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Boda Subrahmanyam and Co. and ors. Vs. the State of Andhra Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Appeal Nos. 27 and 177 of 1973
Judge
Reported inAIR1975AP126
ActsEvidence Act, 1872 - Sections 115; Essential Commodities Act, 1955 - Sections 3(1); Constitution of India - Article 226
AppellantBoda Subrahmanyam and Co. and ors.
RespondentThe State of Andhra Pradesh and ors.
Appellant AdvocateT. Ananthababu and T. Ramam
Respondent Advocate4th Govt. Pleader
DispositionPetition dismissed
Excerpt:
civil - doctrine of promissory estoppel - section 115 of evidence act, 1872, section 3 (1) of essential commodities act, 1955 and article 226 of constitution of india - principle of promissory estoppel is substantive law and available even against government - government made representation under scheme for supply of fertilizers to private dealers - dealer filed application under article 226 of constitution seeking enforcement of representation - representation enforceable only when it does not suffer any inherent infirmities - held, representation made unenforceable as ambiguous and equivocal. - - the lease is liable to be forfeited for failure on the part of the tenant to comply with that. in november, the landlord started negotiating with the tenant for the sale of the reversion,.....lakshmaiah, j.1. the doctrine of what has now come to be known as promissory estoppel, is invoked, by the appellants in these appeals preferred against a common judgment of our learned brother kuppu-swamy, j. dated october 10, 1972 by which a batch of writ petitions, including the writ petitions nos. 5342 of 1971 and 1595 of 1972, filed by them, was dismissed.2. the appellants are merchants dealing in various commodities including chemical fertilisers. they undertook to purchase chemical fertilisers from the agricultural department of andhra pradesh government and distribute them to the ryots, as per the terms of the licence granted to them under fertiliser (control) order, 1957 read with the provisions contained in the essential commodities act, 1955 and in accordance with the terms and.....
Judgment:

Lakshmaiah, J.

1. The doctrine of what has now come to be known as Promissory Estoppel, is invoked, by the appellants in these appeals preferred against a common judgment of our learned brother Kuppu-swamy, J. dated October 10, 1972 by which a batch of Writ Petitions, including the Writ Petitions Nos. 5342 of 1971 and 1595 of 1972, filed by them, was dismissed.

2. The appellants are merchants dealing in various commodities including chemical fertilisers. They undertook to purchase chemical fertilisers from the Agricultural Department of Andhra Pradesh Government and distribute them to the ryots, as per the terms of the licence granted to them under Fertiliser (Control) Order, 1957 read with the provisions contained in the Essential Commodities Act, 1955 and in accordance with the terms and conditions that may be laid down by the Government from time to time.

3. The Government of Andhra Pradesh, as per their G. O. Ms. No. 1896 dated September 10, 1970 directed that the revised procedure embodied therein be adopted for the distribution of pool nitrogenous fertilisers in the State with effect from October, 10, 1970. That was followed by a Circular dated November 17, 1970 from the Office of the Directorate of Agriculture, Andhra Pradesh, as per para (2) of which the private dealers are required to enter into an agreement with the Department for lifting the specified quantities of fertilisers.

4. In accordance with the above procedure, the appellants applied between December, 1970 and January, 1971 for allotment of various quantities of fertilisers paying 5 per cent, of the price. Allotments were duly made a month or two thereafter and communicated to them. Letters of credit were immediately opened for the balance of the price and other charges. The Director of Agriculture, issued release orders for the quantities allotted. But, the appellants were not supplied with the fertilisers. On enquiry, they found 'that the Government does not intend to stand by its commitments and honour the release orders already issued.'

5. The appellants stated further in para 8 of their affidavit, 'that the Government is in duty bound to implement G. O. Ms. No. 1896 dated 10-9-1970 and the release orders dated 28-1-1971, 25-2-1971, 2-3-1971, 20-3-1971. The said order constitutes a representation and promise by the Government. Relying thereon the Respondents have changed their position to their detriment. Their capital to the tune of Rs. 6,60,000/-has been locked up for about a year. The loss of interest alone works out to Rupees 35,000/-. This case is directly governed by the legal principles laid down by the Supreme Court in the Union of India v. Anglo Afghan Agencies, AIR 1968 SC 718.'

6. The issuance of a Writ of Mandamus was, therefore, prayed for, for commanding (1) the Government of Andhra Pradesh, the 1st respondent (2) the Director of Agriculture and Controller of Fertilisers, Government of Andh Pradesh, the 2nd respondent, and (3) The District Agricultural Officer, Kakinada, East Godavari District, the 3rd Respondent, to implement the allotment and release orders and to direct delivery to the appellants of the various quantities of fertilisers for which they have paid the price in cash and by letters of credit.

7. The respondents denied the claim of the appellants, and they stated in their additional counter affidavits that the doctrine of promissory estoppel, invoiced by the appellants, has no application to the facts of the case.

8. The expression 'promissory estoppel' has not been defined by any Statute either here in India or elsewhere. But there occurs in Halsbury's Laws of England, 3rd Edition, Vol. 15, at 175, under the Caption 'Promissory Estoppel', this passage:

'Where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced. This doctrine, which is derived from a principle of equity enunciated in 1877 has been the subject of considerable recent development. It differs from estoppel properly so-called in that the presentation relied upon need not be one of present fact.'

9. This doctrine was referred to in the year 1951 by Denning, L.J. in Dean v. Bruce, (1951) 2 All ER 926 at p. 928 as 'a promissory or equitable estoppel', and described by Buckley, J. in Beesly v. Hallwood Estates, Ltd., (1960) 2 All ER 314 at p. 324 as 'promissory estoppel.' This nomenclature received the blessings of the Privy Council in Emmannuel Ayodeji Ajayi v. R.T. Briscoe, (1964) 3 All ER 556 at p. 559. Williston on Contracts (1936) Vol. I, Para 139, poinetd out that in the United States there has been a development away from the idea of purchasing a promise for a price and towards the idea of founding contractual liability upon action in 'Justifiable reliance on a promise.' This development the learned author called the doctrine of 'promissory estoppel.'

10. The following general statement of the doctrine of estoppel by representation was called out by Spencer Bower in his book on 'Estoppel by Representation' from Pickard v. Sears, (1837) 6 Ad & El 469, per Lord Denman, C. J., Freeman v. Cooke, (1848) 2 Exch 654 Per Parke B., Jorden v. Money, (1854) 5 HL Cas 185 per Lord Cronworth L.C. Swan v. North British Australian Co., (1863) 2 H & C 175 Per Blackburn, J.; Citizens Bank of Louisiana v. First National Bank of New Orleans, (1873) LR 6 HL 352, Per Lord Selborne L.C.; Carr v. London and N. W. Ry. Co., (1875) 10 CP 307 Per Brett, J. George White Church Ltd. v. Cavanagh, (1902) AC 117; Per Lord Mac Naghteen Simm v. Anglo American Telegraph Co., (1879) 5 QBD 188 Per Bramwell, J.:

'Where one person ('the representor') has made a representation to another person ('the representee') in words, or by acts and conduct, or (being under a duty to the representee to speak or act) by silence or in action with the intention (actual or presumptive), and with the result, of inducing the representee on the faith of such representation to alter his position to his detriment, the representor, in any litigation which may afterwards take place between him and the representee, is estoppel from making or attempting to establish by evidence, any averment substantially at variance with his former representation, if the representee at the proper time, and in the proper manner, objects thereto.'

11. This passage was adopted in Hopgood v. Brown, (1955) 1 All ER 550 by Sir Raymond Evershed M.R., as accurate.

12. Whereas an estoppel proper is founded on a representation as to an existing matter of fact, Promissory estoppel is founded on a representation with regard to an assurance as to future conduct.

13. The modern doctrine of promissory estoppel has had its foundation in the three following cases:

1. Hughes v. Metropolitan Railway Co., (1877) 2 AC 439;

2. Birmingham and District Land Co. London and North Western Railway Co., (1888) 40 Ch D 268;

3. Central London Property Trust V. High Trees House Ltd., (1947) KB 130 = (1956) 1 All ER 256.

14. The landlord in the first case of Huges, gave his tenant, in October, 1874, six months' notice to repair the premises. The lease is liable to be forfeited for failure on the part of the tenant to comply with that. In November, the landlord started negotiating with the tenant for the sale of the reversion, but he failed on December 31. Meanwhile, the tenant had done nothing to repair the premises. On the expiry of six months from the date of the original notice, the landlord claimed to treat the lease as forfeited and brought an action for ejectment.

15. The House of Lords held that the negotiations initiated by the londlord amounted to a promise by him to the effect that he should not enforce the notice, during their pendency and that, it was in reliance upon that promise that the tenant kept quiet. The tenant was held entitled in equity to be relieved against the forfeiture. Lord Cairns said:

'It is the first principle upon which all courts of equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results--certain penalties or legal forfeiture--afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced these rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties.'

16. This equitable principle enlarges the scope of the conception of the common law doctrine of estoppel and subsumes within its ambit not merely statements of fact but also promises as well.

17. In the second case (1888) 40 Ch D 268 a strong court of appeal consisting of Cotton, L.J., Lindley, L.J. and Bowen, L.J. rendered the decision. The parties here also had been in negotiation and it was urged that the negotiations precluded plaintiff in equity from immediate recourse to his remedy. The relief claimed here is not against any forfeiture, as was the case in Hughes case, and, therefore, it was contended that, that decision did not apply. That contention was rejected by the court of appeal. Cotton, L.J. applied Huges Case; (1877) 2 AC 439. Lindley, L.J., referred to the passage from Lord Cairns, which has been cited, and proceeded to state. 'That is the general principle and I think that it is plainly applicable here.'

18. Bowen, L.J., negotiating the contention that the proposition in Hughes case (1877) 2 AC 439 deals with a case of forfeiture only, held:

'The truth is that the proposition is wider than cases of forfeiture.'

19. There comes, then, the High Trees case (1947) KB 130 = (1956) 1 All ER 256. The plaintiffs, in that case, leased in September, 1939 a block of flats to the defendants, at a ground rent of 2,500/- per annum. In January 1940, the plaintiffs agreed to reduce the rent to 1,250/- because of war conditions which caused many vacancies in the flats. No express time-limit was set for the operation of this reduction. From 1940 to 1945, the defendants paid the reduced rent. In 1945, the flats were again full and the plaintiff claimed the full rent, both retrospectively and for the future. He sued for rent at the original rate for the last two quarters of 1945.

20. Denning, J., was of the view that the agreement of January, 1940 ceased to operate early in 1945. The rent originally fixed by the contract was, thereafter, payable and the plaintiff's claim was allowed. But he was of the opinion that, had the plaintiffs sued for arrears for the period from 1940 to 1945, the agreement made in 1940 would have operated to defeat their claim.

21. Confronted with Foakes v. Beer (1884) 9 AC 605 if the defence was raised as a matter of contract and with (1854) 5 HLC 185 if it were raised as an estoppel. Denning, J., sustained the estoppel, although based on an assurance as to the future, because the promissor intended to be legally bound and intended his promise to be acted upon, with the result that it was so acted upon. He called in aid Hughes' case (1877) 2 AC 439 and the Birmingham and District Land Com., case (1888) 40 Ch D 268 and observed that their distinguishing feature was that the assurance has to the future by which, in each of them, the promisor had been held bound, was one which he intended to be binding upon him. He said:--

'But, what is the position in view of developments in the law in recent years? The law has not been standing still since (1854) 5 HLC 185. There has been a series of decisions over the last fifty years which, although said to be cases of estoppel, are not really such. They are cases of promises which were intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the party to whom the promise was made, and which was in fact so acted on. In such cases the courts have said these promises must be honoured.'

22. Notwithstanding the fact that the most important part of this judgment consisted of obiter dicta, still, that did not present the High Trees case (1947) KB 130 = (1956) 1 All ER 256 from becoming an established authority for the principle came to be laid down therein.

23. The development of this doctrine, almost on parallel lines, in Australia, is remarkable as is evident from the following two cases:

In Baraes v. Queensland National Bank (1906) 3 CLR 925. Hughes case (1877) 2 AC 439 was expressly cited and the High Trees (1947) KB 130 = (1956) 1 All ER 256 estoppel was referred to with approval.

In Mulcahy v. Hoyne (1925) 36 CLR 41 the authority of Hughes (1877) 2 AC 439 principle was referred to again with approval.

24. A like development is found in New Zealand, where the doctrine of 'promissory' estoppel was approved and applied in P. V. P., 1957 NZLR 854 (refer to an article in 21 Mad LR 185 by Mr. L. A. Sheridan).

25. (1964) 3 All ER 556 at p. 559 is a case from the Federal Supreme Court of Nigeria, that went up to the Privy Council, where the doctrine of Promissory Estoppel was referred to and relied upon.

26. The rapidity with which this doctrine of promissory estoppel is going on being developed with new dimensions suggested in the United States is rather instructive and interesting for the Indian context.

27. As early as in the year 1932, we came across in the American Law Institutes' Restatement of the Law of Contracts, (A-90) the proposition that:

'A promise which the promissor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise.'

The illustration to this article is worth noting:

'A promises B to nay him an annuity during B's life. B, thereupon, resigns a profitable employment, as A expected that he might. B receives the annuity for some years, in the meantime becoming disqualified from again obtaining good employment A's promise is binding.'

28. The principle embodied in A-90 has formed the basis of innumerable decisions in various states in different branches of the law of contract (See Corbin on Contracts (1963) Vol. p. 195).

29. The position obtaining in the United States, as regards this doctrine of promissory estoppel, is admirably summed up in a brilliant Article on that subject by G. H. L. Fridman in the Canadian Bar Review, Vol. XXXV, page 279 at 290:--

'In the United States there is a flemishing doctrine of promissory estoppel, which in proper cases can operate so as to give rise to the creation of enforceable promises, and binding contractual obligations, even where there is no consideration such as at common law would have supported the promises and obligations.'

30. Estoppel as a rule of Substantive Law:--

It is pertinent, at this juncture to note as to how the whole concept of the doctrine of promissory estoppel came to be viewed, in its proper perspective as a substantive rule of law.

31. Lord Wright has said in Canadian and Dominion Sugar Company, Ltd., v. Canadian National (West Indies) Steamships, Ltd., (1947) AC 46 at 55 and 56:

'But in more modern times the law of estoppel has developed and has become recognized as a beneficial branch of law. That great lawyer Sir Frederick Pollock has described the doctrine of estoppel as 'a simple and wholly untechnical conception, perhaps the most powerful and flexible instrument to be found in any system of court jurisprudence.'

After having said so, he proceeded to say at page 56 of the Report:--

'Estoppel is a complex legal notion involving a combination of several essential elemtnts, the statement to be acted on, action on the faith of it, resulting detriment to the actor. Estoppel is often described as a rule of evidence, as indeed it may be so described. But the whole concept is more correctly viewed as a substantive rule of law.'

32. A dictum of the same judge in an earlier case shows that he was of this opinion because estoppel 'may have the effect of creating substantive rights as against the person estopped.' (See Mercantile Bank of India Ltd. v. Central Bank of India. Ltd., (1938) 1 All ER 52 at p. 57 = (AIR 1938 PC 52 at p. 55).

33. Rupert Cress D. C. L. in his Treatise on Evidence, 3rd Edition at 289 has this to say of the promissory estoppel associated with High Trees Case (1947) KB 130 = (1956) 1 All ER 256:

'If promissory estoppel associated with the decision in 1947 KB 130 = ((1956) 1 All ER 256) is rightly so called, estoppel must be treated as a rule of substantive law in at least one of its aspects provided the Court comes to the conclusion that a promise was made with the requisite intention and acted upon, it will be treated as binding for certain purposes notwithstanding the ab-sence of consideration.'

34. Phipson in his learned treatise on Evidence, Eleventh Edition, at p. 923, placing reliance upon the views of Bowen, L.J. in Low v. Bouverie (1891) 3 Ch 82 Neville, J., in Re Sugden (1917) 86 LJ Ch 277, and Vaughan Williams, L.J. in Williams v. Pinc-keny, (1897) 67 LJ Ch 34, said:

'An estoppel is a rule whereby a party is precluded from denying the existence of some state of facts which be has formerly asserted. It is usually said to be only a rule of evidence because at common law an action cannot be founded thereon; but as in equity an action, and in both a defence, can be founded on estoppels, and as estoppels must be pleaded and evidence not, it may in many cases be regarded as a rule of substantive law.'

35. Famous authors like Best and Noakes express the same view of the matter in their books on Evidence. Estoppel as a Cause of Action:

36. Estoppel is a doctrine which prevents (estops) a person acting inconsistently with a representation which he has made to the other party, in reliance on which the other party has acted to his detriment. (See Lord Denman, C. J. in (1837) 6 Ad & El 469 at 474.

37. The common law doctrine of estoppel is sometimes distinguished from the equitable doctrine of estoppel on the ground that it is a mere rule of evidence wheieas the other gives rise to substantive rights.

38. No consideration of the concept of the doctrine of estoppel is said to be complete without a consideration of the decisions in (1854) 5 HLC 185 and (1891) 3 Ch 82. While the former limits the operation of estoppel to cases of misrepresentation of fact, the latter is referred to generally as laying that estoppel, is only a rule of evidence, and it cannot be used as a cause of action. 'Neither of those decisions' according to David Jacks on (His article in (1965) 81 LQR at 86) 'are based on authority nor is there any principle by which the limitations imposed by them can be said to be self evident.'

39. The earliest case is in the year 1649 Hunt v. Carew, (1649) Nels. 46 where the doctrine of estoppel was utilised as a cause of action.

40. In 1789, an action against the defendant for damages by the plaintiff was allowed by the Court of King's Bench in Pasley v. Freeman, (1789) 3 TR 51. The plaintiff there gave credit to a third person on the defendant's representation that that person could be trusted and that the defendant knew it to be false. Lord Bdon was of the view in 1801 in Evans v. Bicknell, (1801) 6 Ves 174, that the action in Pasley v. Freeman, (1789) 3 TR 51, could well have been maintained in equity as an obligation to make good a representation known to be false. The dicta in that case was to the effect that estoppel founded on fraud is a cause of action.

41. Vaugan Williams, L.J. said in 1897 in (1897) 67 LJ Ch 34:

The common law doctrine of estoppel is of a very personal nature, and only exists between parties to the transaction. It is part of the law of evidence, and is not the came as the equitable doctrine. You cannot found an action on it as you can in equity.'

42. Reference may also be had to Rawlins v. Wickham, (1858) 3 De G & J 304 and Slim v. Croucher, (1860) I De G. F. & J 518 for supporting the view that equitable estoppel may operate as a cause of action.

43. There is a tendency discernable in the decisions of the Courts, where representations were enforced after being treated as contractual in character.

44. In Hammersley v. De Biel, (1845) 12 Cl & F 45, a settlement or a promise to make a settlement was sought to be enforced, placing reliance on which the plaintiff married. Lord Ludhurst, L.C. stated the principle, thus:--

'If a party holds out inducements to another to celebrate a marriage, and holds them out deliberately and plainly and the other party consents and celebrates the marriage in consequence of them, if he had good reason to expect that it was intended that be should have the benefit of the proposal which was so held out, the court of equity will take care that he is not disappointed, and will give effect to the proposal.'

Lord Campbell said at 88 of the report:--

'a representation made by one party for the purpose of influencing the conduct of the other party and acted on by him, win, in general, be sufficient to entitle him to the assistance of this court for the purpose of realising such representation.'

45. In Maunsell v. Hedges, (1854) 4 HLC 1039, placing reliance upon the case of Hammersley the plaintiff sought the enforcement of a representation. Lord Cranworth in his judgment said, after equating contract with enforceable representation, that the plaintiff's case rested on the proposition that there was 'a rule of law as affecting representations as distinct from the rule of law affecting contracts.'

46. Lord Denning summed up the position regarding estoppel in his judgment in 1956 in Lyle Meller v. Lewis, (1956) 1 WLR 29, 35, holding that the assurance made in the case was binding 'no matter whether it is regarded as a representation of law or of facts or a mixture of both, and no matter whether it concerns the present or the future.'

47. He said further that common law estoppel was 'confined to representations of existing fact; but we have got far beyond the old common law estoppel now. We have reached a new estoppel which affects legal relations.'

48. Robertson v. Minister of Pensions, (1949) 1 KB 227 is a case where the plaintiff succeeded on the basis of the estoppel be set up. The estoppel there resulted from a statement made to P by the War Office that his claim for a pension due to injuries received on active service was accepted. On the faith of this, he did not get independent medical advice nor did he secure the X-ray plates which could help him to prove his claim. When P later claimed from the Ministry of Pensions, a pension because of his injuries, Denning )., held that the Ministry was estopped from denying his claim.

49. This part of the discussion can be summed up by stating that a representation of fact or intention if intended to be acted upon and acted upon, is actionable. The claim for the relief depends upon that representation which constitutes the cause of action.

50. The position in India, is approximative more to the one obtaining in the United States of America, rather than to the one in the United Kingdom and other Commonwealth Countries, so far this aspect of the matter is concerned.

51. (AIR 1968 SC 718) is a case, whereby the Export Promotion Scheme, promulgated by the Government of India under the Imports and Exports (Control) Act, 1947, for woollen textiles, as extended to exports to Afghanistan, the exporters were invited to get themselves registered with the Textile Commissioner for exporting woollen goods and it was represented that the exporters will be entitled to import raw materials of the total amount equal to 100 per cent of F. O. B., value of the exports. The respondents firm exported to Afghanistan woollen goods of the F. O. B. value of Rs. 5,03,471-73 Np. But, the Deputy Director in the office of the Textile Commissioner, Bombay, issued to the respondents an import entitlement certificate for Rs. 1,99,459 only. The respondents filed a petition under Article 226 of the Constitution before the High Court of Punjab for a writ or order directing the Union of India and other concerned officers, to issue a licence 'permitting import of woollen goods of the value of Rs. 3,04,012-73 Np.' The High Court held that the respondents were entitled for the issuance of the licence as prayed for. In appeal by the Union of India, before the Supreme Court, Justice Shah, as he then was, speaking for the court held at page 726 of the report:

'We hold that the claim of the respondents is appropriately founded upon the equity which arises in their favour as a result of the representation made on behalf of the Union of India in the Export Promotion Scheme, and the action, taken by the respondents acting upon that representation under the belief that the Government would carry out the representation made by it On the facts proved in this case, no ground has been suggested before the Court for exempting the Government from the equity arising out of the acts done by the exporters to their prejudice relying upon the representation.'

At other places, the learned Judge held:

'We cannot therefore accept the plea that the courts are powerless to grant relief, if the premised import licence is not given to an exporter who has acted to his prejudice relying upon the representation.'

At page 728:

'under our jurisprudence, the Government is not exempt from liability to carry out the representation made by it as to its future conduct.'

52. This is a dear case of promissory estoppel by representation as regards assu-rance of future conduct, where the represen-tation gave rise to an enforceable obligation.

53. In any event, viewed iff whatever way the interest, the doctrine of promissory estoppel by representation, creates, is suffi-cient, in the context of the nature of the juris-diction conferred on the High Court, under Article 226 of the Constitution of India, to maintain an application thereunder by the representee.

54. In order to constitute valid estop-pel by representation, in the words of my Lord the Chief Justice, Ekbote in his Judgment in Writ Petns. Nos. 105 etc. of 1973 Batch, dated 20-2-1973 (Andh Pra) 'the re-preentation must be clear and unambiguous.'

'An insufficient or equivocal represen-ation will not support an estoppel.' (See Masters v. Fraser), (1901) 85 LT 611.

55. In the light of the aforesaid principles, we shall now examine the facts of this case.

56. This is a case pertaining to the distribution of chemical fertilisers. That commodity was declared to be an essential commodity for the purpose of the Essential Commodities Act, 1955 referred to hereinafter merely as 'the Act'. The purpose of the Act, as its preamble discloses, is to provide, in the interests of the general public for the control of the production, supply and distribution of and trade and commerce in certain commodities, described in and declared under the Act as essential commodities.

57. The Central Government, under Section 3 of the Act, was empowered, if it is of the opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, to provide by order, for regulating or prohibiting the production supply and distribution thereof and trade and commerce therein. Such order may provide for regulating by licences, permits or otherwise, the storage, transport, distribution, disposal, acquisition, use or consumption, of any essential commodity.

58. Section 5 provides for the delegation by the Central Government of the power under Section 3 to make orders or issue noti-fications thereunder in favour of State Government or any authority subordinate to such Government.

59. The Fertiliser (Control) Order, 1957, is an order pertaining to fertilisers. With a view to regulating equitable distribution of fertilisers and making the same available at fair prices, the Central Government has been given power under Rule 3 of the said order to fix the maximum prices or rates at which any fertiliser may be sold by a manufacturer or a dealer. Dealers in fertilisers are required to be registered under Rule 5, as per which, no person can carry on the business of selling fertiliser at any place except under and in accordance with the terms and conditions of certificate of registration granted to him under the order. The licences issued by the Government for carrying on the business of selling fertilisers on or before 30th November, 1969 are deemed to be a certificate of registration until the date of its expiry.

60. Rule 17 of the order provides for the cancellation or suspension of the certificate of registration by the registering authority for any contravention of any provisions of the order or any condition of the certificate of registration. Section 7 of the Act provides for punishment by way of imprisonment ranging from one year to 5 years with fine for the contravention of any order made under Section 3 of the Act and Section 6-A provides for confiscation of essential commodity, for the reasons stated therein.

61. These fertilisers, declared as essential commodity under the Act, shall have to be imported into India by the Government of India. On the basis of agreements and arrangements made by the Government of India with foreign countries, Government of India prepares an advance programme of the estimated quantities of fertilisers of each variety expected to be received in the whole year with probable delivery dates to all the States. On the basis of that information, Government of India makes allotments to State Governments for each quarter before the fertilisers are actually received in this country.

62. As per G. O. M. S. No. 1896 dated 10th September, 1970, providing for the revised procedure for the distribution of these fertilisers, the Government of Andhra Pradesh, directed that the District Co-operative Marketing Societies of good record should be allotted such quantities as are applied for and that the balance should be distributed through recognised private dealers. Such private delears are required as per a Circular, dated November, 17, 1970, to enter into an agreement with the department for lifting the specified quantities of fertilisers. That agreement shows that the appellants had agreed to distribute the fertilisers entrusted to them in the particular districts. Clause (2) of the said agreement in so far as it is material reads thus:--

'Director of Agriculture shall make available the said quantities for the quarter..... to.....of pool nitrogenous fertilisers to .....subject to the supplies being received by the Government from the Government of India. The Department will not take up the responsibility of allotting the quantities of fertilisers required by the dealers in a particular quarter due to the fluctuating position of supplies. However efforts will be made to meet the requirements of dealers as far as possible.'

63. Each year is divided for this purpose into 4 quarters, the first quarter commencing from April-June. The allotments made to State Government by the Government of India will be treated as valid for a period of six months from the end of each quarter provided despatch instructions are furnished within 15 days (See Letter No, 23-12-1971 MD Government of India, Ministry of Food and Agriculture New Delhi dated 1-4-1971 addressed to the Food Corporation of India). The Government of India made it clear further in their letter No. 5-8/71-MD dated October 20, 1971, Ministry of Agriculture, New Delhi, addressed to Food Corporation of India, Madras, that if the despatch instructions to the extent of 18,870 M tonnes are lying with the Food Corporation of India at Madras on the account of Andhra Pradesh, for want of stocks against the allotment of the previous year, viz. January-March 1971, the same may be treated as cancelled. The claim of some of the appellants relates to that quarter. In para 13 of the counter filed, it is stated thus:--

'It is clear from the Government of India's letter dated 20-10-1971 that there were no stocks available for the quarter January-March, 71 to which the petitioners relate.'

In para 15, it is further stated:

'As there was no allotment from the Government of India to the State of Andhra Pradesh in respect of Ammonium Sulphate for July-September, 1971 no allotment could be made to the petitioners.'

In para 12, it is stated:

'The stock position was such that after giving to the Co-operative, nothing was available to the private dealers like the petitioners for allotment.'

64. The resulting position as regards the representation made by the State Government and the Authority subordinate to them may be summed up thus:

65. The fertilisers, are to be imported from outside India, by the Government of India. The Government of India allots them to the State Government. The State Government allots them to the District Co-operative Marketing Societies, and if there is any balance left, to the private dealers for securing an equitable distribution of this essential commodity. The quarters, to which the claim of the appellants relate are January to March, 1971 and July to September 1971. The allotment for the former quarter was cancelled by the Govt. of India for want of stocks, and for the latter quarter, there was no allotment made for the same reason. In any event, there was no stock available for the private dealers after meeting the needs of the District Co-operative Marketing Societies. The Central Government is not a party here, and we do not know anything further with respect to this aspect. The Government's promise or representation to supply to the private dealers is 'subject to the supplies being received by them from the Government of India.'

66. Can this representation be said to be clear, unequivocal, unambiguous and sufficient to support the doctrine of promissory estoppel, invoked by the appellants? The answer is an emphatic 'no'.

67. Reliance was placed on a decision of the Supreme Court in AIR 1968 SC 718. That is a case where the orders of the Textile Commissioner and the Central Government were set aside on the ground that the Textile Commissioner without enquiry, proceeded upon his subjective satisfaction that the respondents 'over-invoiced' the goods exported and that the Union Government acted on irrelevant grounds. The respondents, there, exported to Afghanistan woollen goods of the F. O. B., value of Rs. 5,03,471-73 Np. They are entitled for the issue of an Import Entitlement Certificate for that sum, but the Textile Commissioner issued one in a sum of Rupees 1,99,459 only. The claim of the respondents for the issue of a Certificate for the balance of the amount was upheld. That case does not deal with nature, scope and character of a representation, on which the doctrine of promissory estoppel can be founded.

68. Oudh Sugar Mills Ltd. v. Union of India, : AIR1970SC1070 is a case where the order made by the Director in exercise of the powers under clause 5 of the Sugar (Control) Order, 1966 read with a notification dated November 20, 1967 releasing sugar for sale in open market, allowing to the Sugar Company only 26 days for disposal, was held by the Supreme Court as unreasonable. This decision does not deal with the question of representation, we are concerned with here.

69. So is the situation obtaining in the case of Century Spinning and . v. Ulhasnagar Municipality, : [1970]3SCR854 also, where there was no consideration of the concept of representation in the perspective, we deal with in the instant case. Justice Shah, as he then was, speaking for the Supreme Court, held that public bodies are as much bound as private individuals to carry out representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice.

70. In State of Tamil Nadu v. S. K. Krishna Murty, : [1972]3SCR104 at 1128, the Supreme Court held:--

'There is in our view no warrant for concluding that the Madras Education Rules and the Text Book Committee Rules bold out any representation or even an assurance to the publishers that the books once prescribed will not be changed.'

Those rules were held to be in the nature of Departmental instructions and that they do not confer any rights on the publishers.

71. The question of supply of the fertilisers by the State Government to the appellants arises only when the Cenlral Govern-ment supplies to the State Govern-ment. When the Central Government itself did not supply to the State Government, the State Government's not supplying to the appellants scarcely arises. For the aforesaid reasons, we are of the view that there is no promissory estoppel here for lack of requisite precision in the alleged representation.

72. Even so, Sri Anantha Babu, the learned Counsel for the appellants, submits that the appellants, relying on the alleged representation, changed their position to their detriment. Some of the circumstances, relied upon as illustrating that plea are, the appellants paying 5% of the price and opening letters of credit for the balance, with the resultant loss of interest thereon, on account of the amount being blocked up. Persons, desirous of availing the privilege of distributing the fertilisers after being entrusted with the same by the Government, cannot be permitted to complain about the compliance with the conditions on the fulfilment of which alone, they are entitled to exercise the privilege. There is no alteration of the position of the appellants, much less, if there is one, is it to their prejudice. The amounts, they deposited, they are entitled to get back. At any rate, in view of conclusion that there is no representation in law, on which we found the promissory estoppel, this point need not be pursued further.

73. The request of the appellants that the Government may be directed to supply them the fertilisers from out of the stocks received subsequently cannot be acceded to as the same is not warranted in law.

74. To sum up :

I. The modern doctrine of promissory estoppel has become the most powerful and flexible instrument in the realm of our ad-ministrative law.

II. The Government cannot claim immunity from the operation of that doctrine.

III. That doctrine is available both against the Government as against their delegates or agents.

IV. Whereas the common law doctrine of estoppel is founded on a representation as to an existing fact, the doctrine of promissory estoppel is founded on a representa-tion with regard to an assurance as to future conduct. The latter enlarges the scope of the former and subsumes within its ambit not merely statements of fact but also promises as well.

V. Unlike its common law counterpart viewed merely as a rule of evidence, the doctrine of promissory estoppel, will have the effect of creating substantive rights against the representee and thus it can be viewed as a rule of substantive law.

VI. A representation of fact or intention on which the doctrine is founded if intended to be acted upon and acted upon becomes actionable. The claim for the relief depends upon that representation, which constitutes the cause of action.

VII. The representation, be it of promise, or intention or future conduct, on which this doctrine of promissory estoppel is founded is susceptible of generating enforceable promises and binding contractual obligations even where there is no consideration, such as at common law would have supported the promises and obligations.

VIII. In any event, that doctrine, clothes the representee with the needed interest to maintain an application under Article 226 of the Constitution of India.

IX. The appellants are entitled to enforce through an application under Article 226 of the Constitution the representation made to them by the Government, be it Central or State, on the basis of the Essential Commodities Act, 1955, the Fertiliser (Control) Order 1957, G. O. Ms. No. 1896 dated September, 10, 1970 and other connected circulars issued and agreements entered, provided that the representation does not suffer from other inherent infirmities.

X. But, ultimately, the representation sought to be enforced must be clear, unequivocal, unambiguous and sufficient to found the doctrine of promissory estoppel and that kind of representation we do not have here, in this case, for which reason alone, these appeals should fail. For the aforesaid reasons, we agree with the decision of our learned brother Kuppuswamy, J. and dismiss these appeals. Advocate's fee Rs. 100/- in each.


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