Administrative Law

State of Jharkhand v. Brahmputra Metallics Ltd.

[2020] 14 SCR 45

Facts

Jharkhand Industrial Policy, 2012 promised 50% electricity duty exemption for 5 years for captive power plants.
The policy also said follow-up notifications would be issued within one month.
The State delayed the exemption notification and issued it only on 8 January 2015, making it prospective.
Because of this delay, Brahmputra Metallics lost a substantial part of the promised benefit.

Whether the State could delay implementation of its own industrial policy and then deny the promised electricity duty exemption.

Legitimate expectation arises when a public authority creates an expectation through:
promise;
policy;
representation;
consistent conduct.
It is based on fairness, certainty, non-arbitrariness and Article 14.
It is broader than promissory estoppel because:
promissory estoppel usually needs promise + reliance + alteration of position;
legitimate expectation focuses on fairness of State action.

The State had made a clear policy representation that industrial units would get electricity duty exemption.
This was not a vague political assurance; it was contained in the Industrial Policy itself.
The policy specified:
nature of the incentive;
duration of the incentive;
time-limit for follow-up notification.
Therefore, industries had a legitimate expectation that the State would act according to its own policy.
The State did eventually issue the exemption notification, but only after a long delay.
By making the notification prospective from 8 January 2015, the State practically destroyed the benefit promised for earlier years.
The Court held this was unfair because the State gave no proper public-interest reason for the delay.
The State could not simply say that industries had no vested right.
Even if there was no vested statutory right, the State was still bound by Article 14 to act fairly and transparently.
The Court strongly rejected the idea that the Government can treat policy benefits as “doles” to be given or withheld at will.
Public policies create expectations, and if the State departs from them, it must justify the departure with reasons grounded in public interest.

The Supreme Court held that the State’s conduct was arbitrary and violated Article 14.
The Court upheld relief, but confined it to Financial Years 2012-13 and 2013-14, because under the policy the benefit started from the financial year following commencement of production.
The Court clarified that this case was better understood as legitimate expectation, not merely promissory estoppel.
Use this case for: State policies create legitimate expectations; unexplained delay or unfair departure from policy can violate Article 14.