S.L. Talati, J.
1. Petitioner No. 1 is the society registered under the Societies Registration Act and petitioner No. 2 is the Director of petitioner No. 1-society. Petitioner No. 1-Society was also registered as a public trust under the Bombay Public Trust Act. Now these petitioners have filed this petition for getting quashed and set aside the Government resolution, dated 11-12-1980 which is annexure 'E' to the petition and also getting quashed and set aside the letter, dated 18-12-1980 which is produced at annexure 'D'. Further relief prayed is that an injunction may be granted against the respondents and they may be restrained from implementing the resolution, dated 11-12-1980.
2. The facts as they emerge are as under : Petitioner No. 1 is a society registered under the Societies Registration Act. It is registered with the objects of raising National Memorial in the memory of late Sardar Vallabhbhai Patel and to carry such activities to fulfill the ideals for which late Sardar Vallabhbhai Patel worked during his life time.
3. The Central Government and many State Governments have actively participated in giving various types of grants to meet with the capital expenditures and recurring expenditures to commemorate the memories of Mahatma Gandhi and Pandit Jawaharlal Nehru. The 100th birth-day of Sardar Vallabhbhai Patel was celebrated throughout the country in the year 1974-75 and at various places Sardar Vallabhbhai Patel Centenary Committees were appointed to celebrate his 100th Birthday. The State Government of Gujarat had taken the initiative in the formation of Sardar Vallabhbhai Patel centenary celebration committee under the Chairmanship of late Shri Uchharangrai Navarangrai Dhebar, former President of Indian National Congress. At the time of celebration of the 100th birthday of the late Sardar Vallabhbhai Patel, it was felt that there was a necessity to establish a permanent body to raise National Memorial of late Sardar Vallabhbhai Patel and carry other activities which were dear to him and which were mentioned also as the objects of the centenary committee established by the State Government.
4. Some of the leading public men who were associated with the Centenary Celebration Committee formed petitioner No. 1-society and subsequently registered the said society as a Public Trust. The promoters and trustees of petitioner No. 1-society are as under:
(1) Shri Babubhai Jashbhai Patel
(2) Shri Shantilal H. Shah
(3) Shri Raghavjibhai Leuva
(4) Kumari Maniben Patel
(5) Shri Tribhovandas Patel
(6) Shri Navalbhai Shall
(7) Shri Biharilal Popatlal Shah
(8) Shri Uttamchand Shah
(9) Shri Navinchandra Barot.
5. After the death of Shri Uccharangrai Navarangrai Dhebar, Shri Shantilal H. Shah was appointed as the Chairman of the Centenary Celebration Committee. Shri Shantilal Shah had worked as the Secretary of the Parliamentary Board of the Indian National Congress under late Sardar Vallabhbhai Patel who at that time was Chairman of the Parliamentary Board. Trustee Maniben Patel is the daughter of late Shri Sardar Vallabhbhai Patel and she was very closely associated with the activities of late Sardar Vallabhbhai Patel. She was member of Parliament for many years and she was associated with many institutions connected with the activities of late Sardar Vallabhbhai Patel. Trustee Tribhovandas Kishibhai Patel and Sardar Vallabhbhai Patel hailed from Kaira District and he was also associated with Sardar Vallabhbhai Patel Memorial at Karamsad. Shri Babubhai Jashbhai Patel was the Chief Minister of Gujarat State and he was associated with Sardar Vallabhbhai Patel Memorial at Nadiad which is the birth place of late Shri Sardar Vallabhbhai Patel. Trustee Raghavjibhai Leuva was the Speaker of Gujarat State Legislative Assembly and he was appointed as the executive Chairman of the Centenary Celebration Committee. Thus all the sponsorers and promotees and trustees of the society and the trust are leading public men and they are known for their dedicated services.
6. The petitioner-society applied to the State Government to allocate them the building known as 'Moti Shahibagh Palace' situated in Shahibag area at Ahmedabad for the purpose of National Memorial of late Sardar Vallabhbhai Patel. The State Government, after considering various proposals regarding the proposed use of the building, decided to allot the building known as 'Moti Shahibagh Palace' and the adjoining land and other properties to the petitioner-society by sale at the price of Rs. 57,23,000/-. The State Government, therefore, made a Government Resolution dated 18-8-1979 resolving to transfer the property mentioned in the said Resolution which includes Moti Shahibagh Palace, lands and other properties to the petitioner-society by sale on a consideration of Rs. 57,23,000/-. The resolution also stated the State Government bad resolved to grant-in-aid Rs. 57,23,000/- to the petitioner-society and the said amount of grant had been paid by the said society to the State Government towards the sale-price.
7. In pursuance of the above referred Government resolution, the part of the property mentioned in annexure 'A' was handed over to the petitioner society on 3rd September, 1979, while the remaining part of the property except some 6 to 7 quarters were handed over to the petitioner-society on 31st December, 1979. The petitioner-society has not been handed over 6 to 7 quarters which form part of the property annexure 'A', as they are occupied by the State Government servants and they have not vacated the said quarters.
8. Thereafter it appears that on 18-12-1980 the Executive Engineer (R & B) Division asked petitioner No. 2 to hand over back the possession of the property to the State Government. It was mentioned in the said letter that the State Government has made Government resolution, dated 11-12-1980 resolving to take the property back cancelling the earlier Government resolution annexure 'A'. This led to the filing of this petition.
9. It is alleged by the petitioners that the resolution, dated 11-12-1980 and the letter, dated 18-12-1980 were illegal, improper, invalid, unjust and without competence and authority and they suffer from non-application of mind and the State Government misread the letters and the documents and passed resolution on unwarranted inferences and conjectures.
10. On behalf of the State Government affidavit-in-reply is filed by the Deputy Secretary (R&B;)and it is stated that the Director General, Archaeological Survey of India by his letter dated 14-3-1980 addressed to the Secretary to Government of Gujarat, Education Department after referring to letter dated 24-5-1960 stated that the intention of the Government of Gujarat to sell the said building to Sardar Patel Memorial Society was not in consonance with the conditions of deprotection made by the Central Government by the aforesaid letter dated 24-5-1960. Fur their it was stated that the Director (Publications) for Director General, Archaeological Survey of India, New Delhi by his letter dated 20-4-1979 informed the Secretary to the Government of Gujarat, Education Depart-ment that the said building should be maintained as monument with a land scope garden and early steps should be taken for declaring the building as state protected monument. It was further stated that the entire subject-matter was placed before the State Government for its reconsideration and the state Government on careful consideration decided to cancel the earlier Government Resolution, dated 18-8-1979. The State Government is of the view that the aforesaid building was to be sold to the petitioner-society on certain conditions and one of the conditions was that the approval of the Central Government should be obtained in respect of the scheme of making National Memorial of Sardar Vallabhbhai Patel and that the appropriate steps should be taken to procure the grant from the Central Government for the said purpose and that the order passed by the Education Department of the Government of Gujarat after taking necessary steps for. the same would be binding on the petitioner-society. The State Government considered the aforesaid letters written by the Director General, Archaeological Survey of India, New Delhi dated 20-4-1979 and 14-3-1980 and took the view that having regard to the stand taken by the Central Government the said building should be preserved as an ancient monument and that the intention of the State Government to transfer the said building to the petitioner-society was not consistent with the condition of deprotection mentioned in the letter dated 24-5-1960. However, there was no possibility of getting any grant from the Central Government in regard to the stand taken by the Central Government in the aforesaid letters of the Director General, Archaeological Survey of India, New Delhi, dated 20-4-1979 and 14-3-1950. The State Government, therefore, resolved that it is not possible to sell the aforesaid building to the petitioner-society as it would be inconsistent with the condition of deprotection mentioned in the letter dated 24-5-1960 and that it would also not be in the public interest to sell the building to the petitioner-society. It was further mentioned in the affidavit-in-reply that the resolution, dated 18-8-79 does not create any binding contract between the State of Gujarat and the petitioner-society nor does it create any right, title or interest in the petitioner-society in respect of the aforesaid building. It was further stated in the affidavit-in-reply that the price determined by the aforesaid Government Resolution was also not agreed by the petitioner-society. Under the circumstances handing over of the possession by the officers of the State Government to the petitioner-society was unauthorised and that the present possession of the petitioner-society of the said building did not create any legal right, title or interest in the said society. It was also stated that Article 299 of the Constitution of India required a contract to be executed by the State Government and that the provisions contained in the said Article were mandatory. The State Government had not entered into any contract with the petitioner society as required by Article 299 of the Constitution and, therefore, the petitioner-society did not acquire any legal right, title or interest in the said building by virtue of the aforesaid resolution. Under these circumstances they were entitled to cancel the resolution and get back possession.
11. Thereafter affidavit-in-rejoinder was filed in which it was stated that the Government was barred by promissory estoppel from going back from the promise and/or contract as evidenced by the Government Resolution at annexure 'A' after handing of the property in pursuance of the said resolution.
12. Now in order to appreciate the rival contentions of the parties certain other facts which are not disputed are also required to be stated.
13. The actual use of Moti Shahibagh Palace was done as under:
(1) Prior to 1947 the building was used for the purpose of residence of the Government officials and also to accommodate the Government offices.
(2) From 1947 to 1960 the building was used for the purpose of Government offices and the residence of Government officers.
(3) From 1-5-60 to 14-8-78 the property was used as official residence of Government of Gujarat.
14. Further it is, required to be stated that Queen Elizabeth, Queen of England visited Ahmedabad some-where in the year 1960 and had stayed at Moti Shahibagh Palace. The Public Works Department of the State of Gujarat had nude radical alterations and renovated Moti Shahibaug Palace so as to provide modern outlook and amenities to the visiting high dignatory Queen Elizabeth, Queen of England. The Public Works Department had coloured, plastered and had made numerous additions and alterations to the monument to renovate the same with modern doors, windows and R.C.C. works. The alterations and renovations made in the monument wiped out its archaeological importance as early as in the year 1960.
15. Now these facts which are stated in the petition are not denied.
16. On 24-5-1960 Under Secretary to the Government of India wrote a letter to the Chief Secretary to the Government of Gujarat, Ahmedabad which is produced at annexure 'F'. It was stated in that letter after referring to the letters dated 114-1960 and 29-4-1960 that the Minister of Scientific Research and Cultural Affairs had agreed that the monument in Ahmedabad known as 'Moti Shahi Bagh' may remain with the State Government. It was further stated that in view of this the Central Government proposed to deprotect the monument from point of view of archaeology. A request was made to the State Government that the State Government may take over under their own protection as soon as it was deprotected by the Central Government. In the last paragraph of that letter it was stated that he was to add however, that no additions or alterations would be made in the monument without prior consultation with the Superintendent, Department of Archaeology, Western Circle, Baroda. Now it may be stated here that in the petition it is stated in ground (17) that the archaeologist, Government of Gujarat had his head office at Rajkot in the year 1961 and he had deputed Conservation Assistant to visit Moti Shahibagh Palace and to report about the alterations and renovations made during the visit of Queen Elizabeth, Queen of England. The Conservation Assistant reported to him that numerous additions and alterations were made so as to wipe out the archaeological importance of the monument. The Archaeologist, Government of Gujarat, Rajkot thereafter by his letter dated 4-8-1961 recorded to the Director of Education, Government of Gujarat, Ahmedabad regarding total renovation during the visit of Queen Elizabeth, Queen of England and opined that the monument had no archaeological importance any more and might be delisted from the list of the protected monument of the State. The Director of Education, Gujarat State, Ahmedabad by his letter dated 17-8-1961 addressed to the Secretary to the Government, Education and Labour Department, Sachivalaya, Ahmedabad sent the report of the Archaeologist, Government of Gujarat, Rajkot to delist from the list of the protected monument. The petitioners' allegations were not denied and these letters were not produced. However, Government of India by notice which was published in the Gazettec of India on 11-4-1961 stated as under:
S.O. 889. Whereas Central Government is of opinion that the ancient and historical monuments/sites specified in the schedule to this notification have ceased to be of national importance.
Now, therefore, in exercise of the powers conferred by Section 35 of the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958) the Central Government hereby declares that the monuments/sites aforesaid have ceased to be of national importance for the purpose of the said Act. SCHEDULE----------------------------------------------------------------------------Sr. State District Name of the Monument/ Protection notification:No. Locality Site. (i) Preliminary(ii) confirmatory (iii) subsequent if any. ----------------------------------------------------------------------------xxxx xxx xxxx xxxx9. Gujarat, A-bad Ahmedabad Moti Shahibagh (i) No. 3958, dt. 2-7-1928(ii) No. 3958, dt. 14-11- 1928Government of Bombay xxxx xxxx xxxx xxxx----------------------------------------------------------------------------
17. Now, therefore, the preliminary and confirmatory notifications dated 2-7-1928 and 14-11-1928 were of no avail and by notification dated 11-4-1961 the Government of India itself declared under Section 35 of Act No. 24 of 1958 that Moti Shahi Bagh Palace ceased to be of national importance for the purpose of the said Act. Now, therefore, any letter written by the Under Secretary prior to 11-4-1961 had no meaning at all and on 11-4-1961 Moti Shahi Bagh Place, Ahmedabad ceased to be of national importance for the purpose of Act No. 4 of 1958. However, if the Government of Gujarat wanted to go by the previous letter, dated 21-5-1960 they were entitled to take it over under their own protection and they were not permitted to have any additions or alterations without prior consultation with the Superintendent, Department of Archaeology, Western Circle, Baroda though after notification dated 11-4-1961 the Archaeology, Department of Government of India had no control over that monument because it had ceased to be of national importance for the purpose of Act No. 24 of 1958. Under these circumstances, therefore, perhaps the Government of Gujarat used that building for the residential purpose of Governor throughout till it was handed over to petitioner No. 1-society.
18. Thereafter one has to go to annexure 'A' dated 18-8-1979 by which the Government of Gujarat decided to hand over Moti Shahi Bagh Palace to petitioner No. 1-society. Certain conditions are mentioned in that resolutions. 3(1) to 3(6). Condition No. 3(1) is that in the ensuing assembly session token supplementary demand would be made and the assembly would be informed about the sale. Condition No. 3 (2) laid down that preservation and maintenance would be the responsibility of petitioner No. 1 and petitioner No. 1 would see that Moti Shahi Bagh Palace is kept under good condition. It was further mentioned that if any external or internal small or big alteration became necessary prior sanction would be obtained of the Archaeology Department of the Government. Condition No. 3 (3) required petitioner No. 1 to obtain permission under Section 19(1) of the Urban Ceiling Lands Act. Condition No. 4(4) mentioned that the water connections would be obtained by petitioner No. 1 from Ahmedabad Municipal Corporation and that would be done by petitioner No. 1 at its own expenses. Condition No. 3(5) stated that if petitioner No. 1 decided to stop activities of Sardar Memorial Committee, the property will be handed over back to the Government. Now it is not the case of the Government that breach of any of the conditions Nos. 3(1) to 3(5) is made by petitioner No. 1-society. According to the State of Gujarat breach in regard to condition No. 3(6) is committed which is as under:
Now so far as this condition is concerned it is clear from the reading of the condition itself that petitioner No. 1 was expected to do nothing. It was for the State Government to approach the Government of India and obtain sanction for any scheme for the National Memorial of late Sardar Vallabhbhai Patel. For that purpose the State of Gujarat was expected to obtain necessary grant and help and pass it over to petitioner No. 1. This would be done by the Education Department of the State of Gujarat and after completing the necessary formality whatever orders are passed by the Education Department would be binding to petitioner No. 1. Now, therefore, the Education Department was expected to obtain sanction of the Government of India in regard to the National Memorial of Sardar Vallabhbhai Patel. That was the purpose of the scheme. For that purpose necessary help and grant was to be obtained and in accordance with that scheme help and grant order were required to be passed. Now the orders which are passed are neither regarding the scheme nor regarding the help nor regarding the grant. But on the basis that as it is not possible to get grant, petitioner No. 1-society should hand over possession back of Moti Shahibagh Palace. Now this is based on the letter written by the Directorate General of Archaeological Survey of India dated 14-3-1980. Now that letter is in reply to the letter which the Government of Gujarat must have written on 24-10-1979 because that letter is referred to. However, that letter is not on record. In the letter dated 14-3-80 it is stated that Moti Shahi Bagh Palace is a historical building of Archaeological importance and it was constructed in 1622 A. D. by Shah Jahan during the time of Jahangir. It was on the central list of monuments of National importance till 1960 when it was deprotected vide Ministry of Scientific Research and Cultural Affairs letter No. F-3-51/60-61, dated 24-5-60 (copy enclosed) and handed over to the State Government. In the said letter it was clearly stipulated that the State Government may take the monument on their list of protected monuments and should desist from asking any additions or alterations without prior consultation with the Archaeological Survey. In paragraph 2 of that letter it is stated as under:
Your present intention, as indicated in the letter under reference, to sell this monument to the Sardar Vallabhbhai Patel Memorial is, therefore, not in consonance with the conditions of the deprotection by Central Government. In fact, the monument occupies an important place in our national heritage and should be maintained by the State as a monument, as emphasised in our letter of even number dated the 20th April, 1979. We should again advise you that Moti Shahi Bagh Palace should not be sold but should be maintained by the State as a monument only. Otherwise the Archaeological Survey of India may be constrained to revoke the order of 24-5-1960 and resume the charge of the monument.
It is sufficient to say that the Director General of Archaeological Survey of India is not the Government of India and once the Central Government itself passed the resolution in the years 1961 that Moti Shahi Baug Palace has ceased to be of national importance it is one thing to say that no alterations should be made without prior permission and it is another thing to say that the action of the State Government is not in consonance with the deprotected resolution adopted by the Government of India. It may here be stated that the Government of Gujarat while handed over possession, respondent No. I did in fact mention in condition No. 3(2) that no alterations should be made by petitioner No. 1 without the sanction of the Archaeology Department. It is not the case of the State Government that there was breach of that condition. Now, that therefore on the basis of the letter dated 14-3-1948 of the Archaeological Survey of India if the Government of Gujarat passed a resolution dated 11-12-1980 by which it decided to take back Moti Shahi Bagh Palace from petitioner No. 1 staling that the Central Education Department had decided to give 50% grant i.e. Rs. 30.0 lacs towards the National Memorial of Sardar Vallabhbhai Patel and thereafter mentioning their own letter dated 20-4-1979 which they wrote to the Central Government which is not produced the action of State Government on the basis of the letter dated 14-3-80 which is produced can never be justified on facts.
19. The learned advocate Shri K. G. Vakharia who appeared on behalf of the petitioners submitted that the Government was not competent or authorised to pass resolution dated 11-12-1980 backing out from the previous resolution. He submitted that the impugned resolution suffers from non-application of mind and it is based on irrelevant and extraneous considerations. Further it is submitted that under the principles of promissory estoppel the Government is barred from taking any such action and that the resolution is passed without complying with the rules of natural justice. In regard to promissory estoppel the averments made in the petition are that after possession was handed over of Moti Shahi Bagh Palace to petitioner No. 1 the petitioners issued an appeal to raise permanent Memorial of late Sardar Vallabhbhai Patel in the building which was allotted to them. In response to that appeal the people donated various sums and the total amount collected came to Rs. 25.0 lacs. Now these sums were given by different persons to the petitioner-society because the petitioners had in possession Moti Shahi Bagh palace where the memorial and other allied activities of late Sardar Vallabhbhai Patel could be completed otherwise perhaps these donations from the people could never have come to the society. If now Moti Shahi Bagh Palace is now taken back from the petitioners; it is most likely that the people who gave donations would come forward and ask the petitioners to return their moneys which they gave because they understood that the Memorial would be done at the most befitting place. Secondly it is averred that the petitioner-society has already spent about Rs. 1.50 lacs for setting up the exhibition on the life and work of late Sardar Vallabhbhai Patel. Library and Museum are already set up in that building and large amount is spent for the maintenance of the property after 31-12-1979. Inaugural function was arranged on 7-3-1980. The library contains correspondence by and with late Sardar Vallabhbhai Patel which also includes some historical documents. The petitioner-society has also got microscopic films containing correspondence by and with late Sardar Vallabhbhai Patel. Thus the society has already prepared the exhibition on the life and work of late Sardar Vallabhbhai Patel and the said exhibition is also declared open to the public. The said exhibition is in some of the rooms of Moti Shahi Baug Palace likewise the Museum on the life work of late Sardar Vallabhbhai Patel is also being arranged in the said building.
20. Now the aforesaid facts are completely overlooked.
21. One more thing which is required to be mentioned is that the State Government has also enacted an Act known as 'The Gujarat Ancient Monuments and Archaeological Sites and Remains Act, 1965 (Gujarat Act No. 25 of 1965). Section 4 gives power to the State Government to declare ancient and historical monuments to be protected monuments. Section 4 runs as under:
4. Power of State Government to declare ancient and historical monuments to be protected monuments. (1) Where the State Government is of opinion that any ancient and historical monument not included in Section 3 and not declared by or under any law made by Parliament to be of national importance, should be a protected monument, it may, by notification in the Official Gazette, give two months' notice of its intention to declare such monument to be a protected monument' and a copy of every such notification shall be affixed in a conspicuous place near the monument.
(2) If any person interested in any such monument has any objection to the monument being declared as a protected monument, he may, within two months of the publication of the notification under Sub-section (1), submit his objection in writing, to the State Government.
(3) On the expiry of the said period of two months, the State Government may, after considering the objections, if any, received under Sub-section (2), declare by notification in the Official Gazette the ancient and historical monument to be protected monument.
(4) A notification published under Sub-section (3) shall, unless and until withdrawn by the State Government, be conclusive evidence of the fact that the ancient and historical monument to which it relates is a protected monument for the purposes of this Act.
Now the Central Government having declared this palace to be de-protected under the Central Act. 1958 on the ground that it has ceased to be of national importance, the State Government had power under Section 4 of Gujarat Act No 25 of 1965 to take any action if they so desired. But till this date they have not chosen to do so. The reason is obvious. Moti Shahi Bagh Palace had ceased to be of national importance because alterations were made, renovations were made, it was used for the purposes of offices and residences of Government servants and lastly it was used as the residence for the Governor of Gujarat. In view of this situation the Government of Gujarat never considered to act under Section 4 of Gujarat Act No. 25 of 1965 till this date. It is now useless to contend that this Moti Shahi Bagh Palace is of national importance. It has ceased to be of national importance according to the Government of India as for back as in 1961. The Government of Gujarat has put this Moti Shahi Bagh Palace to various uses considering to be not of National importance and it has never used Gujarat Act No. 25 of 1965 for that particular purpose.
22. The learned advocate Shri Vakharia referred to certain rulings which are required to be referred to.
23. The first ruling to which reference was made is the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh and Ors. reported in : 118ITR326(SC) . It is a case where the principle of promissory estoppel is discussed in paragraphs 7 to 10, 19, 24, 27, 28 and 33. It is held:
It is a principle evolved by equity to avoid unjustice and though commonly named 'promissory estoppel', it is neither in the realm of contract nor in the realm of estoppel. The true principle of promissory estoppel seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or effect 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 is made and it is in fact so acted upon by the other party, the promise 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, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. The doctrine of promissory estoppel need not be inhibited by the same limitation as estoppel in the strict sense of the term. It is an equitable principle evolved by the courts for doing justice and there is no reason why it should be given only a limited application by way of defence.
xx xx xx xx xx xx
The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived. Where the Government makes a promise knowing or intending that it would be acted by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promisee is not recorded in the form of a formal contract as required by Article 299 of the Constitution, xxxx xxxx xxxx
24. The second ruling while is required to be referred to is the case of M/s. Jit Ram Shiv Kumar and Others v The State of Haryana and Another reported in : 3SCR689 . Now in this judgment the first judgment referred to above is desented and in paragraph 39 the scope of the plea of doctrine of promissory estoppel against the Government is summed up as follows:
(1) The plea of promissory estoppel is not available against the exercise of the legislative functions of the State.
(2) The doctrine cannot be invoked for preventing the Government from discharging its functions under the law.
(3) When the officer of the Government acts outside the scope of his authority, the plea of promissory estoppel is not available. The doctrine of ultra vires will come into operation and the Government cannot be held bound by the unauthorised acts of its officers.
(4) When the officer acts within the scope of his authority under a scheme and enters into an agreement and makes a representation and a person acting on that representation puts himself in a disadvantageous position, the Court is entitled to require the officer to act according to the scheme and the agreement or representation. The Officer cannot arbitrarily act on his mere whim and ignore his promise on some undefined and undisclosed grounds of necessity or charge the conditions to the prejudice of the person who had acted upon such representation and put himself in a disadvantageous position.
(5) The Officer would be justified in changing the terms of the agreement to the prejudice of the other party on special considerations such as difficult foreign exchange position or other matters which have a bearing on general interest of the State.
In paragraph 50 after considering the authorities the Supreme Court observed as under:
50. On a consideration of the decisions of this Court it is clear that there can be no promissory estoppel against the exercise of legislative power of the State. So also the doctrine cannot be invoked for preventing the Government from acting in discharge of its duty under the law. The Government would not be bound by the act of its officers and agents who act beyond the scope of their authority and a person dealing with the agent of the Government must be held to have notice of the limitations of the authority. The Court can enforce compliance by a public authority of the obligations laid on him if he arbitrarily or on his mere whim ignores the promises made by him on behalf of the Government. It would be open to the authority to plead and prove that there were special considerations which necessitated his not being able to comply with his obligations in public interest.
Now here this is not a case where the State Government was acting under any law because as I have mentioned earlier no section is over taken by the State Government under Gujarat Act No. 25 of 1965. Further there is no legislative action by the State of Gujarat. It is an act authorised by the State. The first act by which the State Government handed over Moti Shahi Bagh Palace was by a resolution which it adopted on 18-8-1979. That resolution was adopted in concurrence with the Revenue Department, Education, Department, Finance Department and General Administration Department and it was issued in the name of the Governor of the State staling that it was being issued in the name and on behalf of the Governor of Gujarat. Now, therefore, it was not a contract. There was no question of complying with Article 299 of the Constitution of India. This resolution never mentioned a term by which it was stated that any formal contract or agreement of sale was required to be entered into between the parties. The resolution was itself issued in the name and on behalf of the Governor of Gujarat and after obtaining the concurrence of all the departments concerned. Now, therefore, the Government which neither acted in its legislative capacity nor under the law acted purely in administrative capacity and when they cancelled that resolution they also did it in the same fashion and they did it in the name and on behalf of the Governor of Gujarat after obtaining the concurrence of the Legal, Education and Finance Departments of the State. Now that, therefore, a clear promise was made by the resolution which resolution the Government of Gujarat acted upon and handed over possession of Moti Shahi Bagh Palace to the petitioner-society. As the petitioner society was in possession of Moti Shahi Bagh Palace, the petitioner society could collect Rs. 25.00 lacs from the people. They could put up museum and library. The whole position is changed. These facts cannot be overlooked.
25. Now on behalf of the State it was submitted firstly that the Government of India did not give grant. It is only required to be stated that the Government of India did agree to give 50% of the grant for raising National Memorial of late Sardar Vallabhbhai Patel and did sanction Rs. 30.00 lacs. The rest of the grant either Government of Gujarat could have made or it could have asked the petitioner society to meet with the rest of the amount. The second argument was that no sale-deed was executed. There is no term in the resolution that any sale-deed was required to be executed between the parties. The third argument was that it was a national monument. This argument is negatived by the Government of India itself by its notification which I have already mentioned which was issued as far back as in the year 1961 and the Government of Gujarat never issued any notification under Gujarat Act No. 25 of 1965 and if it put this Moti Shahi Bagh Palace to various uses which itself destroyed any national importance to this building if it was attached to it. It is surprising here to know from the learned Assistant Government Pleader that the resolution dated 18-8-1979 has no validity because immediately thereafter it was suggested that Clause 3(6) of that resolution was basic. This would mean that an invalid resolution had a basic clause which was violated. This argument itself was falacious. The argument was based on two letters of the Government of India,, one dated 23-5-1980 and another dated 11-12-1980. It may only be stated that any officer of the Government of India writing any letter cannot be construed to be the decision of the Government of India. The decision of the Government of India is taken in the year 1961 by notification issued under the Act. That notification destroyed the effect if any which could be had because of the previous letter dated 23-5-1960, After this palace ceased to be of national importance according to the Government of India notification, no officer of the Government of India had any business to write a letter in the year 1980 that Moti Shahi Bagh Palace was of national importance. This was against the Government of India resolution of the year 1961 which I have already referred to.
26. The learned Assistant Govt. Pleader thereafter relied upon a case of State of West Bengal v. B.K. Mondal and Sons reported in : AIR1962SC779 and a reference was made to paragraph 6 where it was held that State shall not be burdened with liability based on unauthorised contracts. The ruling is based on the interpretation of Section 175 of the Government of India Act and it was contended that as the contract was not in accordance with Article 299 of the Constitution of India the contract is void. I have already stated earlier that no formal contract was ever intended to be entered upon between the parties. Even in the resolution which was passed all formalities contemplated by Article 299 of the Constitution of India were observed. The resolution was in the name and on behalf of the Governor of Gujarat and that resolution was binding to the State of Gujarat. It was void contract, according to the State the action is required to be taken under Section 65 of the Indian Contract Act which reads as under:
65. When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.
This could be done by filing a civil suit and not by adopting some resolution and calling upon the party to hand over possession which was handed over to the party by passing an appropriate resolution. If. the Government feels that the resolution was void the Government can go to a civil court and file a suit for possession. No other course is left open to the Government.
27. A faint attempt was made that there was frustration as contemplated by Section 56 of the Indian Contract Act which runs as under:
56. An agreement to do an act impossible in itself is void. A contract to do, an act, which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent unlawful, becomes void when the act becomes impossible or unlawful.
Where one person has promised to do something which he knew, or, with reason-able diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustained through the non-performance of the promise.
28. To support this proposition reliance was placed on a case of Satyabrata Ghose v. Mugneeram Bangur and Co. and Anr. reported in : AIR1954SC44 . The law is summarised as under:
The relief is given by the Court on the ground of subsequent impossibility when it finds that the whole purpose, or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement. When such an event or change of circumstance occurs which is so fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the Court which can pronounce the contract to be frustrated and at an end. The Court undoubtedly has to examine the contract and the circumstances under which it was made. The belief, knowledge and intention of the parties are evidence but evidence only on which the Court has to form its own conclusion whether the changed circumstances destroyed altogether the basis of the adventure and its underlying object. This is really a rule of positive law and as such conies within the purview of Section 56 of the Contract Act.
29. The second case is the case of Boothaling a Agencies v. V.I.C. Periaswami Nadar reported in A.I.R. 1969 Supreme Court at page 170. It lays down as under:
The provisions of Section 56 of the Contract Act cannot apply to be a case of 'self-induced' frustration.
Here I do not know what the Government of Gujarat wrote to the Government of India because that letter is not produced. What is produced is the letter which is received from the Officer of the Govern-ment of India and it cannot be suggested for a moment that it has become impossible to go by the first resolution inasmuch as there is already a condition which lays down that no alterations could be made without prior sanction of the Archaeology Department.
30. In another ruling Bhim Singh and Ors. v. State of Haryana and Ors. reported in : AIR1980SC768 the Supreme Court observed as under:
Doctrine of promissory estoppel. State Government holding out certain specific promises as inducement for its employees to move into a newly created department. Held employees having believed representations by State Government and having acted thereon could not be denied rights and benefits promised to them.
31. This High Court in the case of M/s. Kothari Oil Products Co. Rajkot v. State of Gujarat reported in 23(1) G.L.R. at page 28 after considering the Supreme Court Rulings on promissory estoppel held as under:
Held, therefore, that if the Government or any authority on behalf of the Government has made a representation and acting on that representation a party has altered its situation, then, it is not open to the Government to resile from that position and at the instance of the party who has altered its situation to its disadvantage, the Court is entitled to direct the Government or the authority to carry out its promises or its scheme.
32. Now, therefore, it is clear from what has been discussed above that the Government cannot resile from the resolution dated 18-8-1979 unless the petitioners committed breach of any of the conditions mentioned in that resolution. Condition No. 3(6) on which reliance is placed is to be carried out not by the petitioners but by the State of Gujarat. The Education Department is expected to pass orders in regard to the scheme of National Memorial of late Sardar Vallabhbhai Patel after getting its sanction from the Central Government. The Education Department of the State is also authorised to pass orders in regard to the help or grant. But the Education Department is not authorised to cancel the resolution dated 18-8-1979 unless breach is established.
33. The last thing which is required to be stated is that in any case the Government has not complied with the rules of natural justice before passing the resolution dated 11-12-1980. The Government of Gujarat has not even bothered to issue any show-cause notice to the petitioners giving them opportunity of being heard. If any orders are required to be passed against the interest of the petitioner atleast rules of natural justice, fair play require that a show-cause notice could have been issued and they should have been given opportunity of being heard. This is fundamental in any democratic structure. No one even bothered to take care of this fundamental principle which is necessary in the interest of democratic structure under which every body is expected to work. Under these circumstances this Court has no alternative except to strike down resolution, dated 11-12-1980 because it has been issued without complying with the rules of natural justice and it clearly appears to be arbitrary unjust and without application of any mind to the facts and circumstances of the case which were so eloquent as I have described above. As the resolution dated 11-12-1980 is struck down the natural corollary would be that the letter dated 18-12-1980 which is addressed to the society in pursuance of that resolution becomes a nullity.
34. The result is that this petition is allowed. The Government resolution dated 11-12-1980 which is produced at annexure 'B' AND the letter dated 18-12-1980 which is produced at annexure 'D' are hereby quashed and set aside.
35. The Government and its officers are hereby restrained from taking any action of taking possession of the property known as 'Moti Shahi Bagh Palace' from the petitioner in pursuance of the said resolution and letter. 35. Rule is made absolute with costs.