pradesh Rajya Setu Nirman Nigam Ltd. (MPRSNN) was authorised by the State vide order for reconstruction, strengthening, widening, and rehabilitation of a section of road on Satna-Maihar-Parasimod-Umaria Road Project to be executed through Concession on BOT Scheme. MPRSNN invited tenders against the said project pursuant to which the appellant’s bid was accepted. The ISA was amended in MP State and proviso (c) to Clause(C) was inserted to Entry No. 33 of Schedule-1(A) which provided that there shall be levy of stamp duty @ 2% on the amount likely to be spent on the project, on the agreement to lease and right to collect the toll is given.
The Collector (Stamps), Bhopal directed recovery of deficit stamp duty of Rs. 1 crore 8 lakhs and the same was challenged by the appellant. The challenge made in the appeals was regarding the validity of the amendment made in proviso (c) to Clause (C) of Article 33 of Schedule 1(A) as amended by the Indian Stamp (M.P.) Act, 2002, and a further prayer was made to declare Section 48 and 48(B) of IS Act, 1899, as amended by M.P. Act 24 of 1990 as ultra vires. The Division Bench had dismissed the writ petitions and hence, the appellants approached the Apex Court.
The Supreme Court in the above regard noted, “Where the executive takes a decision based upon which a party acts and, later on, the executive withdraws that decision to the detriment of the party acting upon the earlier decision, it can be said to be estopped from withdrawing its promise or depriving the party from its legitimate expectation of what had been promised.”
The Court said that if the previous executive decision is withdrawn, modified or amended in any manner in exercise of legislative power in larger public interest, then the earlier promise upon which the party acts, cannot be enforced as a right and neither can the authorities be estopped from withdrawing its promise, as such an expectation does not give any enforceable right to the party.
“… it is evident that the principles of legitimate expectation and promissory estoppel would not apply here, as the appellants cannot be said to have any enforceable legal right in light of the previous law or policy and executive action, which was subsequently changed by the state legislature in light of larger public interest”, it added.
Coming to the next challenge in the appeals, the Court enunciated that the definition of lease as given under the ISA clearly covers any instrument by which tolls of any description are let and also under Section 105 of the TOPA, all the ingredients of a lease are fulfilled.
“From a clear reading of the above proviso (c) to Clause(C), the stamp duty would be chargeable @ 2% on the amount likely to be spent under the agreement by the lessee. Thus, the lessee has no liability to pay any stamp duty on the amount not spent by the lessee but by the lessor or any other stake-holder. The amount spent by the lessee as per the agreement generally was 50% of the total cost of the project”, it further observed.
The Court also clarified that once the stamp duty is payable on the amount spent by the lessee, the demand raised on the whole amount would be unjustified. It, therefore, directed the Collector (Stamps)/Revenue Officer to calculate the amount in each of the cases individually and communicate the same to the appellants within two months and where the amount is lying in excess with the State, the same shall be refunded within two months of such determination.
Accordingly, the Apex Court partly allowed the appeals.
Cause Title- M/s Rewa Tollway P. Ltd. v. The State of Madhya Pradesh & Ors. (Neutral Citation: 2024 INSC 539)
Appearance:
Appellants: Senior Advocate Dushyant Dave, Advocate Prafulla Kumar Behera, AOR S. S. Nehra, Advocates Vikrant Nehra, Sundari Rawat, AOR Kunal Verma, Advocates Yugandhara Pawar Jha, Lavanya Dhawan, Shivraj Pawar, Ritik Gupta, AOR Sanjay Kapur, Advocate Arjun Bhatia, and AOR B. K. Satija.
Respondents: AAG Saurabh Mishra, AOR Sunny Choudhary, Advocate Aarushi Singh, and AOR Ashiesh Kumar.