24. In Done Investments (P.) Ltd. v. Gujarat
Industrial Investment Corpn., (2006) 2 SCC 619, the
apex Court held that ordinarily a procedural provision
would not be mandatory even if the word 'shall' is
employed therein unless a prejudice is caused. Therefore,
the use of word "shall" though prima facie means
mandatory and even if in this case for eligibility criteria
contained in Clause-5.2 of the DTCN the use of the word
"shall" may be mandatory, but use of the words "should
have" in Clause-6 of the DTCN has to be construed as
"must have".
Similarly, in Dove Investments
Pvt. Ltd. And others Vs. Gujarat Industrial Investments Corporation Ltd.
and another (2006) 2 SCC 619, the Hon'ble Supreme Court refused to
interfere with the order passed by the High Court while applying the same
principle. In the said case, appellant-company refused to register
remaining shares against the security for loan of Rs.4.5 crores on the
ground that the same were presented two months after the period specified
in Section 108 of the Companies Act, 1956, though the appellant-company
had already registered 3 lakh shares. Therefore, the Hon'ble Supreme
Court refused to interfere with the order passed by the High Court as the
appellant-company had already waived off the right of refusal by already
registering 3 lakh shares and setting aside of the order of the High Court
would have caused revival of an illegal order.
12. Per contra, the learned Advocate for the respondent No. 1-Bank has argued that the provisions of the Second and Third Schedules to the Income Tax Act, 1961, and the Income Tax Rules, 1962, are governed and controlled by Section 29 of the RDDBFI Act, which states, "The provisions of the Second and Third Schedules to the Income Tax Act, 1961 (43 of 1961) and the Income Tax (Certificate Proceedings) Rules, 1962, as in force from time-to-time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under this Act instead of to the Income Tax Act" thereby meaning that those provisions could be made applicable as far as possible and the Recovery Officer has got every power to permit the auction purchaser to pay the balance of the said consideration beyond 15 days as prescribed under Rule 57, and the same is not illegal. To strengthen their contention, they relied upon the case of Dove Investments Pvt. Ltd. v. Gujarat Industrial Inv. Corporation II , wherein it was held, "Whether a statute would be directory or mandatory will depend upon the scheme thereof. Ordinarily a procedural provision would not be mandatory even if the word 'shall' employed therein unless a prejudice is caused".
In this connection, reference may be
made to the observations of Sagnata Investments Ltd. v.
Norwich Corporation 1971 2 QB 614 and p. 626 Also the
97
observations in British Oxygen Co. v. Board of Trade 1971
AC 610. See also Foulkes' Administrative Law, 6th Ed. at
page 181-184. In Ex P. Khan (1981 1 All. E.R. page ), the
Court held that a circular or self made rule can become
enforceable of the application of persons if it was shown that
it had created legitimate expectation in their minds that the
authority would abide by such a policy/guideline. However,
the doctrine of legitimate expectation applies only when a
person had been given reason to believe that the State will
abide by the certain policy or guideline on the basis of which
such applicant might have been led to take certain actions.
This doctrine is akin to the doctrine of promissory estoppel.