http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 9  

CASE NO.: Appeal (civil)  5281 of 2005

PETITIONER: M.P. Mathur & others.

RESPONDENT: D.T.C and Others  

DATE OF JUDGMENT: 24/11/2006

BENCH: Arijit Pasayat & S. H. Kapadia

JUDGMENT: J U D G M E N T

KAPADIA, J.         This civil appeal is filed by the original plaintiffs and is  directed against the judgment and order passed by the  Division Bench of the Delhi High Court dated 19.2.2003 in  RFA(OS)No.4/1992 reversing the decision of the Ld. Single  Judge in Suit No.308 of 1983.

       In this civil appeal we are required to consider the scope  of Resolution No.55/79 dated 18.4.1979 and Resolution  No.139/79 dated 31.8.1979 passed by the Board of Delhi  Transport Corporation.  Plaintiffs contended that a legal right  was created in their favour under the above Resolution dated  31.8.79 by itself and that Delhi Transport Corporation was  estopped from recalling its decision vide subsequent  Resolution No.179/79 dated 3.12.79 read with Resolution  No.35/81 dated 2.3.81.

       The undisputed facts are as follows.         Between 1962-63 and 1965-66, 5144 tenements were  constructed by Municipal Corporation of Delhi in six colonies  of the Delhi Administration, namely, Karampura, Nehru  Nagar, Giri Nagar, Vishwakarma Nagar, Hari Nagar and G.T.  Road under Integrated Subsidised Housing Scheme for  Industrial Workers and Economically Weaker Sections of the  Community, 1952 (for short, ’the Scheme’).  Appellants herein  are industrial workers and they were allotted service quarters  in Hari Nagar and G.T. Road colonies.  They have retired from  service.  However, they have continued to reside in these  quarters till today.  According to the appellants, 300 quarters  were constructed by Delhi Transport Undertaking at Hari  Nagar and G.T. Road under the above Scheme.  In 1971 Delhi  Transport Undertaking was converted into Delhi Transport  Corporation (for short, ’DTC’), taking 300 tenements out of the  quota of Delhi Administration.  In 1978 the above Scheme was  amended allowing DTC to transfer the allotted houses on  ownership basis to the occupants (plaintiffs).  The said  Scheme was sponsored by the Government of India.   According to the appellants, out of 5144 tenements, 4844  tenements were transferred by the Delhi Administration in  favour of the occupants.  This was done in 1979.  The balance  was 300 tenements belonging to DTC in the two colonies of  Hari Nagar and G.T. Road which remained untransferred.  

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 9  

DTC Workers Union protested when DTC did not take steps to  transfer the 300 tenements to the occupants.  They threatened  to proceed on strike.  On 28.10.1978 a Settlement was signed  under Industrial Disputes Act between DTC and the Union of  workers under which DTC was given six months time to take  decision on the workers’ demand for transferring of the  tenements to the occupants.  Before expiry of six months,  DTC, by way of Resolution dated 18.4.1979, decided in  principle to sell the service quarters to the occupants.  The  occupants were asked to fill up certain forms.  They were  asked to furnish certain information to DTC.  This was done  by the appellants.  By another Resolution dated 31.8.1979  DTC approved the Scheme to sell the tenements to the  occupants subject to certain conditions being satisfied by each  of the occupants.  Even in the Annual Administration Report,  DTC stated that action has been taken to transfer ownership  of 300 service quarters constructed under the above Scheme.   According to the appellants, DTC took the above steps in line  with the decision of the Delhi Administration dated 9.2.1979  to transfer 4844 tenements out of 5144 tenements in four  colonies, namely, Karampura, Nehru Nagar, Giri Nagar,  Vishwakarma Nagar in favour of their occupants and,  therefore, the appellants herein were sure that in their case  the decision to transfer the tenements on ownership basis  would be implemented.  However, on 3.12.1979 the Chairman  of DTC requested the Board to reconsider its decision to sell in  the   light   of   increased   replacement   cost   of   about     Rs.3 crores, particularly when DTC had huge accumulated  losses.  By letter dated 16.5.1980 the Government of India  invited DTC to implement its decision to sell the tenements to  the occupants.  Ultimately, vide Resolution dated 2.3.1981 the  DTC Board rescinded its decision to sell and stated that it will  not implement the policy decision of the Government of India.   Aggrieved by the said Resolution, the appellants herein filed  Suit No.308/83 in the Delhi High Court seeking a declaration  of entitlement to the transfer of these properties.  The suit was  decreed by the learned Single Judge on 11.9.1991.  However,  the appeal preferred by DTC was allowed by the impugned  judgment.  Hence this civil appeal.

       Mr. K.K. Venugopal, learned senior counsel appearing on  behalf of the appellants (plaintiffs), submitted that Resolution  of DTC dated 2.3.1981 was flawed and baseless.   According to  the learned counsel, the representation made to the appellants  by DTC stood withdrawn without cogent and sufficient  reasons.  In this connection, it was urged that the above  Scheme was formulated by the Central Government.  It was  reviewed by the Central Government on 9.2.1978.  Therefore,  it was not open to DTC to question the decision of the Central  Government to sell the tenements to the occupants.  Learned  Counsel further contented that except 300 tenements every  other tenement under the Scheme has been sold.  Only 300  tenements belonging to DTC were not transferred.  In the  circumstances, it was contended that DTC had erred in stating  that no public sector undertaking had decided to sell the  houses as mentioned in the above Resolution.  In the above  Resolution one of the grounds taken by DTC was that the  direction of the Government of India to DTC to implement its  policy decision to sell the tenements was recommendatory.   Learned counsel submitted that even assuming without  admitting that the instructions given by the Government of  India were recommendatory even then DTC had by way of  Resolutions dated 18.4.1979 and 31.8.1979 had represented  to the appellants that it had taken the decision to sell the  tenements to the occupants and, therefore, DTC was estopped

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 9  

from resiling from its decision to sell.  Learned counsel further  urged that in Resolution dated 2.3.1981 it is stated that DTC  had 24000 employees who were required to be accommodated.   It was urged that this was a false excuse.  It was urged that  the Scheme was meant for industrial workers.  It was urged  that 24000 employees, at the relevant time, was the total  workforce.  The employees who were not industrial employees  were not eligible under the Scheme to buy the tenements.   Moreover, DTC Union had no objection to the said tenements  being transferred to the appellants and, therefore, there was  no reason for DTC to withdraw its earlier decision to sell the  tenements to the occupants.  Learned counsel urged that it  was never the case of DTC that these service quarters were  required to accommodate the in-service employees.  It was  urged that these tenements were constructed with the  contributions of the Central Government and, therefore, DTC  was not entitled to utilize these tenements to house employees  not covered by the Scheme.  Learned counsel urged that as  late as in 1985 DTC Board had offered to transfer ownership  to the occupants.  Therefore, the decision to withdraw the  earlier decision to sell the tenements was without any basis.   Learned counsel submitted that there is no merit in the  argument of DTC that DTC was incurring accumulated losses  and it was unable to meet the replacement cost.                

According to the appellants hundred acres of land  belonging to DTC for residential accommodation situated at  Rohini Terminals, Vinod Nagar, Okhla III, Partap Nagar,  Punjabi Bagh and Kanjhawala, were not being utilized by DTC.   In 1986 land was also allotted to DTC at Kondli for  construction of 500 tenements.  Even today, according to the  appellants, a few tenements were lying vacant in Hari Nagar  and G.T. Road colonies.  On behalf of the appellants it was  further pointed out that DTC colony at Shadipur was not even  covered by the Scheme and therefore to say that the occupants  of Shadipur Colony would also raise a similar demand, had no  merit.   

       Learned counsel further submitted that the impugned  judgment was erroneous.  It was urged that the suit is based  on promissory estoppel which is a principle based on equity  and which principle requires no contractual or statutory basis.   Learned counsel urged that there was a distinction between  the obligation of the State based on a promise and an  obligation based on a contract.  In the present case, according  to the learned counsel, the suit was founded on the promise  made by DTC to the appellants.  It was not based on the  contract.  Therefore, according to the learned counsel, the  High Court erred in holding that no legal right was shown in  the tenements.  Learned counsel urged that the appellants  had changed their position to their detriment relying on the  promise made by DTC.  They acted to their prejudice by not  applying for and obtaining alternate accommodation.  They  acted to their prejudice by not availing of any other scheme for  Low Income Group.  Therefore, according to the learned  counsel, the High Court had erred in holding that the  appellants have not changed their position to their detriment.   Learned counsel urged that the High Court had erred in  holding that larger interest of employees precluded the  invocation of promissory estoppel.  According to the learned  counsel, the only reason shown by DTC in Resolution dated  2.3.1981 was that other employees may make similar  demands.  However, as stated above, according to the learned  counsel, the Workers Union had made it clear that they would  not object to allotment to the sale of the tenements by DTC to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 9  

the appellants and, therefore, it was not open to DTC to say  that they expected other employees to make similar demands.   Learned counsel urged that Resolutions dated 18.4.1979 and  31.8.1979 constituted a promise or representation made by  the Board to the appellants.  It was contended that DTC had  agreed to decide the matter within six months.  They sought  information from the appellants regarding terms and  conditions of transfer; they wrote letters in which details of the  occupants were sought; the Annual Report of DTC also  indicates decision to transfer and, therefore, it was incumbent  on DTC to act on promise/representation made to the  appellants who had altered their position to their prejudice by  not resorting to strike, maintaining industrial peace, not  applying for alternate accommodation and by not availing of  any other Scheme.  In the circumstances, learned counsel,  therefore, urged that Resolution dated 2.3.1981 withdrawing  the representation made to the appellants should be set aside  and that DTC should be asked to implement its  promise/representation to sell the tenements to the  appellants.

       Mr. T.L.V. Iyer, learned senior counsel appearing on  behalf of DTC, submitted that the question of transfer of the  buildings in the above two colonies to the occupants came for  consideration before the DTC Board on 30.8.1978 when the  consideration was postponed for further examination due to  the increased cost of the land which had risen manifold and  also for other reasons, namely, similar demands from other  workmen, huge replacement costs, and the fact that the  Government of India did not fund DTC with the entire costs of  construction amounting to Rs.35.04 lacs.  Learned counsel  pointed out that only an amount of Rs.6.25 lacs was given by  the Central Government which was given as a loan.  Rs.1.56  lacs was paid as subsidy.  DTC had to pay back the loan with  interest.  In fact, the balance could not be paid because of  recurring losses.  These were reasons for postponing the  decision to sell the tenements.  It was further pointed out that  the matter again came for consideration before the DTC Board  on 8.3.1979 pursuant to the Memorandum of settlement  under the Industrial Disputes Act.  In the said meeting of the  DTC Board they considered the letter of the Government of  India dated 14.2.1979 to permit employers (DTC) to sell the  houses.  However, according to the learned counsel, the  Scheme was an enabling scheme which did not create any  obligation on DTC to sell their houses.  Learned counsel  submitted that similarly the matter was again placed before  DTC on 18.4.1979 when DTC Board agreed in principle to sell  the houses to the occupants.  However, the details had to be  worked out.  The matter was required to be considered with  the lessor, namely, DDA.  Learned counsel submitted that the  decision dated 18.4.1979 was tentative decision which  required further examination of details with DDA and  Government of India.

       Learned counsel for DTC submitted that passing of  Resolution was never communicated to any of the appellants;  that, no letter of allotment were ever issued; that, various  clarifications were sought from Government of India; that, the  decision approving proposal of sale on 31.8.1979 was again  subject to certain clarifications from the Central Government;  that, since the Chairman of DTC had reservations, the matter  was placed before DTC for further consideration on 3.12.1979  when the matter was discussed at length and ultimately the  Board decided that it would not be possible to implement the  policy decision of the Government of India to sell the flats to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 9  

the occupants on ownership basis for the reasons indicated  above.  Thus ultimately, according to the learned counsel, on  2.3.1981 the DTC Board took the decision that the tenements  could not be sold to the appellants.  This decision was  particularly taken because DTC had only 480 tenements  allotted to it which were inadequate for housing 5254  industrial workers in April 1979.  In March 1981 there were  5839 industrial workers.  In the circumstances, the decision  was taken on 2.3.1981 stating that there was no ground for  sale of tenements to the appellants.

       Learned counsel submitted that there is no merit in the  argument advanced on behalf of the appellants that  Resolution dated 18.4.1979 conferred a right on the appellants  to have the houses transferred to them.  Learned counsel  pointed out that the suit was filed under Section 34 of the  Specific Relief Act, 1963 in which there was no prayer for an  industrial relief directing DTC to transfer the tenements to the  plaintiffs.  It was further pointed out that in the suit there was  no prayer for specific performance and that the entire suit was  based on the plea of the promissory estoppel.  In the  circumstances, learned counsel submitted that there was no  merit in the suit filed by the appellants.     

       As stated above, two contentions have been raised on  behalf of the plaintiffs.  Firstly, the appellants contended that  a legal right was created in their favour vide Resolution  No.55/79 dated 18.4.1979 read with Resolution No.139/79  dated 31.8.1979 by itself.  Secondly, they contended that even  if there was no legal right, an estoppel was created in their  favour by the conduct of DTC and, therefore, it was not open  to DTC to resile from their earlier decision vide Resolution  No.179/79 dated 3.12.1979.

We do not find any merit in the above two contentions. As regards the first contention, we may observe that  promissory estoppel is based on equity or obligations.  It is not  based on vested right.  In equity the court has to strike a  balance between individual rights on one hand and the larger  public interest on the other hand.  Freedom to contract is a  common law civil liberty enjoyed by all persons.  But when the  Government is contracting with private parties this common  law freedom is circumscribed by the principles of  administrative law which requires larger public interest to be  taken into account.  We must remember that larger public  interest is not only for accommodating retiree workmen but  also to accommodate in-service workmen.  Even applying the  principles enshrined in Article 39 (b) and (c) of the  Constitution, egalitarian equality requires the Government to  strike a balance between competing claims.  Even in the realm  of social justice, on which our Constitution is founded, the  administration has to strike a balance between the competing  claims.  In the present case, DTC, in principle, had agreed to  transfer the tenements on ownership basis to the industrial  workers.  However, when DTC examined the ground reality, it  found acute shortage of resources coupled with increased  costs of replacement running into Rs.3 crores.  The Central  Government also did not fund the full cost of construction.   DTC had to accommodate approximately 5000 in-service  employees in 480 tenements.  DTC at the relevant time was a  loss-making public sector enterprise.  Despite these  difficulties, DTC did try to accommodate the claims of the  plaintiffs.  However, they could not.  In the circumstances,  ultimately DTC informed Government of India that under the  above circumstances it was not possible for it to implement

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 9  

the scheme.  Therefore, in our view the conduct of DTC cannot  be faulted.  Moreover, as stated above, the decision to allot the  tenements on ownership basis vide Resolution No.139/79  dated 31.8.1979 was a tentative decision.  There was no  contract entered into by DTC with any individual workman.   DTC was a lessee.  DDA was a lessor.  DTC had to work out  the cost-benefit ratios with DDA.  That exercise was never  undertaken.  Not a single communication was ever sent by  DTC to the plaintiffs.  No formal sale-conditions were ever  fixed or communicated by DTC to the plaintiffs.  None of the  plaintiffs was ever asked to pay to DTC the final sale  consideration amount.  In the circumstances, Resolution  dated 31.8.1979 bearing no.139/79 was a tentative decision  and not a final and binding decision as alleged.  Therefore, it  cannot be said that the said Resolution created a legal right by  itself.  We do not find any bias, discrimination or arbitrariness  in Resolution of DTC bearing no.179/79 dated 3.12.1979 by  which DTC recalled its earlier decision.  DTC used to make  losses.  The replacement cost had shot up to Rs.3 crores.  The  number of industrial workers to be accommodated had risen  drastically.  Against 480 tenements DTC had industrial  workforce of 5000 employees (in-service).  They had to be  accommodated.  Even the Central Government concurred with  DTC in its decision not to implement the Scheme.  The  Scheme was an enabling scheme.  It was not mandatory.  DTC  was not obliged to sell the tenements under the Scheme.  The  Government of India had funded DTC to a very small extent.   DTC was in fact required to repay the loan taken from the  Government of India with interest.  In the circumstances, it  was open to DTC to recall its decision of allotting the two  colonies by way of sale to the occupants.  Under the  circumstances, it cannot be said that impugned Resolution  No.35/81 dated 2.3.1981 passed by DTC of not selling the  tenements was in any way arbitrary, biased or discriminatory.   We also do not find any merit in the contention advanced on  behalf of the appellants that relying on the promise of DTC  they altered their position to their prejudice by not opting for  purchase under some other housing schemes.  That, they did  not buy the flat elsewhere all these years.  There is no merit in  the above contention.  Resolution dated 31.8.1979 approving  the sale was deferred on 3.12.1979 by the Chairman pointing  out the above difficulties.  Moreover no communication was  ever sent to appellants individually calling upon them to make  payment.  Hence there was no representation as alleged.   

Coming to the second contention advanced on behalf of  the plaintiffs, the question we have to ask is: whether, on the  facts and circumstances of this case, the plaintiffs could  compel transfer of tenements in their favour on the basis of  promissory estoppel.

The present suit is based on equity.  The term "equity"  has four different meanings, according to the context in which  it is used.  Usually it means "an equitable interest in  property".  Sometimes, it means "a mere equity", which is a  procedural right ancillary to some right of property, for  example, an equitable right to have a conveyance rectified.   Thirdly, it may mean "floating equity", a term which may be  used to describe the interest of a beneficiary under a will.   Fourthly, "the right to obtain an injunction or other equitable  remedy".  In the present case, the plaintiffs have sought a  remedy which is discretionary.  They have instituted the suit  under Section 34 of the 1963 Act.  The discretion which the  Court has to exercise is a judicial discretion.  That discretion  has to be exercised on well-settled principles.  Therefore, the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 9  

Court has to consider - the nature of obligation in respect of  which performance is sought, circumstances under which the  decision came to be made, the conduct of the parties and the  effect of the of the Court granting the decree.  In such cases,  the Court has to look at the contract.  The Court has to  ascertain whether there exists an element of mutuality in the  contract.  If there is absence of mutuality the Court will not  exercise discretion in favour of the plaintiffs.  Even if, want of  mutuality is regarded as discretionary and not as an absolute  bar to specific performance, the Court has to consider the  entire conduct of the parties in relation to the subject-matter  and in case of any disqualifying circumstances the Court will  not grant the relief prayed for [Snell’s Equity, 31st Edn.,  page366].  In the present case, applying the above test, we do  not find an iota of mutuality.  There is no contract between  DTC and the plaintiffs.  There is no communication at any  point of time between DTC and the plaintiffs.  No sale- consideration was ever fixed.  The plaintiffs were never called  upon to make payment.  The decision to allot remained  tentative.  In the circumstances, neither contract nor equity  existed at any point of time so as to compel DTC to convey the  tenements to the plaintiffs.

In the case of Sales Tax Officer and another v. Shree  Durga Oil Mills and another \026 (1998) 1 SCC 572, this Court  held that even an Industrial Policy Resolution can be changed  if there is an overriding public interest involved.  In that case it  was contended on behalf of the State that various notifications  granting sales tax exemptions to the dealers resulted in severe  resource crunch.  On reconsideration of the financial position,  it was decided to limit the scope of the exemption notifications  issued under Section 6 of the Orissa Sales Tax Act.  This  Court held that withdrawal of notification was done in public  interest and that this Court will not interfere with any action  taken by the Government in public interest.  It was further  observed that public interest must override any consideration  of private loss or gain and, therefore, the plea of change of  policy on the basis of resource crunch was sufficient for  dismissing the case of the assessee under the Sales Tax Act of  Orissa based on the doctrine of promissory estoppel.                                                   

         In the case of Sharma Transport v. Government of  A.P. and others - (2002) 2 SCC 188, this Court speaking  through one of us, Pasayat, J., vide para 23 observed as  follows:         "If it can be shown by the Government that  having regard to the facts as they have transpired, it  would be inequitable to hold the Government or  public authority to the promise or representation  made by it, the court would not raise an equity in  favour of the promise and enforce the promise  against the Government. The doctrine of promissory  estoppel would be displaced in such a case, because  on the facts, equity would not require that the  Government should be held bound by the promise  made by it. But the Government must be able to  show that in view of the fact as has been transpired,  public interest would not be prejudiced. Where the  Government is required to carry out the promise the  Court would have to balance the public interest in  the Government’s carrying out the promise made to  the citizens, which helps citizens to act upon and  alter their position and the public interest likely to  suffer if the promises were required to be carried

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 9  

out by the Government and determine which way  the equity lies. It would not be enough just to say  that the public interest requires that the  Government would not be compelled to carry out  the promise or that the public interest would suffer  if the Government were required to honour it. In  order to resist its liability the Government would  disclose to the court the various events insisting its  claim to be exempt from liability and it would be for  the court to decide whether those events are such  as to render it inequitable to enforce the liability  against the Government."                          Similarly, in the case of Bannari Amman Sugars Ltd. v.  Commercial Tax Officer and others \026 (2005) 1 SCC 625, the  Division Bench of this Court speaking through one of us,  Pasayat, J., vide paras 19 and 20 observed as follows: "19. 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 for ever be present in the  mind of the Court. 20. In Shrijee Sales Corporation and Anr. v. Union  of India (1997 (3) SCC 398) it was observed that  once public interest is accepted as the superior  equity which can override individual equity the  principle would be applicable even in cases where a  period has been indicated for operation of the  promise. If there is a supervening public equity, the  Government would be allowed to change its stand  and has the power to withdraw from representation  made by it which induced persons to take certain  steps which may have gone adverse to the interest  of such persons on account of such withdrawal.  Moreover, the Government is competent to rescind  from the promise even if there is no manifest public  interest involved, provided no one is put in any  adverse situation which cannot be rectified. Similar  view was expressed in Pawan Alloys and Casting  Pvt. Ltd. v. U.P. State Electricity Board and Ors.  (AIR 1997 SC 3910) and in Sales Tax officer and  Anr. v. Shree Durga Oil Mills and Anr. (1998 (1)  SCC 572) and it was further held that the  Government could change its industrial policy if the  situation so warranted and merely because  Resolution was announced for a particular period, it  did not mean that the government could not amend  and change the policy under any circumstances. If  the party claiming application of the doctrine acted  on the basis of a notification it should have known  that such notification was liable to be amended or  rescinded at any point of time, if the Government  felt that it was necessary to do so in public  interest."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 9  

       Applying the above tests to the facts of the present case,  we find that in the present case the doctrine of promissory  estoppel had no application.  On balancing of equities we are  of the view that DTC which is a public sector undertaking had  to act in public interest in the sense that had to keep the  transport service running for which they had to accommodate  in-service industrial workers which they could not have done if  it had to sell the existing service quarters to the retirees.  In  the circumstances, the Division Bench was right in setting  aside the decree passed by the learned Single Judge.

       We do not find any merit in the civil appeal and the same  is accordingly dismissed with no order as to costs.