Full Judgment Text
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CASE NO.:
Appeal (civil) 2092 of 2002
PETITIONER:
State of Arunachal Pradesh
RESPONDENT:
Nezone Law House, Assam
DATE OF JUDGMENT: 01/04/2008
BENCH:
Dr. ARIJIT PASAYAT & P.SATHASIVAM
JUDGMENT:
J U D G M E N T
CIVIL APPEAL NO. 2092 OF 2002
Dr. ARIJIT PASAYAT, J.
1. Challenge in this appeal is to the order of a Division
Bench of the Guwahati High Court dismissing the writ appeal
filed by the appellant.
2. The factual position is very interesting and needs to be
noted in some detail.
A Writ Petition was filed by the respondent claiming that
the State Government had promised to purchase 500 sets of
’North Eastern Region Local Acts and Rules’ from it. But
contrary to its promise it had refused to place any order. The
prayer in the writ petition was for a direction to the present
appellant and its functionaries to maintain and keep the
promise made by them to the respondent in respect of printing
and supply of 500 sets as noted above. It was stated that the
then Law Minister had assured the respondent through its
proprietor to purchase the books and had given green signal
for publishing and printing of the compilation of local laws at
the relevant period and had promised that if they publish
those the government of Arunachal Pradesh will purchase at
least 500 sets of local Acts and Rules. It was submitted that
in view of the direction given by this Court in All India Judges’
Association and Ors. v. Union of India & Ors. [AIR 1992 SC
165] and in All India Judges’ Association and Ors. v. Union of
India & Ors. [AIR 1993 SC 2493] such promise was made. It
according to the writ petitioner is a clear case where principles
of promissory estoppel and legitimate expectation applied. The
stand was resisted by the present appellant contending that
there has been manipulation of the notes. The alleged note
does not indicate that there was any promise or order for
printing/publishing the book. It was merely a departmental
note sent to the Planning/Finance/Law Department from the
Chief Minister for examination. Further the Minister had
specifically stated (in the note) that 400 copies of one book
containing all the North Eastern Regional Local Acts and Rules
of Rs.400/- each (total value of Rs.1,60,000/-) could be
purchased as the publisher on his own told that he has
published such Acts and Rules. This according to the present
appellant established that the then Law Minister had never
ordered to undertake publication and supply thereafter of 500
sets of such books. The mind of the then law Minister was
clear as to the procedure to be adopted. It was further pointed
out that on the body of the respondent’s letter dated 27th
April, 1997 the words/Figures ’500 volumes’ (in the third line
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of the Minister’s note) appears to be interpolated by the words
’500 sets’ by obliterating the word ’volume’ by using a white
erasing ink and writing over their ’sets’ by hand. It was
pointed out that the cost involvement would be about a crore
of rupees as the price of the books as claimed was nearly 40
lakhs and with escalation of price it was likely to reach Rupees
one crore. It was further submitted that the Writ Petition
deserves to be dismissed. The High Court observed that
though there appear to be over writing, but the normal
practice is that books are purchased in sets and therefore,
even if there was any interpolation the same was intentionally
done to correct the error. The Writ Petition was, therefore,
allowed purportedly holding that the principles of promissory
estoppel applied. As noted above, the writ appeal was filed by
the appellant which was dismissed by the impugned
judgment.
3. Learned counsel for the appellant submitted that the
learned Single Judge and the Division Bench clearly
overlooked the position in law that when a claim is founded
on disputed document, the writ petition is not to be
entertained. Additionally there was no question of any
promissory estoppel involved. The document relied upon by
the respondent was a departmental note. The same need
approval of the various departments. The books were not
useful for the judicial officers and, therefore, there was no
need for placing any order.
4. Though the respondent is represented in this appeal by
a learned counsel, none appeared when the matter was taken
up.
5. As noted above the factual scenario is interesting. The
document relied upon by the respondent and the High Court
refer to some oral expression of desire by the then Law
Minister. When the view of several departments were involved
the question of any oral view being expressed by a Minister is
really not relevant. Further the document relied upon was
nothing but a departmental note which itself clearly indicated
that the view of various departments/Ministries were to be
taken and their concurrence was to be obtained. Apart from
that, undisputedly there was some factual dispute as to
whether the intended purchase was of volumes or sets. There
is conceptual different between the two. The books were not
even printed at the relevant point of time. The High Court has
noticed only one volume had been printed. Further the need
for the purchase of the books for the judicial officers was to be
assessed in consultation with the High Court. The Law
Minister could not have, without taking the view of the High
Court, placed orders. In any event the dispute as to the
volumes or the sets and the interpolation in the documents
were of considerable relevance. Unfortunately the High Court
has lightly brushed aside this aspect.
6. The doctrines of promissory estoppel and legitimate
expectation were not applicable to the facts of the case.
7. Estoppel is a rule of equity which has gained new
dimensions in recent years. A new class of estoppel has come
to be recognized by the courts in this country as well as in
England. The doctrine of ’promissory estoppel’ has assumed
importance in recent years though it was dimly noticed in
some of the earlier cases. The leading case on the subject is
Central London Property Trust Ltd. v. High Trees House Ltd.
(1947) 1 KB 130. The rule laid down in High Trees case
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(supra), again came up for consideration before the King’s
Bench in Combe v. Bombe (1951) 2 KB 215. Therein the court
ruled that the principle stated in High Trees’s case (supra), is
that, where one party has, by his words or conduct, made to
the other a promise or assurance which was intended to affect
the legal relations between them and to be acted on
accordingly, then, once the other party has taken him at his
word and acted on it, the party who gave the promise or
assurance cannot afterwards be allowed to revert to the
previous legal relationship as if no such promise or assurance
had been made by him, but he must accept their legal
relations subject to the qualification which he himself has so
introduced, even though it is not supported in point of law by
any consideration, but only by his word. But that principle
does not create any cause of action, which did not exist before;
so that, where a promise is made which is not supported by
any consideration, the promise cannot bring an action on the
basis of that promise. The principle enunciated in the High
Trees case (supra), was also recognized by the House of Lords
in Tool Metal Manufacturing Co. Ltd. v. Tungsten Electric Co.
Ltd (1955) 2 All ER 657. That principle was adopted by this
Court in Union of India v. Indo-Afghan Agencies Ltd. (AIR
1968 SC 718) and Turner Morrison and Co. Ltd. v. Hungerford
Investment Trust Ltd. (1972 (1) SCC 857). Doctrine of
"Promissory Estoppel" has been evolved by the courts, on the
principles of equity, to avoid injustice. "Promissory Estoppel"
is defined in Black’s Law Dictionary as "an estoppel which
arises when there is a promise which promisor should
reasonably expect to induce action or forbearance of a definite
and substantial character on the part of promisee, and which
does induce such action or forbearance, and such promise is
binding if injustice can be avoided only by enforcement of
promise". So far as this Court is concerned, it invoked the
doctrine in Indo Afghan Agencies’s case (supra) in which it
was, inter alia, laid down that even though the case would not
fall within the terms of Section 115 of the Indian Evidence Act,
1872 (in short the ’Evidence Act’) which enacts the rule of
estoppel, it would still be open to a party who had acted on a
representation made by the Government to claim that the
Government should be bound to carry out the promise made
by it even though the promise was not recorded in the form of
a formal contract as required by Article 299 of the
Constitution. (See Century Spinning Co. v. Ulhasnagar
Municipal Council (AIR 1971 SC 1021), Radhakrishna v. State
of Bihar (AIR 1977 SC 1496), Motilal Padampat Sugar Mills
Co. Ltd v. State of U.P. (1979 (2) SCC 409), Union of India v.
Godfrey Philips India Ltd. (1985 (4) SCC 369), Dr. Ashok
Kumar Maheshwari v. State of U.P. & Another (1998 (2)
Supreme 100).
8. In the backdrop, let us travel a little distance into the
past to understand the evolution of the doctrine of "promissory
estoppel". Dixon, J. an Australian Jurist, in Grundt v. Great
Boulder Gold Mines Prorietary Ltd. (1939) 59 CLR 641 (Aust)
laid down as under: "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 prevent 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 assumptions were deserted
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that led to it". The principle, set out above, was reiterated by
Lord Denning in High Trees’s case (supra). 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, as noted in Anglo Afghan Agencies’s case (supra)
and Sharma Transport Represented by D.P. Sharma v.
Government of A.P. and others (2002 (2) SCC 188).
9. Where a particular mode is prescribed for doing an act
and there is no impediment in adopting the procedure, the
deviation to act in different manner which does not disclose
any discernible principle which is reasonable itself shall be
labelled as arbitrary. Every State action must be informed by
reason and it follows that an act uninformed by reason is per
se arbitrary.
10. This Court’s observations in G. B. Mahajan v. Jalgaon
Municipal Council (AIR 1991 SC 1153) are kept out of lush
field of administrative policy except where policy is
inconsistent with the express or implied provision of a statute
which creates the power to which the policy relates or where a
decision made in purported exercise of power is such that a
repository of the power acting reasonably and in good faith
could not have made it. But there has to be a word of caution.
Something overwhelming must appear before the Court will
intervene. That is and ought to be a difficult onus for an
applicant to discharge. The Courts are not very good at
formulating or evaluating policy. Sometimes when the Courts
have intervened on policy grounds the Court’s view of the
range of policies open under the statute or of what is
unreasonable policy has not got public acceptance. On the
contrary, curial views of policy have been subjected to
stringent criticism.
11. As Professor Wade points out (in Administrative Law by
H.W.R. Wade, 6th Edition) there is ample room within the legal
boundaries for radical differences of opinion in which neither
side is unreasonable. The reasonableness in administrative
law must, therefore, distinguish between proper course and
improper abuse of power. Nor is the test Court’s own standard
of reasonableness as it might conceive it in a given situation.
The point to note is that the thing is not unreasonable in the
legal sense merely because the Court thinks it to be unwise.
12. In Union of India and Ors. v. Hindustan Development
Corporation and Ors. (AIR 1994 SC 998), it was observed
that decision taken by the authority must be found to be
arbitrary, unreasonable and not taken in public interest where
the doctrine of legitimate expectation can be applied. If it is a
question of policy, even by ways of change of old policy, the
Courts cannot intervene with the decision. In a given case
whether there are such facts and circumstances giving rise to
legitimate expectation, would primarily be a question of fact.
13. As was observed in Punjab Communications Ltd. v.
Union of India and others (AIR 1999 SC 1801), the change in
policy can defeat a substantive legitimate expectation if it can
be justified on "Wednesbury reasonableness." The decision-
maker has the choice in the balancing of the pros and cons
relevant to the change in policy. It is, therefore, clear that the
choice of policy is for the decision-maker and not the Court.
The legitimate substantive expectation merely permits the
Court to find out if the change of policy which is the cause for
defeating the legitimate expectation is irrational or perverse or
one which no reasonable person could have made. A claim
based on merely legitimate expectation without anything more
cannot ipso facto give a right. Its uniqueness lies in the fact
that it covers the entire span of time; present, past and future.
How significant is the statement that today is tomorrows’
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yesterday. The present is as we experience it, the past is a
present memory and future is a present expectation. For legal
purposes, expectation is not same as anticipation. Legitimacy
of an expectation can be inferred only if it is founded on the
sanction of law.
14. As observed in Attorney General for New Southwale v.
Quinn (1990 (64) Australian LJR 327) to strike the exercise of
administrative power solely on the ground of avoiding the
disappointment of the legitimate expectations of an individual
would be to set the Courts adrift on a featureless sea of
pragmatism. Moreover, the negotiation of a legitimate
expectation (falling short of a legal right) is too nebulous to
form a basis for invalidating the exercise of a power when its
exercise otherwise accords with law. If a denial of legitimate
expectation in a given case amounts to denial of right
guaranteed or is arbitrary, discriminatory, unfair or biased,
gross abuse of power or violation of principles of natural
justice, the same can be questioned on the well known
grounds attracting Article 14 but a claim based on mere
legitimate expectation without anything more cannot ipso facto
give a right to invoke these principles. It can be one of the
grounds to consider, but the Court must lift the veil and see
whether the decision is violative of these principles warranting
interference. It depends very much on the facts and the
recognised general principles of administrative law applicable
to such facts and the concept of legitimate expectation which
is the latest recruit to a long list of concepts fashioned by the
Courts for the review of administrative action must be
restricted to the general legal limitations applicable and
binding the manner of the future exercise of administrative
power in a particular case. It follows that the concept of
legitimate expectation is ’not the key which unlocks the
treasure of natural justice and it ought not to unlock the gates
which shuts the Court out of review on the merits,’
particularly, when the elements of speculation and uncertainty
are inherent in that very concept. As cautioned in Attorney
General for New Southwale’s case the Courts should restrain
themselves and respect such claims duly to the legal
limitations. It is a well meant caution. Otherwise, a resourceful
litigant having vested interest in contract, licences, etc. can
successfully indulge in getting welfare activities mandated by
directing principles thwarted to further his own interest. The
caution, particularly in the changing scenario becomes all the
more important.
15. If the State acts within the bounds of reasonableness, it
would be legitimate to take into consideration the national
priorities and adopt trade policies. As noted above, the
ultimate test is whether on the touchstone of reasonableness
the policy decision comes out unscathed.
16. Article 166 of the Constitution deals with the conduct of
Government business. The said provision reads as follows:
"166. Conduct of business of the
Government of a State. \026 (1) All executive
action of the Government of a State shall be
expressed to be taken in the name of the
Governor.
(2) Orders and other instruments made and
executed in the name of the Governor shall be
authenticated in such manner as may be
specified in rules to be made by the Governor,
and the validity of an order or instrument
which is so authenticated shall not be called
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in question on the ground that it is not an
order or instrument made or executed by the
Governor.
(3) The Governor shall make rules for the
more convenient transaction of the business
of the Government of the State, and for the
allocation among Ministers of the said
business in so far as it is not business with
respect to which the Governor is by or under
this Constitution required to act in his
discretion."
Clause (1) requires that all executive action of the State
Government shall have to be taken in the name of the
Governor. Further there is no particular formula of words
required for compliance with Article 166(1). What the Court
has to see is whether the substance of its requirement has
been complied with. A Constitution Bench in R. Chitralekha
etc. v. State of Mysore and Ors. (AIR 1964 1823) held that the
provisions of the Article were only directory and not
mandatory in character and if they were not complied with it
could still be established as a question of fact that the
impugned order was issued in fact by the State Government or
the Governor. Clause (1) does not prescribe how an executive
action of the Government is to be performed; it only prescribes
the mode under which such act is to be expressed. While
clause (1) is in relation to the mode of expression, clause (2)
lays down the ways in which the order is to be authenticated.
Whether there is any Government order in terms of Article
166; has to be adjudicated from the factual background of
each case.
17. In order to invoke the doctrine of promissory estoppel
clear, sound and positive foundation must be laid in the
petition itself by the party invoking the doctrine and bald
expressions without any supporting material to the effect that
the doctrine is attracted because the party invoking the
doctrine has altered its position relying on the assurance of
the Government would not be sufficient to press into aid the
doctrine. The Courts are bound to consider all aspects
including the results sought to be achieved and the public
good at large, because while considering the applicability of
the doctrine, the Courts have to do equity and the
fundamental principles of equity must forever be present in
the mind of the Court.
18. As the factual scenario goes to show the principles of
promissory estoppel were clearly inapplicable to the facts of
the case. Above being the position, the appeal deserves to be
allowed which we direct. Orders of learned Single Judge and
the Division Bench are set aside.
19. The appeal is allowed but without any order as to costs.