S.K. Dubey, J.
1. This is a defendants' appeal under Section 96 of the Code of Civil Procedure against the Judgment and decree dated 7-10-1994 passed in Civil. Suit No. 26-B/91, by the District Judge, Bhopal.
2, Admitted facts are thus, the appellant No. 1 Food Corporation ot India (FCI) in the year 1985, invited offers from the owners of land for construction, of plinths and other facilities (including building) as per specifications detailed in the advertisement for storing foodgrain. sugar, fertilisers and any other material handled by the FCI and after construction to lease to FCI on rent for 3 years with an option to FCI of renewal for one more year, on the same terms and conditions. The respondent-plaintiff firm had its land at Rasal Khedi near Bhopal submitted its offer for construction of plinths and other constructions as specified in advertisement, after negotiations, the offer of the respondent at the negotiated rate of 40 paisa per sq. feet was accepted vide letter dated. 11-6-1985 (Ex. P. I), stating therein that the work will be executed in accordance with the FCl guidelines, drawings and specifications and a lay out plan approved by the Regional Office before start of the work. Respondent was asked to submit all relevant documents pertaining to ownership of land, flood level certificate and lay out plan etc. and to execute an agreement on stamp paper of Rs. 51 within 10 days of the issue of Ex. P. I. Original offer andletterofnegotiation dated 31-5-1985 to form a part of the agreement. A similar letter dated 12-8-1985 (Ex. P. 2) was also sent in pursuance of the letter of the respondent dated 24-6-1985 for hiring capacity of 40,000 Metric tonnes, in addition to the capacity of 45,000 MTs under Ex. P. 1, Vide letter dated 19-8-1985, the FCI accepted the revised offer for construction of plinth for 85,000 MT at the rate of 40 Paisa per sq. feet with effect from 12-8-1985. An agreement dated 12-2-1986 (Ex. P. 6) was entered into by the respondent as party No. I and FCI as Party No. 2 at Bhopal, clauses and terms of agreement relevant for the purpose of this appeal are extracted below.
'Whereas Party No. 2 by open advertisement in the news paper had called for offers from any person (s) for construction of plinth along with other facilities upon pieces of land as per Appendi x 'A' by the party No. 2 for the purpose of storing food grains/sugar/fertilisers or any other material handled by the Food Corporation of India and thereafter to lease the same to party No. 2 on rent for a period of three years with a right/option to party No, 2 to extend it by a further period upto one year on the same rates, terms and contitions applicable to the initial period of lease i.e. three years; AND
WHEREAS party No. I has agreed to construct plinths alongwith the facilities as per Appendix 'A' 85000 MT capacity at Rasal Khedi Bhopal in the State of M.P. and
Whereas party No. 1 has further agreed to lease out the aforesaid plinths with other facilities after the same is constructed according to the specification mentioned in Appendix 'A'' and enclosures thereto laid down by party No. 2 on lease for a period of 3 years at the rent pf 0.40 paisa (Fourty Paise only) per sq. feet with a right of option on party No. 2 to extend the lease further for a period upto one year on the same rates, terms and conditions provided the plinths with other facilities are completed and made ready for occupation within a period of three months from the date of the execution of this agreement.
NOW THIS AGREEMENT WITNESSETH AS UNDER :-
1. The opposite party No. 1 would be solely responsible for obtaining necessary permission from the land ceiling authority and sanction for the plan of plinths and other facilities to be constructed from the local bodies like Municipal Authorities or any other competent authority before proceeding with the constructions
2. The size and height of the plinths and other facilities will be as per specifications laid down in Appendix 'A'.
3. to 4. xx xx xx xx
5. The layout plan indicating the plinths proposed to be constructed, roads, office blocks etc. should be got approved by party No. 2 before commencement of the work.
6. to 7. xx xx xx xx
8. Upon completion of the construction of plinths and other facilities referred to above in all respect and after obtaining acompletion certificate from the party No. 2 or any of its officer nominated by party No. 2 in this behalf, party No. 1, would hand over the plinths and other facilities to the party No. 2 under lease agreement to be executed between the parties in the prescribed proforma prescribed by the party No. 2. The necessary stamp duty as per requirement for execution of lease deed shall be borne by the party No. 1.
9. It shall be understood that the time is the essence of this agreement. In the event of any delay in the completion of the plinth and other facilities or if there is a faulty workmanship or the structure is found to be defective, the party No: 2 would not be bound to take the plinths on lease and the earnest money deposited by the party No. I shall be forfeited. The decision of the opposite party No. 2 would be final in this regard and shall not be questioned by the party No. 1. The earnest money shall also be forfeited incase the party No. 1 alters, modifies the terms of the agreement, withdraws the offer charges, etc.
The constitution of the ownership and/or fails to complete the construction of plinth and other facilities within the time stipulated for constructions.
10. On successful completion of the constructions as per specification and satisfaction of the party No. 2, the earnest money ......... So deposited shall be converted into security deposit for the performance of lease terms and the party No. 1 shall not be entitled for any interest on the security deposit or earnest money so deposited.
11. Annual repairs and maintenance of the plinths and the other facilities including the maintenance of the structures shall be the responsibility of the party No. 1. In case the annual repairs and maintenance is not undertaken and/or any faulty workmanship or any other defect in plinths or facilities as pointed out by party No. 2 is not rectified within 30 days from the notice in that behalf, the party No. 2 shall be entitled to get the work done himself at the cost of the party No. 1 and recover such cost from the rent payable to party No. 1. The party No. 2 shall also be entitled to terminate the lease agreement on this count. The decision of the opposite party No. 2 in this regard shall be final.
12. The period of lease will be three years from the date of taking possession of the lease property. The party No. 2 will be entitled to extend it by a further period upto one year on the same rates, terms and conditions applicable to the lease.'
3. The respondent for construction of plinths, godown etc. as approved by the FCI borrowed the loan of about Rs. 2,00,000/- from the United Commercial Bank. The FCI addressed letter dated 16-10-1986 (Ex. P. 11) to the Bhopal Branch of United Commercial Bank, regarding rent payable to respondent, saying that the respondent's offer for construction of 18 open plinths having capacity of 45,000 Mts for storage of foodgrains has been accepted at the rate of 5600/- per plinth for a period of initial tenancy of 3 years which may be extended for one year more with the discretion of FCI. The respondent has requested in writing that the rent payable to the respondent for a period of 3 years and also for one year, if the period is extended, be directly remitted to this Branch of the Bank instead of payment to the respondent which proposal and request has been accepted by the FCI, and accordingly the FCI shall make payment of the entire rent payable to the respondent to your Branch for the entire period of 3 years and one year more if extended from the date of occupation of the aforesaid plinths. The respondent constructed the plinths within the extended period 31-12-1986 worth construction cost of Rs. 29,55,000/- as per report of the valuation of immoveable property (Ex. P. 35) and detailed estimate of costs of constructions (Ex. P, 36). The respondent vide letter (Ex. P. 4) dated 25-12-1986 intimated FCI to take possession of the plinths constructed as per specifications on or before 31-12-1986. FCI took possession of 18 plinths along with compound wall constructed of the total area of 2313 sq. meter as per specifications and proposed plan through its Assistant Manager (Depot) of the FCI Chola, Bhopal, vide Ex. P. 9 dated 24-1-1987. The possession of auxiliary construction (watch man quarter with all fittings. Office building, W.C. blocks ceiling fans) was not taken over for the reason of non-posting of staff on plinths as on 24-1-1987 which was also taken on 18-3-1987 by the FCI and handed over to Assistant Manager, Chola vide Ex. P. 10. However, FCI and its officers did not ask the respondent to execute the lease but continued to pay the rent for a period of 21 months. Thereafter FCI served a notice (Ex. P. 12) dated 26-9-1988 of vacation of plinth of 45,000 MTs capacity on 10th October, 1988 because of the order of competent Authority for the reason of low utilisation of the plinth in view of the drought situation. The respondent was advised to take possession of the plinths from the Assistant Manager (D) on or before the said date within working hours and to send the rent bill for reimbursement. The respondent sent the reply vide Ex. P. 13 dated 6-10-1988 agitating and stating therein that the respondent is not liable to take possession of the plinths prior to expiry of 3 yearsor until and unless FCI makes payment of rent for the remaining period of 3 years, that is, upto 23rd January, 1990. The respondent also claimed rent from June, 1988 along with interest at the rate of 15 per cent per annum as the respondent had to pay interest at that rate to the Bank on the amount of loan borrowed by the respondent from the Bank. FCI sent another letter dated 10-10-1988 (Ex. D. 8) informing the respondent that the FCI has shifted all the stocks and vacated the above plinths and, therefore, advised the respondent to take possession of the plinths as per letter dated 26-9-1988. The letter also enclosed handing and taking over report in duplicate for taking necessary action. In order to ensure safety of the fittings in the office building/ watchman quarters etc., the doors were looked and a watchman was kept to take care of the plinths, if the respondent fails to take possession of the plinths on 10-10-1988 the respondent shall be alone responsible. The District Manager, vide letter dated 3-12-1988 (Ex. D. 9) intimated that the FCI has vacated the plinths on 10-10-1988 of which possession was taken over by the respondent on 10-10-1988 and arrears of rent have been paid upto 10th October, 1988. The FCI now is no longer tenant of the respondent and, therefore, the respondent was advised to refrain from raising false bills of rent in future.
4. Meanwhile a circular dated 4-5-1989 (Ex. P. 15) was issued by the FCI communicating the decision of Board of Directors of FCI regarding low utilisation of CAP storage period of 3 years guarantee period scheme, to the Zonal Managers and Senior Divisional Managers of the FCI stating that the Board has decided that wherever guarantee period of 3 years has not expired the plinths may be continued up to the expiry of the period of three years but negotiations may be conducted with the owners of the plinths so that expenditure of rent be reduced which should not be less than 5 per cent for the balance guarantee period of plinths, making it clear that under existing laws FCI is under no obligation to continue the plinths upto the end of the lease period being un-registered lease deed. In case owners do not agree the plinths may be dehired with the notice as per provisions of the lease agreement.
5. The respondent reagitated its claim vide letter dated 6-1-1989 (Ex. P. 17) and vide letter dated 9-5-1989 (Ex. P. 19) reminded the Zonal Manager, FCI to convey the decision on the representation made vide Ex. P. 17 dated 6-1-1989: Then, the respondent vide letter dated 17- 10-1989 (Ex. P. 25) in continuation of the correspondence agreed to negotiate the decrease in rent by 5 percent. Further vide letter dated 22-11-1989 (Ex. P. 26) the respondent communicated to decrease of rent by 6 percent and for release of the payment of the bills of rent.
6. As the request of the respondent was not accepted the respondent instituted a suit for recovery of Rs. 17,02,709.00 as damages for breach of contract, Rs. 10,000/- for refund of security deposit Rs. 3037/- as interest on security amount and Rs. 10,000/- electricity charges. Interest pendente lite on the amount of Rs. 17,25,746/- from the date of the suit till payment at the rate of 18 per cent per annum was also claimed.
7. The appellants resisted the suit on various grounds. The main defence was that in the absence of the registered lease deed the parties were not bound by the period of lease as the same was unenforceable, the plaintiff cannot claimdamages on the simple agreement. In the absence of registered lease deed the tenancy was month to month, liabie to be terminated under Section 106 of the Transfer of Property Act, 1882 (TP Act). The defendants were in no way connected with the bank liability though they had written that they may take the godown for 3 years but that did not disclose that the FCI has taken the guarantee that it will keep the godown for 3 years so that the plaintiff can pay off the bank loan. The plaintiff cannot compel the defendants to keep the godown upto 23-1-1990 on the plea of promissory estoppel. Any promise made by the officers of the FCI on the principle of promissory estoppel in the absence 'of Valid agreement, the plaintiff cannot claim damages as worked out by him of which no details have been given. The vacation of the plinth by 10-10-1988 was in public interest and to avoid wastage of public money in view of low utilisation because of the drought situation prevailing at the relevant time.
8. The Trial Court, after appreciation of the pleadings and evidence adduced by the parties on the issues raised in the suit, held that the plaintiff firm is registered partnership firm, hence the suit is not barred under Section 69(2) of the Partnership Act. The plaintiff-respondent completed the construction work of the plinths within the extended period. In the absence of the registered, lease deed the tenancy was month to month, but, however, there was breach of contract. The defendants were bound to pay the rent for, a period of 3 years on the principle of promissory estoppel. Therefore the plaintiff is entitled to reasonable damages keeping in view the provisions of Section 73 of the Contract Act and Rs. 10,000/- of the security deposit with reasonable interest thereon of Rs. 3037/-. The defendants were further directed to pay the interest at the rate of 6 per cent per annum from the date of the suit, that is, 4-10-1991 to the date of payment, on the sum of Rs. 17,02,709/-. Costs were also awarded.
9. We have heard Shri S. L. Saxena, Senior Advocate with Shri M. L. Choubey, counsel for the appellants, and Shri A. K. Chitley Senior Advocate with Shri K. N. Agarwal counsel for the respondent.
10. The first question for our consideration is whether Ex. P. 8, the document was compulsorily registered under Section 17 of the Registration Act. Relevant clauses of Section 17 for the purposes of this appeal, we extract ;
'17. (1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which. Act No. XVI of 1864, or the Indian Registration Act, 1866 (XX of 1866), or the Registration Act, 1871 (VII of 1871), or the Indian Registration Act, 1877 ((III) of 1877). or this Act came or comes into force, namely :
(a) xx xx xx xx
(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immoveable property;
(c) xx xx xx xx
(d) lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent; and
(e) xx xx xx xx
(2) to (3) xx xx xx
Lease is defined in S. 105 of the T.P. Act. Section 106 of the T.P. Act deals with duration of certain leases. How the leases are made is provided in Section 107 of the T.P. Act which lays down that a tease of immovable property from year to year or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument. All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession. In Registration Act, 'lease' is defined in Section 2(7) of the Act, that, includes a counterpart, Kttbuliyat, as undertaking to cultivate or occupy, and an agreement to lease. Section 17 of the Registration Act deals with documents of which registration is compulsory.
11. Admittedly, Ex. P. 8 is not the document, as contemplated in Section 17(1)(d). It is contended that the document falls in clause (b) of Section 17. therefore, in the absence of registered document. the terms as contracted, cannot be enforced. Whether an agreement operates as lease or agreement for a lease is a matter of construction. The words 'agreement for a lease' must relate to some document that creates a present and immediate interest in the immovable property.
12. From the reading of Ex. P. 8 it is clear that the respondent on acceptance of its offer for construction of plinths along with other facilities upon pieces of land, as per Appendix 'A' of Ex. P. 8 agreed to lease out the constructed plinths on obtaining acompletion certificate from the F.C.I. or any of its officers nominated by F.C.I. and to hand over the plinths and other facilities to FCI under lease agreement to be executed between the parties for a period of three years at the rate of 0-40 paise per sq. ft. with a right of option to FCI to extend the lease for a period of one year more on the same terms and conditions applicable to lease. The lease agreement was to be executed between the parties in the proforma to be prescribed by FCI. Necessary stamp duty as per requirement for execution of the lease deed was to be borne by the respondent. Clause 9 provides that in the event of any delay in the completion of plinths and other facilities or if there is a faulty workmanship or the structure is found to be defective, the FCI was not bound to take the plinths and the earnest money deposited by the respondent was liable to be forfeited. Therefore, the terms as contained in Ex. P. 8 clearly demonstrate that the demise was not in presenti nor was at a future date. There was no transfer of the right to be in possession, as the right was not created at once. An agreement to lease must be an instrument which effects an actual demise and operates as a lease. In other words, the agreement between two parties which entitles one of them merely to claim the execution of the lease from other without creating present and immediate demise or interest in his favour, is not included under Section 2(7) of the Registration Act or under Section 105 of T.P. Act. See Hemant Kumari Devi v. Midhapur Zamindari, AIR 1919 PC 79.
13. In Triveni Bai v. Lilabai, AIR 1959 SC 620, which arises from a decision of this Court, reported in TrivenfBai v. Leela Bai, AIR 1955 Nagpur 170 the Supreme Court after considering the decision of the Privy counsel in Hemant Kumari Devi's case (AIR 1919 PC 79) and the provisions of S. 17 of the Registration Act, observed that the view taken by the Pri vy Council in that case is perfectly right. Section 17(1) of the Registration Act deals with documents of which registration is compulsory. It is obvious that the documents falling under Clauses (a), (b), (c) and (e) of Sub-section (1) are all documents which create an immediate and present demise in immovable property mentioned therein. Clause (d) which deals with leases does not import any such limitation because it refers to leases of immovable properties from year to year or any term exceeding one year or reserving a yearly rent. It would not be right to assume that leases mentioned in clause (d) of Section 17(1) would cover cases of documents which do not involve a present and immediate transfer of lessees' right. It would thus be reasonable to hold that like the instruments mentioned in Clause (a), (b) and (c) of Section 17(1) leases also are instruments which transfer lessees' right in the property immediately and in presenti. It was further observed that the agreements of the character where no present or immediate demise is made, such agreement of sale or purchase or to lease may lead to a successful claim for a specific performance. Same conclusion is in respect of inclusive definition of 'lease' Under Section 2(7) of the Registration Act. In view of the above position of law, on construction of the document Ex. P. 8, we are of the opinion that this document is not of the nature falling under clause (d) of Sub-section (1) of Section 17 of the Registration Act, an agreement purported and was compulsorily to be registered, as such was not inadmissible in evidence. The decision relied on by Shri Saxena, counsel for the appellants in Mr. Rampati v. Santa Singh, AIR 1936 Lahore 1002 is distinguishable and is of no help, as clause (b) of Sub-section (1) of Section 17 requires that right must be in presenti or in future whether vested or contingent, but, the right must be created at once and if a document where no property right having been transferred and on execution of the document in future a right to come in existence, such document, in our opinion, will not fall within the clause.
14. Therefore, we are of the view that the trial Court rightly proceeded to deal with the case of breach of contract (Ex. P. 8) and on the principle of promissory estoppel as respondent could not have claimed specific performance of the agreement (Ex. P. 8) because the period of three years had already expired.
15. Coming to the question of breach of contract, damages and the plea of applicability of doctrine of promissory estoppel; in the background of facts that on the assurance and the terms agreed in the document Ex. P. 8 that after the construction, the plinths will be taken on lease at 0.40 paise per sq. ft. for a period of three years with an option to the FCI to extend the period of one year on the same terms and conditions applicable to lease, the respondent on this assurance and the representation made in Ex. P. 8 and in terms of tender notice after taking huge loan amount invested the money for construction of plinths and other facilities as per specifications of FCI. Therefore, in the circumstances, the FCI which is an authority under Article 12 of the Constitution, cannot back out from the terms, merely on the plea that the document was not admissible in evidence being not registered and in the absence of registered lease for the period of three years the tenancy was month to month as held by the trial Court.
16. The principle of promissory estoppel is that where one party has by his word or conduct made to the other a clear and unequivocal promise or representation which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party, to whom the promise or representation is made and it is in fact so acted upon by the other party, the promise or representation would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings which have taken place between the parties. The doctrine of promissory estoppel is now well established one in the field of administrative law. This principle has been evolved by equity to avoid injustice. It is neither in the realm of contract nor in the realm of estoppel. Its object is to interpose equity shorn of its form to mitigate the rigour of strict law.
17. Law of promissory estoppel which found its 'most elequent exposition' in Union of India v. Anglo Afghan Agencies, AIR 1968 SC 718, crystalized in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., AIR 1979 SC 621 as furnishing cause of action to a citizen, enforceable in a Court of law, against Government if it or its officials in course of their authority extended any promise which created or was capable of creating legal relationship and it was acted upon by the promisee irrespective of any prejudice. It was reiterated in Union of India v. Godfrey Philips India Ltd. (1985) 4 SCC 369 : (AIR 1986 SC 806), and was taken further where it was held that no duty of excise was assessable on cigarettes manufactured by assessee by including cost of corrugated fibreboard containers, when it was clearly represented by the Central Board of Excise and Customs in response to the submission made by the Cigarette Manufacturers Association and this representation was approved and accepted by the Central Government that the cost of corrugated fibreboard containers would not be includible in the value of the cigarettes for the purpose of assessment of excise duty.
18. In Delhi Cloth and General Mills v. Union of India(1988) 1 SCC 86:(AIR 1987 SC 2414) the Supreme Court observed that the party asserting the estoppel must have acted upon the assurance given to him or must have relied upon the representation made to him. The entire doctrine proceeds on the premise that it is reliance based and nothing more. The Court would compel the opposite party to adhere to the representation acted upon or abstained from acting. The alteration of position by the party is the only indispensable requirement of the doctrine. It is not necessary to prove further any damage, detriment or prejudice to the party asserting the estoppel,
19. In Amrit Banaspati Co. Ltd. v. State of Punjab (1992) 2 SCC 411 : (AIR 1992 SC 1075) the Supreme Court after referring to earlier decisions in para 10, observed that promissory estoppel being an extension of principle of equity, the basic purpose of which is to promote justice founded on fairness and relieve a promise of any injustice perpetrated due to promisor's going back on its promise, which is incapable of being enforced in a Court of law if the promise which furnishes the cause of action or the agreement, express or implied, giving rise to binding contract is statutorily prohibited or is against public policy.
19-A. The doctrine can also not be invoked to support an ultra vires act or to compel the Government or a public authority to carry out a promise which is contrary to law or ultra vires its powers, or its enforcement is not in larger public interest. See Home Secretary, U.T. Chandigarh v. Darashjit Singh Gorewal (1993) 4 SCC 25.: (1993 AIR SCW 2585), Food Corporation of India v. Kamdhenu Cattle feed Industries (1993) I SCC 71 :(AIR 1993 SCI 601).
20. In a recent decision of the Supreme Court in State of H.P. v. Ganesh Wood Products (1995) 6 SCC 363 ; (AIR 1996 SC 149) the Supreme Court considered the well recognised doctrine of promissory estoppel, and observed at page 391 (of SCC): (at p. 165 of AIR), in para 55 thus :
'To wit, the rule of promissory estoppel being an equitable doctrine, has to be moulded to suit the particular situation. It is not a hard and fast rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. If it is more just from the point or view of both promisor and promises that the letter is compensated appropriately and allow the promisor to go back on his promise, that should be done; but if the Court is of the opinion that the interests of justice and equity demand that the promisor should not be allowed to resile from his representation in the facts and circumstances of that case, it will do so. This, in out respectful opinion, is the proper way of understanding the words 'promises altering his position.' Altering his position should mean such alteration in the position of the promises as it makes it appear to the Court that holding the promisor to his representation is necessary to do justice between the parties. The doctrine should not be reduced to a rule of thumb. Being an equitable doctrine it should be kept elastic enough in the hands of the Court to do complete justice between the parties Now, can the doctrine of promissory estoppel be put on a higher pedestal than the written contract between the parties? Take a case where there is a contract between the parties containing the very same terms as are found in the 'approval' granted by IPARA (Sub-Committee) and then the Government resiles from the contract and terminates the contract. The promisee will then have to file a suit for specific performance pf the contract in which case the Court will decide, having regard to the facts and circumstances of the case and the provisions of the Specific Relief Act, whether the plaintiff should be granted specific performance of the contract or only a decree for damages for breach of contract. It must be remembered that the docrine of promissory estoppel was evolved to protect a promisee who acts on the faith of a promise/representation made by promissor and alters his position even though there is no consideration for the promise and even though the promise is not recorded in the form of a formal contract. Surely, a representation made or undertaking given in a formal contract is as good as, if not better than, a mere representation. All that we wish to emphasise is that anything and everything done by the promisee on the faith of the representation does not necessarily amount to altering his position so as to preclude the promisor from resiling from his representation. If the equity demands that the promisor is allowed to resile and the promisee is compensated appropriately, that ought to be done. If, however, equity demands, in the light of the things done by the promisee on the faith of the representation, that the promisor should be precluded from resiling and that he should be held fast to his representation, that should be done. To repeat, it is a matter of holding the scales even between the parties - to do justice between them. This is the equity implicit in the doctrine.'
21. In the background of the law on promissory estoppel, which yields when equity so acquires would be applicable in the facts of this case which are admitted as the respondent after the acceptance of its tender, negotiations on the agreed term contained in Ex. P. 8, after deposit of security deposit Rs. 10,000/- and on taking huge amount of loan on interest from the Bank, constructed the plinths and other facilities as per requirements and specifications of the FCI, on the assurance and agreed condition that plinths and other facilities so constructed to the satisfaction of FCI shall be taken on lease as agreed for a period of three years with an option of F,CI, to extend for one more year on the same terms and 'conditions of the lease. The FCI not only entered into agreement Ex. P. 8 to that effect but, its officers also wrote a letter Ex. P. 11 to the Branch Manager, UCO Bank, Bhopal that FCI has accepted the offer of the respondent and agreed to take plinths on rent at 0.40 paise per sq. ft. and the rent payable to the respondent for the entire period of three years and one year more if extended from the date of occupation shall be remitted to the Bank. However, this arrangement continued only for a period of 21 months as FCI terminated the tenancy in public interest the reason being low utilisation due to drought situation. The Plaintiff denied that there was any drought in Bhopal area. Assuming it to be correct to avoid hardship to such owners who constructed the plinths, the Board of Directors of FCI passed a resolution and accordingly a circular dated 4-6-1989, Ex. P. 15 was issued stating therein that the agreement contained for a period of three years guarantee may be continued, but negotiations be held for reduction in rent of plinths by five per cent for the remaining unexpired period of three years, making clear that FCI is not under obligation to continue the plinths, as the lease is unregistered. If plinths owners do not agree with the proposal the plinths may be de-hired. Though the tenancy was terminated prior to issue of circular Ex. P. 15, but, as the respondent was agitating the respondent agreed to reduce the rent first by five percent and then by six percent as the respondent invested huge amount by taking loan for construction of plinths and other facilities as per specification and requirements of FCI.
22. Therefore, in the circumstances, we are of the opinion that on doctrine of promissory estoppel the FCI was bound to discharge its obligations arising out of Ex. P. 8. FCI being the statutory Corporation cannot be allowed to resile from its promise so as to cause harm or injury to respondent because we do not find any inequilability or equity in favour of FCI. We also do not find the contract being opposed to public policy Under Section 23 of the Contract Act, orprohibited by any statutory provision of law or ultra vires the authority. The case is also not such that public interest would suffer. On the other hand FCI, decided to continue the plinths but on reduction of hiring charges by five per cent to be equitable with the plinths owners.
23. The respondent has established that plinths and other facilities remained vacant and continued to remain vacant, while there is no evidence on behalf of the FCI that the respondent utilized the plinths and other facilities or rented the said constructions. Therefore, for the breach of contract u/S. 73 of the Contract Act the respondent was entitled to damages as the specific performance of the contract was not possible because of the expiry of the period of three years, to be calculated after reduction of six per cent from the agreed rent of 0.40 paise per sq. feet or Rs. 5600/- per plinth as the respondent agreed to reduce the rent of plinths and other facilities in pursuance of circular Ex. P. 15 and negotiations, for the unexpired period of three years.
24. In the result the appeal is allowed partly;the decree passed by the trial Court is modified tothe extent that the respondent would be entitledto damages to be calculated after deduction of sixper cent from the agreed rent for the unexpiredperiod of three years. The respondent would Beentitled to interest on the amount so calculated atthe rate of 6% per annum from the date of the suit,4-10-1991 and would also be entitled to Rs.10,000/- of security deposit and Rs. 3037/- interestas awarded by the trial Court. The costs of thisappeal shall be borne by the parties as incurred.A decree be drawn up accordingly.