Full Judgment Text
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PETITIONER:
DELHI CLOTH & GENERAL MILLS LTD.
Vs.
RESPONDENT:
UNION OF INDIA
DATE OF JUDGMENT08/10/1987
BENCH:
SHETTY, K.J. (J)
BENCH:
SHETTY, K.J. (J)
MUKHARJI, SABYASACHI (J)
CITATION:
1987 AIR 2414 1988 SCR (1) 383
1988 SCC (1) 86 JT 1987 (4) 35
1987 SCALE (2)715
CITATOR INFO :
R 1988 SC 354 (11)
RF 1992 SC1075 (3)
RF 1992 SC2169 (28)
ACT:
Refusal of permission by the Railway Board to charge
concessional station to station freight rate for the
carriage of Naptha for a fertilizer factory complaint under
section 41(1)(a) and (b) of the Railways Act, 1980, against
HEADNOTE:
The appellant, a company, set up a fertilizer factory
at Kota in Rajasthan. The factory manufactures urea for
which the main raw material is Naptha, which has to be
transported from the Koyali Refinery of the Indian oil
Corporation.
Before the actual setting up of the factory, the
appellant requested the Railway Board by letter for a
concessional frieght rate for the carriage of Naptha to the
factory. The Railway Board by its letter EX 5 dated November
5, 1966, quoted station to station rate equal to 85-B
(special) as against the rate equivalent to classification
62.5-B requested for by the appellant, and also stated that
as the special rate was being quoted ahead of the actual
setting up of the factory, the frieght rate would be
reviewed when the traffic actually began to move.
When the factory was almost ready for operation, the
appellant again requested the Railway Board by letter for
charging the rate under classification 62-5-B instead of 85-
B (special) quoted by it. The Railway Board refused to
oblige. The appellant wrote another letter to the Board,
requesting it to permit charging the rate equivalent to 85-B
(special) pending its final decision, as the movement of
naptha was to commence from June/July, 1968. The Railway
Board refused to grant that request also, saying that it
could reconsider the question if on the basis of the facts
and figures of the cost of production vis-a-vis the sale
price of the fertilizers, it could be established that the
production of the fertilisers at Kota was uneconomical
unless freight concession on the movement of naptha was
granted.
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The appellant filed a complaint under section 41(1)(a)
and (b) of the Railways Act, 1890, before the Railway Rates
Tribunal. The Tri-
384
bunal decided against the appellant. Aggrieved, the
appellant appealed to this Court by special leave for relief
against the order and judgment of the Tribunal.
Dismissing the appeal, the Court
^
HELD: Three questions arise for consideration of the
Court: (1) whether the Railway Board was bound to allow the
concessional rate offered to the appellant, that is, 85-B
(special) quoted in its letter Ex. C 5 dt. November 5, 1966,
to the appellant, (2) whether the rate charged for the
carriage of the naptha between the stations concerned was
unreasonable, and (3) whether the Railways were showing
undue preference or advantage in respect of other traffic in
contravention of the provisions of section 28 of the
Railways Act. [389E-F ]
Dealing with the third question first, which relates to
the contravention of section 28 of the Railways Act, the
scope of the section was considered by this Court in Rajgarh
Jute Mills Ltd v. Eastern Railway and another, [1959] SCR
236 at 241, and the Railway Rates Tribunal, considering the
material on record in the light of the decision of the Court
in case, held that there was no evidence produced by the
appellant to justify any grievance under section 28. This
conclusions is perfectly justified. [390E; 391C]
The second question above-said relates to the rate
charged by the Railway Administration being per se
unreasonable. Even assuming, as argued by appellant’s
counsel, that the Railways are earning some surplus income,
that by itself is no ground to hold that the frieght charged
is per se unreasonable. In the case of commodities of
national needs such as foodgrains, crude oil etc., it may be
necessary for the Railways to charge below the operation
cost, and to offset the loss, the Railways may charge higher
freight for some other classified commodities. The cost of
operation cannot by itself be the basis for judging the
reasonableness of the rate charged. Counsel for the
appellant also argued that crude oil and naptha were
comparable commodities for the purpose of carriage but there
was disparity in the rates charged in respect of the two,
naptha being charged at a much higher rate. The Tribunal
rejected the demand of the appellant for parity in frieghts,
and the Court cannot interfere with the finding to the
Tribunal in this appeal under Article 136 of the
Constitution. On merits also, there is no justification to
demand that neptha should take the same freight rate as that
of the crude oil. [391D, F-H; 392B. D-E]
385
Lastly, the first question: It relates to the
correctness of the view taken by the Tribunal on doctrine of
promissory estoppel consequent upon the letter Ex. 5 of the
Railway Board. The Tribunal rejected this claim of the
appellant. Considering the conclusion of the Tribunal on
this question, it appears the Tribunal has not correctly
understood the doctrine of promissory estoppel: The party
asserting the estoppel must have relied and acted upon the
assurance given to him. It means the party has changed or
altered the position by relying on the assurance or
representation. 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. "A promise
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intended to be binding, intended to be acted upon, and in
fact acted upon, is binding", said Lord Denning, sitting as
a trial judge in Central London Properties Ltd v. High trees
House Ltd., [1947] K.B. 130. If the promisee has acted upon
the promise, the promisor is precluded from receding from
his promise. The concept of detriment as it is understood
now is whether it appears unjust, unreasonable or
inequitable that the promisor should be allowed to resile
from his assurance or representation, having regard to what
the promisee has done or refrained from doing in reliance on
the assurance or representation. It is, however quite
fundamental that the doctrine of promissory estoppel cannot
be used to compel the public bodies or The Government to
carry out the representation or promise which is contrary to
law or which is outside their authority or power. Secondly,
the estoppel stems from equitable doctrine. it requires that
he who seeks equity must do equity. The doctrine, therefore,
cannot also be invoked if it is found to be inequitable or
unjust in its enforcement. or the purpose of invoking the
doctrine, it is not necessary for the appellant to show that
the insurance contained in Ex. (I S was mainly responsible
for the establishing of the factory at Kota. There may be
several representation to one party from different
authorities in regard to different matters. Or there may be
several representations from the same party in regard to
different matters; In the instant case, there was one
representation by the Rajasthan government to supply power
to the appellant’s factory at concessional rate. There is
another representation from the same government to exempt
the appellant from payment of tax for a certain period. If
those representations have been relied upon by the
appellant, the Court would compel the authorities to adhere
to their representations. What is required is the fact that
the appellant was induced to act on the representations.
The assurance given by the Railway Board in the letter
Ex. S was not clear and unqualified. it was subject to
review to be undertaken
386
when the appellant started moving the raw material.
Accordingly, A appellant was put to notice that it has to
approach the Railway administration again when it would
review the whole matter. From the tenor of Ex. 5, the
railways are entitled to say that they have reviewed the
matter and found no justification for a concessional frieght
rate for naptha; that does not amount to resiling from the
earlier assurance. No question of estoppel arises in favour
of the appellant in the case out of the representation made
in Ex 5. The Court agreed with the conclusion of the
Tribunal but not for all the reasons stated.
Rajgarh Jute Mills Ltd v. Eastern Railway & Anr, [1959]
SCR 234 at 241; Central London Properties Ltd v. High Trees
House Ltd, [1947] KB 130; Central Newbury Car Auctions Ltd
v. Unity Finance Ltd, [1956] 3 All ER 905 at 909; Article
"Recent Development in the Doctrine of Consideration"-Modern
Law Review, Vol. 15, P. 5, Grundt v. The Great Boulder Ptv
Gold, Mines Ltd, [1938] 59 CLR 641; Mohlal Padampet Sugar
Mills Co Ltd v. State of UP and ors, [1979] 2 SCR 641 at
695= [1979] 2 SCC 409; Union of India and ors v. Godfrey
Philips Ltd, [1985] 4 SCC 369= [1985] Supp. 3 SCR 123 and
Halsbury’s Laws of England-4th Edn., Vol. 16, P. 1071, para
1595, referred to.
JUDGMENT:
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 223 of
1974.
From the Judgment and order dated 13.7.1973 of the
Railways Rates Tribunal, Madras in Complaint No. 2 of 1969.
K.K. Jain, Bishamber Lal, Pramod Dayal and A.D. Sanger
for the Appellant.
Bed Brat Barua, Ms. A. Subhashini,.C.V. Subba Rao, Mrs.
S. Suri, P. Parmeswaran and Anil Katiyar for the Respondent.
The Judgment of the Court was delivered by
JAGANNATHA SHETTY, J. This appeal, with Special Leave,
is against the order and judgment dated July 13, 1973, of
the Railways Rates Tribunal Madras, in complaint filed by
the appellant under Section 41(1) of the Indian Railways Act
No. 9 of 1890. The background facts are these:
The appellant is a Company. It has set up a fertilizer
factory at
387
Kota in Rajasthan. It is said to be an industrially backward
area. The factory manufactures Urea for which the main raw
material is Naptha. Naptha has to be transported from Koyali
Refinery of Indian oil Corporation. The nearest railway
station is Bajuva near Baroda. The nearest railway station
serving Company’s factory is Dadhevi in Rajasthan. The
distance between Bajuva and Dadhevi is about 520 kms. For
transportation, the Naptha has been classified by the
Railway under Clause 110-B of the tariff.
Before the actual setting up of the factory, the
Company, by its letter dated September 5, 1966 requested the
Railway Board for a concessional frieght rate for the
carriage of Naptha. It requested the Railway Board for fixed
Station to Station rate equivalent to classification 62.5-B.
That would have meant reduction of about 43% in the normal
tariff under clause 110-B. In that letter it was pointed out
that if such concessional rate was not fixed, the Company
would be put to disadvantageous position as against the
other factories located at ports or near the refineries. The
Railway Board by its letter Ex. C5 dated November 5, 1966
agreed to quote station to station rate equal to 85-B
(Special). In the said letter it was also stated that as the
special rate was being quoted ahead of the actual setting up
of the factory the freight rate need to be reviewed when the
traffic actually begins to move.
When the factory was almost ready for operation the
company wrote a letter dated June 5, 1967 requesting the
Railway Board for charging the rate under classification
62.5-B instead of 85-B(Special). The Railway Board did not
accede to the request. On May 31, 1968 the company wrote
another letter informing the Railway Board that the movement
of Naptha would commence from June/July 1968 and pending
decision of the company’s earlier request, the Railway Board
may permit charging the rate equivalent to 85-B (Special)
already offered in terms of the letter Ex. 5. The Railway
Board refused to grant that request also. The Railway Board,
however, informed the Company in the letter dated July 11,
1968 as follows:
"However, if on the basis of facts and figures
your cost of production (date to be furnished for
at least one complete year) vis-a-vis the sale
price of fertilizers, it can be established that
production of fertilizers at Kota is uneconomical,
until freight concession on the movement of Naptha
from Bajuva/Trombay to Kota is granted, the
Railway Board would be prepared to reconsider the
question."
388
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on April 19, 1969, the company filed a complaint under
Section 41(1)(a) and (b) of the Railways Act, 1890 before
the Railway Rates Tribunal Madras. The principal contentions
raised in the complaint are as follows:
"(i) The Railway Board was estopped and/or
precluded from going back on the assurance Of
quoting station to station concessional rate 85-B
when the company had in vested a large amount of
capital in setting up the factory at a place away
from the refinery or port (ii) The rate charges by
the Railway for the carriage of Naptha between two
stations-Bajuva and Dadhevi was unreasonable under
Section 41(1)(b) of the Indian Railways Act, 1980,
and (iii) The Railways were showing undue
preference or advantage in respect of other
traffic and contravening the provisions of Section
28 of the Indian Railway Act, 1890."
With these and other contentions, the company requested
the tribunal to declare the rate charged for the carriage of
Naptha as unreasonable and to fix a reasonable rate for such
carriage.
The Railway Board in its reply maintained that while
quoting the concessional rate equal to 85-B (Special) it was
made clear to the company that the rate was subject to
review when the traffic starts moving and that concessional
rate was provisional in character. The company did not
construct the factory relying solely on the concessional
rate offered by the Railway Board. There was no scope for
any such understanding since the Railway reserved its right
to determine the correct rate when the traffic started
moving. It was later found that the chemicals have been
advisedly given low class rate with a view to encourage
fertilizer industry and no further concession was necessary
to the company. It was further stated that the question of
any undue prejudice of undue favour to any party does not
arise when charging the respective class rates for specified
commodities.
On these pleadings the Tribunal considered among
others, the following issues:
1. Whether freight charges, now charged, for the
carriage of a Company’s traffic in Neptha from Bajuva
to Dadhevi station are unreasonable under Section 41(1)
of the Indian Railways Act, 1890?
389
2. Whether the Railways are contravening Section 28 of
the Indian Railways Act in charging the respective
class rates for commodities naptha, chemical manures,
divisions A & B, Urea and Gypsum?
3. Whether the Railways are estopped by the doctrine of
promissory estoppel in view of the assurance given in
the letter Ex. C?
The Tribunal determined all these questions against the
company. It was held that there was no unreasonableness in
the rate charged for the carriage of Naptha from Bajuva to
Dadhevi. The Railways are not contravening Section 28 of the
Railways Act. The rate charged has not caused any prejudice
to the company. On the question of promissory estoppel, the
Tribunal held that the assurance given by the Railway Board
in the letter Ex. C5 was not mainly responsible for setting
up of fertilizer factory at Kota. It was further held that
even if Ex. CS was an assurance to the Company the
withdrawal of that assurance has not adversely affected the
interests of the company.
Upon the submissions made by learned counsel on both
sides, the following questions arise for our consideration:
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(1) Whether the Railway Board was bound to give the
concessional rate offered to the company under Ex. C5
dated November 5, 1966?
(2) Whether the rate charged for the carriage of Naptha
between Bajuva and Dadhevi is unreasonable?
(3) Whether the Railways are showing undue preference
or advantage in respect of other traffic and
contravening the provisions of Section 28 of the
Railways Act?
We may conveniently take up third question first for
consideration.
The relevant provisions of the Railways Act, 1890,
which have a material bearing on the question are these:
Section 41 provides for filing complaints against Railway
Administration. The Section provides as follows, so far as
it is material:
390
41(I) Any complaint that a railway administration
(a) is contravening the provisions of Section 28 or
(b) is charging for the carriage of any commodity
between two stations a rate which is unreasonable, or
(c) x x x x x
may be made to the Tribunal and the Tribunal shall
hear and decide any such complaint in accordance
with the provisions of this chapter.
Section 28 provides:
"28. A Railway administration shall not make or
give any undue or unreasonable preference or
advantage to, or in favour of, any particular
person or railway administration, or any
particular description of traffic, in any respect
what soever, or subject any particular person or
railway administration or any particular
description of traffic to any undue or
unreasonable prejudice or disadvantage in any
respect whatsoever. "
The third question formulated by us relates, to the
contravention of Section 28 of the Railways Act. The scope
of this Section has been considered by this Court in Rajgarh
Jute Mills Ltd v Eastern Railway and another, [ 1959] SCR
236 at 241. There it was observed that a party who complains
against the railway administration that the provisions of
Section 28 have been contravened must establish that there
has been preference between himself and his goods on the one
hand and his competitor and his goods on the other.
Gajendragadkar, J. (as he then was) observed:
"Section 28 is obviously based on the principle
that the power derived from the monopoly of
railway carriage must be used in a fair and just
manner in respect of all persons and all
descriptions of traffic passing over the railway
area. In other words, equal charges should
normally be levied against persons or goods of the
same or similar kinds pas sing over the same or
similar area of the railway lines and under the
same or similar circumstances; but this rule does
not mean that, if the railway administration
charges un-
391
equal rates in respect of the same or similar
class of goods travelling over the same or similar
areas, the inequality of rates necessarily attract
the provisions of S. 28. All cases of unequal
rates cannot necessarily be treated as cases of
preference because the very concept of preference
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postulates competition between the person of
traffic receiving preference and the person or
traffic suffering prejudice in consequence. It is
only as between competitors in the same trade that
a complaint of preference can be made by one in
reference to the other."
In the light of these principles, the Tribunal
considering the material on record held that there is no
evidence produced by the Company to justify any grievance
under Section 28. We see no reason to disagree with this
conclusion. It is, in our opinion, perfectly justified. In
fact Mr. K.K. Jain learned counsel for the appellant also
did not seriously dispute the correctness of that finding
recorded by the Tribunal.
We may now turn to the second question.Mr. K.K. Jain
urged that the rate charged by the Railway Administration is
per se unreasonable. Here again the onus to prove the
alleged unreasonableness of the freight rests on the
company. It is for the company to establish that the rate
charged by the Railway Administration for the carriage of
Naptha is unreasonable. Of course, this onus could be
discharged by relying upon the material produced by the
Railways. Mr. Jain, therefore, relied upon a statement Ex.
C46 in support of his case. Ex. C46 is a statement of
surplus "working cost" in respect of carriage of Naptha from
Bajuva to Dadhevi. It is, in our opinion, not necessary to
analyse the statement. Even assuming that the railways are
earning some surplus income after deducting the operation
cost that by itself is no ground to hold that the freight
charged is per se unreasonable. It must be born in mind that
the railways are run as commercial undertaking and at the
same time it being an instrumentality of the State, should
serve the national interest as well. There is however, no
obligation on the railways to pass on the extra amount
realised by the carriage of goods to customers. Nor it is
necessary to share the profit with the commuters. As Mr.
Barua learned counsel for the Railways said that in the case
of commodities of national needs such a foodgrains, crude
oil etc., it may be necessary for the Railways to charge
below the operation cost. To off set such a loss the
Railways may charge higher freight for certain other
classified commodities. Therefore, it seems to us, that the
cost of operation cannot by itself be the basis for judging
the reasonableness of the rate changed.
392
It was next urged by Mr. K.K. Jain that the crude oil
and Naptha are considered as comparable commodities for the
purpose of carriage. The crude oil carries the rate equal to
class 85-B(old), 85(new) while Naptha carries rate 110-
B(old), 105-B(new). In terms of amounts it works out at
Rs.59.45 for crude oil as against Rs.73.13 for Naptha. The
counsel urged that there is no justification shown for this
wide disparity in the first place. Secondly, the freight
rate of crude oil was the rate offered to the company under
Ex. CS and the denial of that rate without any good reason
is arbitrary. This argument though attractive does not carry
conviction if one analyses the evidence on record. Crude oil
has been clubbed with Glycerine, fruit juices and syrups,
fibres, flax etc. Naptha has been clubbed with Aviation
Spirit, Petrol, Petroleum, Ether and solvent oil. From the
evidence produced by the Railways Naptha has been classified
as a dangerous commodity with the flash point below 24.4øC
spontaneously. The crude oil has no such dangerous
characteristics. It is also on record that Naptha requires
special type of tank wagons and the Railways have to take
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special precautions for transportation. These and other
relevant factors have been taken into account by the
Tribunal for rejecting the demand of the company for parity
in freights. This Court cannot, interfere with such a
finding in this appeal under Article 136 of the
Constitution. On the merits also, we see no justification to
demand that Neptha should take the same freight rate as that
of crude oil.
We may now revert to the first question. It relates to
the correctness of the view taken by the Tribunal on the
doctrine of promissory estoppel resulting by the letter Ex.
CS of the Railway Board. The Tribunal has rejected this
claim of the company by summarising its conclusion in the
following terms:
"We must, therefore, hold that the assurance
contained in . Ext. CS was not mainly responsible
for the setting up of the Fertilizer Factory at
Kota. 15.3. Even if it was held that Ex. CS was a
definite encouragement to the complainant to set
up the Kota factory, there is no evidence on
record to show that the withdrawal of the
concession by Ex. 12 has adversely affected the
complainant. We will show in the (i succeeding
paragraphs that the complainant has suffered no
material injury by virtue of the withdrawal of the
concessional rate and the charging of the normal
rate. It is well settled that the principle of
estoppel cannot be applied unless the person
pleading estoppel can show that he has been
prejudiced by the conduct of the party on whose
assurance l l he has acted."
393
Here the Railways Rates Tribunal apparently, appears to
have gone off the track. The doctrine of promissory estoppel
has not been correctly understood by the Tribunal. It is
true, that is the formative period, it was generally said
that the doctrine of promissory estoppel cannot be invoked
by the promisee unless he has suffered ’detriment’ or
’prejudice’. It was often said simply, that the party
asserting the estoppel must have been induced to act to his
detriment. But this has now been explained in so many
decisions all over. All that is now required is that the
party asserting the estoppel must have acted upon the
assurance given to him. Must have relied upon the
representation made to him. It means, the party has changed
or altered the position by relying on the assurance or the
representation. 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. The Court,
however, would compel the opposite party to adhere to the
representation acted upon or abstained from acting. The
entire doctrine proceeds on the promise that it is reliance
based and nothing more.
This principle would be clear if we study the cases in
which the doctrine has been applied even since it was burst
out into sudden blaze in 1946. Lord Denning in Central
London Properties Ltd v High Trees House Ltd, 11947] K.B.
130 sitting as a trial judge, asserted:
"A promise intended to be binding, intended to be
acted upon, and in fact acted upon is binding
.......
The history of the High Trees principle is too well
known to bear repetition. It will be enough to make the
following points. The promisor is bound because he led the
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promisee to commit himself to change the position. If the
promisee has acted upon the promise, the promisor is.
precluded from receding his promise. No further detriment to
the promisee upon his temporal interests need be
established. This position has been made clear by Lord
Denning himself in his article "Recent Developments in the
Doctrine of Consideration" Modern Law Review, Vol. 15 at p.
5.
"A man should keep his word. All the more so when
the promise is not a bare promise but is made with
the intention that the other party should act upon
it. Just a contract is different from tort and
from estoppel, so also in the sphere now under
discussion promises may give rise to a different
equity from other conduct.
394
The difference may lie in the necessity of showing
"detriment" where one party deliberately promises
to waive, modify or discharge his strict legal
rights, intending the other party to act on the
faith of promise, and the other party actually
does act on it, then it is contrary, not only to
equity but also to good faith, to allow the
promisor to go back on his promise. It should not
be necessary for the other party to show that he
acted to his detriment in reliance on the promise.
It should be sufficient that he acted on it.
The principle governing this branch of the subject
cannot be better put then in the wolds of a great Australian
jurist, DIXON, J. in Grundt v The Great Boulder Pty Gold
Mines Ltd, [1938] 59 CLR 641. There he said:
"It is often said simply that the party asserting
the estoppel must have been induced to act to his
detriment. Although substantially such a statement
is correct and leads to no misunderstanding, it
does not bring out clearly the basal purpose of
the doctrine. That purpose is to avoid or pre vent
a detriment to the party asserting the estoppel by
compelling the opposite party to adhere to the
assumption upon which the former acted or
abstained from acting. This means that the real
detriment or harm from which the law seeks to give
protection is that which would flow from the
change of position if the assumption were deserted
that led to it. So long as the assumption is
adhered to, the party who altered his situation
upon the faith of it cannot complain. His
complaint is that when afterwards the other party
makes a different state of affairs the basis of an
assertion of right against him then, if it is
allowed, his own original change of position will
operate as a detriment. His action or inaction
must be such that if the assumption upon which he
proceeded were shown to be wrong, and an
inconsistent state of affairs were accepted as the
foundation of the rights and duties of himself and
the opposite party, the consequence would be to
make his original act or failure to act a source
of prejudice."
This passage was referred to, with approval, by Lord
Denning in Central Newbury Car Auction Ltd v Unity Finance
Ltd, [1956] 3 All E.R. 905 at 909. The said passage has also
been quoted, with approval,
395
by Bhagwati, J. (as he then was) in Motilal Padampat
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Sugar Mills Co A Ltd v state of U.P. & Ors.,[ 1979]2 SCR 641
at p. 695= 1979(2)SCC 409. The learned Judge then said:
"We do not think that in order to invoke the
doctrine of promissory estoppel it is necessary
for the promisee to show that he suffered
detriment as a result of acting in reliance on the
promise. But we may make it clear that if by
detriment we mean injustice to the promisee which
could result if the promisor were to recede from
his promise then detriment would certainly come in
as a necessary ingredient. The detriment in such a
case is not some prejudice suffered by the
promisee by acting on the promise, but the
prejudice which would be caused to the promisee,
if the promisor were allowed to go back on the
promise. "
The view taken in Motilal Padmapat Sugar Mills case
(supra) has been reiterated in Union of India & Ors. v.
Godfrey Philips India Ltd,, [ 1985 ] 4 SCC 369 = [ 1985 ]
Supp 3 SCR 123 .
The concept of detriment as we know understand is
whether it appears unjust, unreasonable or inequitable that
the promisor should be allowed to resile from his assurance
or representation, having regard to what the promisee has
done or refrained from doing in reliance on the assurance or
representation.
It is, however, quite fundamental that the doctrine of
promissory estoppel, cannot be used to compel the public
bodies or the Government to carry out the representation or
promise which is contrary to law or which is outside their
authority or power. Secondly, the estoppel stems from
equitable doctrine. It, therefore, requires that he who
seeks equity must do equity. The doctrine, therefore,
cannot, also be invoked if it is found to be inequitable or
unjust in its enforcement.
We may also state that for the purpose of invoking the
doctrine, it is not necessary for the company to show that
the assurance contained in Ex.C5 was mainly responsible for
establishing the factory at Kota. There may be several
representations to one party from different authorities in
regard to different matters. Or, there may be several
representations from the same party in regard to different
matters. As in the instant case, there was one
representation by the Rajasthan Government to supply power
to the company at concessional rate. There was another
representation from the same Govern-
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ment to exempt the company from payment of tax for certain
period. There may be other representations from the same or
some other authorities. If those representations have been
relied upon by the company, the Court would compel those
parties to adhere to their respective representations. It is
immaterial whether each of the representations was wholly
responsible or partly responsible for locating the factory
at Kota. It is sufficient if the company was induced to act
on that representation.
The last and final aspect of the matter to which
attention should be drawn is that for the purpose of finding
whether an estoppel arises in favour of the person acting on
the representation, it is necessary to look into the whole
of the representation made. It is also necessary to state
that the representation must be clear and unambiguous and
not tentative or uncertain. In this context we may usefully
refer to the following passage from Halsbury’s Laws of
England, Halsbury’s Laws of England 4th Edn. Vol. 16 p. 1071
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 11
para 1595.
"1595. Representation must be unambiguous To found
an estoppel a representation must be clear and
unambiguous, not necessarily susceptible of only
one interpretation, but such as will reasonably be
understood by the person to whom it is made in the
sense contended for, and for this purpose the
whole of the representation must be looked at.
This is merely an application of the old maxim
applicable to all estoppels, that they "must be
certain to every intent
The question now is whether the assurance given by the
Railway Board in the letter Ex.C5 was clear and unqualified.
But unfortunately, it is not so. It was subject to review to
be undertaken when the company starts moving the raw
material. Ex. C5 reads:-
New Delhi I,
Dated S Nov., 1966
Dear Sir,
Sub: Integrated Fertilizer-PVC project at
Kota, Rajasthan Rail movement of Naptha.
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Ref: Your letter No. SFC/Gen-72 dated
5.9.1966
I am directed to state that the Railway Board
agree to quote a special rate equal o class 85-B
(Special) CC: K for transport of Naptha in train
loads from Bombay or Koyali to Kota, for
manufacture of fertilizers. The proposed special
rate will apply at owner’s risk.
Since the special rate is being quoted ahead
of the actual setting up of the factory the rate
may need to be reviewed when the traffic actually
begins to move. The Railway may accordingly be
approached before the traffic actually starts
moving.
Yours
faithfully,
Sd/- R.L. Sharma
for Secretary
Railway Board"
What does this letter mean? The first part of the
letter offering the concessional rate equal to class 85-B
(Special) has been completely watered down in the second
part of the letter. It has been expressly stated that the
rate may need be reviewed when the traffic actually begins
to move. The company was put to notice that it has to again
approach the Railway Administration. The Railway authorities
now states that they have reviewed the whole matter and
found no justification to offer a concessional freight rate
for Naptha, since fertilizers are deliberately given a low
classification in the tariff. From the tenor of Ex. S the
Railways are entitled to state so, and it does not amount to
resiling from the earlier assurance. No question of estoppel
arises in favour of appellant out of the representation made
in Ex. CS.
We, therefore, agree with the conclusion of the
Tribunal but not for all the reasons stated.
In the result the appeal fails and is dismissed. In the
circumstances. however, we make no order as to costs.
S.L. Appeal dismissed.
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