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PETITIONER: CENTURY SPINNING &  MANUFACTURING COMPANYLTD.  AND ANR.

       Vs.

RESPONDENT: THE ULHASNAGAR- MUNICIPAL COUNCIL AND ANR.

DATE OF JUDGMENT: 27/02/1970

BENCH: SHAH, J.C. BENCH: SHAH, J.C. HEGDE, K.S. GROVER, A.N.

CITATION:  1971 AIR 1021            1970 SCR  (2) 854  1970 SCC  (1) 582  CITATOR INFO :  R          1971 SC1025  (5)  RF         1972 SC2112  (18)  RF         1972 SC2396  (12)  RF         1973 SC 381  (16)  RF         1973 SC2232  (15)  D          1974 SC 651  (15)  RF         1976 SC 386  (15)  RF         1977 SC1496  (13)  R          1979 SC 621  (25,29,31)  RF         1980 SC1285  (36,37,43)  F          1985 SC 941  (4)  F          1986 SC 806  (11)  RF         1986 SC 872  (180)  RF         1988 SC1247  (3)  C&R        1991 SC  14  (11)

ACT: Constitution   of  India,  Art.  226-High  Court’s   Powers- Dismissal  in  limine-Questions of  fact-Representations  by Public Body-If enforceable ex-contractu by a person who acts upon the representations.

HEADNOTE: The  appellants-companies set up their factories  within  an "Industrial Area", No octroi duty was payable in respect  of goods  imported by the appellants into the  Industrial  Area for  use in the manufacture of its products.  The  State  of Maharashtra constituted a Municipality for certain  villages including  the Industrial Area.  On representations made  by the appellants and other manufacturers, the State proclaimed the  exclusion  of the Industrial Area  from  the  Municipal Jurisdiction.  The Municipality made representations to  the State  requesting  that  the  proclamation,  be   withdrawn, agreeing to exempt the factories in the Industrial Area from payment of octroi for seven years from the date of the levy. The State acceeded to the request of the Municipality.   The appellants  claimed to expand their activities relying  upon the   Municipality’s   assurance   and   undertaking.    The Maharashtra   Municipalities   Act  was  enacted   and   the respondent-Municipality took over the administration of  the

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former  municipality  as  its  successor.   Thereafter,  the respondent-Municipality  sought to levy octroi duty  on  the appellant  amounting to about Rs. 15 lakhs per  annum.   The appellants   filed  a  petition  under  Art.  226   of   the Constitution  to restrain the  respondent-Municipality  from enforcing the levy of the Octroi.  The High Court  dismissed the petition in limine.  In appeal by special leave, HELD : The case must be remanded to the High Court for being readmitted  to  its  file and dealt  with  and  disposed  of according to law. The  High Court may, in exercise of its discretion,  decline to  exercise its extra-ordinary jurisdiction under Art.  226 of the Constitution.  But the discretion is judicial; if the petitioner  makes a claim which is frivolous, vexatious,  or prima facie unjust or which may not appropriately be true in a  petition invoking extraordinary jurisdiction,  the  Court may decline to entertain the petition.  But a party claiming to be aggrieved by the action of a public body or  authority on  the  plea  that  the  action  is  unlawful,  highhanded, arbitrary or unjust is entitled to a hearing of its petition on the merits.  Apparently the petition filed by the Company did   not  raise  any  complicated  questions-of  fact   for determination,  and the claim could not be characterised  as frivolous, vexatious or unjust.  The High Court has given no reason  for  dismissing  the petition in limine,  and  on  a consideration  of  the  averments in the  petition  and  the materials  placed  before  the  Court  the  appellants  were entitled  to  have its grievance against the action  of  the Municipality,  which was prima facie unjust, tried.   Merely because  a question of fact is -raised, the High Court  will not  be justified in requiring the party to seek  relief  by the  somewhat lengthy, dilatory and expensive process  by  a civil  suit  against a public body.  The questions  of  fact raised by the petition in this case are elementary. [858  C- F] Public  bodies are as much bound as private  individuals  to carry  out  representations or facts and  promises  made  by them, relying on which  855 other   persons  have  altered  their  position   to   their prejudice.  The obligation arising against an individual out of his representation amounting to a promise may be enforced ex-contractu by a person who acts upon the promises when the law  requires that a contract enforceable at law  against  a public  body shall be in certain form or be executed in  the manner  prescribed by statute and if the contract be not  in that  form the obligation may still be enforced against  the body in appropriate cases, in equity. [859 D] If  our nascent democracy is to thrive  different  standards "of  conduct  ,for the people and the public  bodies  cannot ordinarily  be permitted.  A public body is not exempt  from liability  to  carry  out  its  obligation  arising  out  of representations made by it relying upon which a citizen  has altered his position to his prejudice. [860 D] There   is  undoubtedly  a  clear  distinction   between   a representation of an existing fact and a representation that something  will  be done in future.  The former may,  if  it amounts  to a representation as to some fact alleged at  the time  to  be  actually in existence, raise  an  estoppel  if another  person  alters  his  position  relying  upon   that representation A representation- that something will be done in  future  may result in a contract, if another  person  to whom  it is addressed acts upon it.  A  representation  that something  will  be done in future is not  a  representation that it is true when made.  But between a representation  of

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a  fact  which  is untrue and a  representation  express  or implied-to  do something in future there is no  clear  anti- thesis.   A  representation that something will be  done  in future may involve an existing intention to act in future in the manner represented.  If the representation is acted upon by  another person it may, unless the statute governing  the person making the representation provides otherwise,  result in an agreement enforceable at law; if the statute  requires that- the agreement shall be in a certain form, no  contract may result from the representation and acting thereupon  but the  law is not powerless to raise in appropriate  cases  an equity  against him to compel performance of the  obligation arising out of his representation. [858 H-859 C] Union  of India & Ors. v. M/s.  Indo-Afghan  Agencies  Ltd., [1968]  2  S.C.R. 366: Robertson v.  Minister  of  Pensions, [1949]  1 K.B. 227; Falmouth Board Construction Co. Ltd.  v. Howell, [1950] 1 All.  E.R. 538, referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION: Civil Appeal Nos.  2130  and 2131 of 1969. Appeals by special leave from the judgment -and order  dated June 16, 19, 1969 of the Bombay High Court in Special  Civil Application No. 41 of 1969 and S.C.A. No. 1774 of 1969. C.   K. Daphtary, Suresh A. Shroff, P. C. Bhartari and O. C. Mathur, for the appellants (in both the appeals). H.   R. Gokhale, N. H. Gurshani and N. N. Keswani, for  res- pondent No. 1 (in both the appeals). B.   D.  Sharma  and S. P. Nayar, for respondent No.  2  (in both the appeals). 856 The Judgment of the Court was delivered by Civil Appeal No. 2130 of 1967 Shah,  J.  The High Court of Bombay dismissed  in  limine  a petition  filed  by the Century Spinning  Manufacturing  Co. Ltd. hereinafter called ’the Company’for the issue of a writ restraining  the respondent Municipality from enforcing  the provisions of the Maharashtra Municipalities Act 40 of  1965 relating  to  the levy, assessment, collection  recovery  of octroi and in particular s. 105 and Ss. 136 to 144  thereof, and  from enforcing the Maharashtra Municipalities  (Octroi) Rules, 1967, and from acting upon resolutions passed by  the Municipal Council dated September 9, 1968 and’ September 13, 1968, and from levying, assessing, collecting, recovering or taking  any other step under the Act, rules or  the  resolu- tions  and  for -an order restraining  the  Municipality  of Ulhasnagar from levying, assessing, collecting any octroi on the  goods imported by the Company within the limits of  the Municipal  Council for a period of 7 years from the date  of its  first imposition.  With special leave, the Company  has appealed ’against, the order rejecting the petition. The Company was incorporated under the Indian Companies Act, 1913.   It set up its factory in 1956, within the limits  of village  Shahad, Taluka Kalyan on a site purchased from  the State of Bombay, and within an area known as the ’Industrial Area’.  No octroi duty was then payable in respect of  goods imported by the Company into the Industrial Area for use  in the  manufacture of its products.  On October 30, 1959,  the Government  of Bombay issued a notification  announcing  its intention to constitute a Municipality for certain villages, including  the  Industrial  Area.   The  Company  and  other manufacturers  who  had set up their  plants  and  factories objected to the proposed constitution of the Municipal Area.

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On  September 20, 1960, the State of Maharashtra  (successor to   the   State  of  Bombay)   published   a   notification constituting with effect from April 1, 1960 the Municipality including  the  area  in  which  the  Industrial  Area   was included.  Representations were then made by the Company and other  manufacturers for excluding the Industrial Area  from the  Ulhasnagar Municipal District Area.  On April 27,  1962 the Government of Maharashtra (the new State of  Maharashtra having been constituted under the Bombay Reorganization Act, 1960)  proclaimed that the Industrial Area be excluded  from the Municipal jurisdiction.  The District Municipality  then made a representation to the Government of Maharashtra  that the  proclamation dated April 27, 1962, be withdrawn by  the Government.  The Municipality agreed to exempt the  existing factories  viz., the Company and other  manufacturers  whose factories  were  then existing in the Industrial  Area  from payment of octroi for a period of seven years from the  date of  levy  of octroi and for exempting new  industrial  units from payment of octroi for  8 5 7 a  similar  period  from the  date  of  establishment.   The Government  of  Maharashtra acceded to the  request  of  the Municipality to retain the Industrial Area within the  local limits of the Municipality. On  August  24,  1963, the District  Municipality  passed  a resolution to implement the agreement.  It was resolved that the  Municipality  "agrees  to  give  a  concession  to  the existing  factories  by exempting them from the  payment  of octroi  for  a period of 7 years from the date  of  levy  of octroi  tax and by exempting new factories from the  payment of  the octroi tax for a period of 7 years from the date  of their  establishment  -as recommended by the  Government  of Maharashtra". On October 31, 1963, the Government of Maharashtra issued  a notification  withdrawing the proclamation dated  April  27, 1962, and the Industrial Area became part of the  Ulhasnagar Municipal   District.   Relying  upon  the   assurance   and undertaking  given  by the Municipality the  Company  claims that   it   had  expanded  its  activities   and   commenced manufacturing  new products by, setting up additional  plant which it would not have done "but for the concessions given, assurances and representations made and agreement arrived at on May 21, 1963". On September 10, 1965, the Legislature of the State of Maha- rashtra  enacted  the Maharashtra Municipalities  Act  which repealed  the Bombay District Municipal Act 3 of  1901.  the notification  declaring  the  area of  the  former  District Municipality of Ulhasnagar into the Ulhasnagar  Municipality became  effective  as from June 15,  1966.   The  Ulhasnagar Municipality  took  over  as  successor  to  the  Ulhasnagar District  Municipality, the assets and the affairs  of  that body.   On  September 9, 1968  the  Ulhasnagar  Municipality resolved  "to levy minimum rates of octroi duty as shown  in columns 4 and 6 on all items shown in Sch.  1 to the Rules", and by resolution dated September 13, 1968, the Municipality ’adopted with effect from January 1, 1969, the rates for the imposition  of  octroi duty on the goods imported  for  use, sale and consumption within the Municipal Council limits. At a special meeting held on December 24, 1968, the  Munici- pal Council considered the letters written by the Government of  Maharashtra  dated November 22, 1968  and  December  10, 1968,  drawing  the  attention of the  Municipality  to  the circumstances in which the Industrial Area was included  and retained  in  the local limits of  the  Ulhasnagar  District Municipality and continued to reman within the local  limits

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of the Municipality, and "advised the Municipality to pass a resolution   confirming  such  exemption  and   honour   the commitments  of its predecessor." The  Municipality  ignored the  advice and resolved that the Government of  Maharashtra be  informed that the Municipality would consider afresh  on Sup.CI(NP)70-10 858 merits any representation of a tax-payer for exemption  from payment  of octroi, and if any such representation was  made by the factories situate in the Industrial Area, the Council would  consider  the same and take such action as  it  would deem fit.  Thereafter the Municipality sought to levy octroi duty  and to recover from the Company octroi duty  amounting to approximately Rs. 15 lakhs per annum. The Company moved a petition before the High Court of Bombay under  Art.  226 of the Constitution for the writs  set  out earlier seeking to restrain the Ulhasnagar Municipality from enforcing the octroi Rules. The  High Court may, in exercise of its discretion,  decline to ,exercise its extra-ordinary jurisdiction under Art.  226 of  the Constitution.  But the discretion is judicial  :  if the petition makes a claim which is frivolous, vexatious, or prima  facie unjust, or may not appropriately be tried in  a petition invoking extra-ordinary jurisdiction, the Court may decline to entertain the petition.  But a party claiming  to be aggrieved by the action of a public body or authority  on the plea that the action is unlawful, high-handed, arbitrary or  unjust, is entitled to a hearing of its petition on  the merits.   Apparently the petition filed by the  Company  did not   raise   any   complicated  questions   of   fact   for determination, -and the claim could not be characterised  as frivolous, vexatious or unjust.  The High Court has given no reasons  for  dismissing the petition in limine,  and  on  a consideration  of  the  averments in the  petition  and  the materials placed before the Court we are satisfied that  the Company  was  ,entitled to have its  grievance  against  the action  of the Municipality, which was prima  facie  unjust, tried. The Company pleaded that the, Ulhasnagar Municipality had" entered  into a solemn arrangement" not to levy octroi  duty for aperiod of seven years from the date of its  imposition. The  evidence relating to the undertaking was  contained  in public  records.  The Government of Maharashtra advised  the Municipality that it was acting in violation of the terms of that  undertaking.   By  its  resolution  the   Municipality declined to abide by the undertaking of itspredecessor. There   is  undoubtedly  a  clear  distinction   between   a represen‘tation  of  an existing fact and  a  representation that  something will be done in future.  The former may,  if it  amounts to a representation as to some fact alleged  -at the time to be actually in existence, raise an estoppel,  if another  person  alters  his  position  relying  upon   that representation.   A  representation that something  will  be done  in  the future may result in a  contract,  if  another person to whom it is  859 addressed  acts  upon it.  A representation  that  something will  be done in future is not a representation that  it  is true  when  made.  But between a representation  of  a  fact which  is untrue and a representation-express or  implied-to do  something  in future, there is no clear  antithesis.   A representation  that sotmething will be done in  future  may involve an existing intention to act in future in the manner represented.  If the representation is acted upon by another person it may, unless the statute governing the person  mak-

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ing  the  representation provides otherwise,  result  in  an agreement  enforceable at law; if the statute requires  that the  agreement shall be in a certain form, no  contract  may result from the representation and acting thereupon but  the law is not powerless to raise in appropriate cases an equity against him to compel performance of the obligation  arising out of his representation. Public  bodies are as much bound as private  individuals  to carry  out  representations of -facts and promises  made  by them,  relying  on which other persons have  -altered  their position to their prejudice.  The obligation arising against an  individual  out  of his representation  amounting  to  a promise  may be enforced ex contractu by a person  who  acts upon  the  promise : when the law requires that  a  contract enforceable at law against a public body shall be in certain form or be executed in the manner prescribed by statute, the obligation  may  be if the contract be not in that  form  be enforced  against  it in appropriate cases in  equity.   ’In Union  of India & Ors. v. Mls.  IndoAfghan Agencies  Ltd.(1) this  Court held that the Government is not exempt from  the equity  arising  out of the acts done by citizens  to  their prejudice, relying upon the representations as to its future conduct  made by the Government.  This Court held  that  the following observations made by Denning, J., in Robertson v. Minister of Pensions(1) applied in India                                                            "The                                                            Crown                                                            cannot                                                            escape                                                            by                                                            saying                                                            that                                                            estoppe ls                                                            do                                                            not                                                            bind                                                            the                                                            Crown                                                            for                                                            that                                                            doctrin e                                                            has                                                            long                                                            been                                                            explode d.                                                            Nor                                                            can                                                            the                                                            Crown                                                            escape                                                            by                                                            praying                                                            in                                                            aid                                                            the                                                            doctrin e                                                            of                                                            executi ve                                                            necessi ty,

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                                                          that                                                            is,                                                            the                                                            doctrin e                                                            that                                                            the                                                            Crown                                                            cannot                                                            bind                                                            itself                                                            so                                                            as                                                            to                                                            fetter                                                            its                                                            future                                                            executi ve                                                            action. , We  are in this case not concerned to deal with the  question whether  Denning, L.J., was right in extending the rule to  a different class of cases as in Falmouth Boat Construction Co. Ltd. v. Howell(1) where he observed at p. 542 :               "Whenever Government officers in their dealings               with               a   subject  take  on  themselves   to   assume               authority in a               (1)       [1968]      2       S.C.R.       366.               (2) [1949] 1 K.B. 227.               (3)   [1950] All.  E.R. 538.               8 6 0               matter with which the subject is concerned,  he               is  entitled  to  rely  on  their  having   the               authority which they assume.  He does not know,               and  cannot be expected to ]mow, the limits  of                             their  authority, and he ought not to suffer  if               they exceed it.  " It  may  be sufficient to observe that in  appeal  from  that judgment  (Howell  v. Falmouth Boat Construction  do.   Ltd.) Lord Simonds observed after referring to the observations  of Denning, L.J.               "The  illegality of an act is the same  whether               the action has been misled by an assumption  of               authority  on the part of a government  officer               however-     high     or     low     in     the               hierarchy...........  The question  is  whether               the  character  of an act done in  force  of  a               statutory  prohibition is affected by the  fact               that  it  had  been  induced  by  a  misleading               assumption  of  authority.  In my  opinion  the               answer is clearly : No." If our nascent democracy is to thrive different standards  of conduct   for  the  people  and  the  public  bodies   cannot ordinarily be permitted.  A public body is, in our  judgment, not exempt from liability to carry out its obligation arising out  of  representations  made by it  relying  upon  which  a citizen has altered his position to his prejudice. Mr.  Gokhale  appearing on behalf of the  Municipality  urged that  the  petition filed by the  Company  apparently  raised questions  of fact which in the view of the High Court  could not  appropriately  be tried in the exercise  of  the  extra- ordinary jurisdiction under Art. 226.  But the High Court has

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not  said  so, and on a review of the averments made  in  the petition this argument cannot be sustained.  Merely because a question  of  fact  is raised, the High  Court  will  got  be justified  in  requiring  the party to  seek  relief  by  the somewhat lengthfiy, dilatory and expensive process by a civil suit against ’a public body.  The questions of fact raised by the petition in this case are elementary. The order passed by the High Court is set aside and the  case is  remanded  to the High Court with a direction that  it  be readmitted  to  the file and be dealt with  and  disposed  of according  to  law.  The High Court will issue  rule  to  the Municipality  and the State and dispose of the petition.   We recommend that the case may be taken up for early hearing. We  had during the pendency of the appeal in this Court  made an order restraining the levy of octroi duty.  We extend  the operation  of  the order for a fortnight from  this  date  to enable the  861 Company  to  move the High Court for an  appropriate  interim order  pending  hearing and disposal of  the  writ  petition. There  will be no order as to costs in this Court.  Costs  in the High Court will be costs in the cause. Since  we  have  granted special,  leave  against  the  order dismissing  the  petition,  we do not deem  it  necessary  to consider  whether  the order rejecting  the  application  for certificate was erroneous.  Civil Appeal No. 2131 of 1969  is therefore dismissed. Y.P. 862