EON KHARADI INFRASTRUCTURE PVT. LTD. v. THE STATE OF MAHARASHTRA AND ORS
Application of Promissory Estoppel against the State for Octroi Exemption Promises in SEZ Policies despite Municipal Inaction.
Court: Bombay High Court
Citation: 2026:BHC-AS:16349-DB
Decision Date: 07-04-2026
List of Laws
The Special Economic Zones Act, 2005; The Special Economic Zones Rules, 2006; The Maharashtra Municipal Corporations Act, 1949; The Constitution of India, Article 226; Doctrine of Promissory Estoppel
- Facts: The Petitioner, EON Kharadi Infrastructure Pvt. Ltd., was granted approval by the Central and State Governments to develop an IT/ITES Sector Specific Special Economic Zone (SEZ) in Pune. The State Government’s SEZ Policy of 2001 specifically promised that developers would be exempted from all state and local taxes, including octroi. Despite this policy and subsequent approvals under the SEZ Act, 2005, the Pune Municipal Corporation (PMC) continued to levy octroi. The Petitioner paid octroi duty amounting to approximately Rs. 6.69 Crores under protest between 2005 and 2011. While the State Government initially directed PMC to amend its rules to provide for the exemption, the PMC General Body ultimately refused to grant the exemption, and no statutory amendment was ever finalized.
- Procedural Posture: The Petitioner filed a Writ Petition under Article 226 of the Constitution of India before the Bombay High Court challenging the PMC’s communication refusing the exemption and seeking a refund of the octroi paid along with interest.
- Issue: Whether the State Government is bound to fulfill the promise of tax exemption made in its SEZ Policy based on the doctrine of promissory estoppel, even if the local municipal body (PMC) failed to amend its rules to reflect such exemption.
- Holding: Yes, the State Government is bound by its promise. While the PMC cannot be directed to refund the amount in the absence of a statutory rule change, the State Government must reimburse the Petitioner to satisfy the promise held out in its policy.
- Reasoning: The Court applied the doctrine of promissory estoppel, noting that the Petitioner acted upon the State's clear promise in the 2001 Policy and invested significant capital. The Court observed that the State Government possessed ample legislative and supervisory powers under Sections 450A, 456, and 456A of the Maharashtra Municipal Corporations Act to ensure the implementation of its policy, yet failed to exercise them. Since the PMC utilized the funds for its own purposes and never amended its rules, it was not statutorily liable; however, the State Government, having made the representation that induced the Petitioner's investment, could not resile from its commitment. Public interest favored fulfilling the promise to encourage SEZ development rather than discouraging investors through policy inactions.
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