REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO……….…OF 2010 (Arising out of SLP©No.7409 of 2007)

M.D., M/s. T. Nadu Magnesite Ltd.                         …Appellant

VERSUS

S. Manickam & Ors.                    …Respondents

W I T H

CIVIL APPEAL NO…………..OF 2010 [Arising out of SLP(C) No.7835/2007]

A N D

CIVIL APPEAL NO…………. OF 2010 [Arising out of SLP(C) No.7952/2007]

J U D G M E N T

SURINDER SINGH NIJJAR,J.

1. Leave granted.

2. By this judgment, we shall dispose of the above three appeals as  

the facts and the legal issues involved in all the appeals are common.  

The  writ  petitioners  before  the  High  Court  have  been  impleaded  as  

respondent No.1 before this Court.

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3. The appellant herein, TANMAG, is a company fully owned by the  

Government  of  Tamil  Nadu.  By  G.O.Ms.No.41  Industries  Department,  

dated 10.1.1979, it was decided to implement the policy decision taken  

by the Government of Tamil Nadu to reserve the mineral prone areas of  

magnesite for State exploitation.  TANMAG was accordingly formed for  

implementing the policy. It is the common case of the parties that the  

respondents were duly selected and appointed, on the respective posts,  

in  the  aforesaid  company.  They  were  appointed  as  Assistant  Project  

Engineer  (Mechanical),  Junior  Foreman  (Mechanical)  and  Deputy  

Manager  (Mechanical)  respectively  by  orders  dated  12.9.1983,  

23.11.1988  and  18.8.1989.  At  the  time  of  joining,  the  respondents  

executed  bonds  to  serve  in  TANMAG for  a  minimum period  of  three  

years.  The TANMAG confirmed the services of the respondents through  

its proceedings dated 25.10.1985, 30.4.1991 and 24.8.1989 respectively.  

The respondents were paid the revised pay by the TANMAG as per the  

Pay Commission’s recommendations made by the Government of Tamil  

Nadu.

4.     In  the  year  1990,  through  G.O.Ms.No.855  Industries  (MME.II)  

Department, dated 16.8.1990 the Government of Tamil Nadu decided to  

implement the Chemical Beneficiation Project in joint venture with M/s.  

Kaitan Supermag Limited. The share holding pattern of the joint venture  

was as follows:

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TANMAG:  26%  

M/s. Kaitan Supermag Ltd.: 25%  

General public: 49%  

Therefore, TANMAG had control over JVC.  

5.    The  appellant  through  letter  dated  18.3.1991  conveyed  to  the  

respondents that they are in excess of the  cadre strength in TANMAG  

and called upon them to express their willingness to work in the Joint  

Venture Company with the then existing pay and other facilities without  

any disadvantage.  It was also mentioned in the said communication that  

if no option is given, the appellant will have no option but to terminate  

their services under Clause 2.14 of the Service Rules of the Tamil Nadu  

Magnesite  Limited (hereinafter  referred to  as  the Service  Rules).   The  

respondents were reluctant to leave the service of TANMAG.  However,  

after  prolonged  correspondence,  the  appellant  transferred  the  

respondents to  the JVC,  without  any monetary  loss and alteration of  

service  conditions  with  seniority  and  other  benefits;  by  orders  dated  

20.06.1991 and 31.07.1991 respectively.   

6.     On 21.6.1996 respondent  No.1 S.  Manickam, petitioner in  Writ  

Petition No.3707/2001,  represented that  since his transfer  to JVC he  

had been working in the same cadre.  Had he continued in TANMAG he  

would  have  become  eligible  for  promotion.   Even  though  under  the  

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transfer order it was provided that there would be no change in terms  

and  conditions  of  employment,  apart  from  other  facilities  he  was  

monetarily losing more than Rs.2,000/- a month.  It was also pointed  

that  since  JVC had not  been  able  to  take  up any  work on chemical  

beneficiation project, he was apprehensive about his future employment  

prospects.  Since  there  was  uncertainty  in  the  implementation  of  the  

project and originally his employment was for Rotary Kiln Plant, he be  

reverted back to TANMAG.  It appears that no decision was taken on the  

representation.  

7. By G.O.Ms No 140 dated 11.5.98 it was decided to close the JVC.  

A joint request was made by six employees in the letter dated 31.10.1998  

including  the  three  respondents  herein  seeking  reversion  back  to  

TANMAG.   By  letter  dated  26.11.98  the  respondents  and  the  other  

employees were informed that they were permanently transferred to the  

JVC, namely, M/s. India Magnesia Products Limited (hereinafter referred  

to  as  IMPL).   Accordingly,  they  were  relieved  from the  service  of  the  

company from the afternoon of 31.7.1991.  As such they have no lien in  

TANMAG and no right to claim a reversion of their services from M/s.  

IMPL to TANMAG. Thus their request was rejected.   

8. The order dated 26.11.1998 was challenged by the respondents in  

the  respective  writ  petitions  contending  that  the  respondents  were  

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recruited by TANMAG and were transferred with all service benefits, pay  

protection, etc., to M/s. IMPL (the JVC) when it was formed. When it was  

closed all its assets were transferred back to TANMAG. The employees  

transferred  from  TANMAG  to  the  JVC  should  also  be  automatically  

reverted back to TANMAG. The action of TANMAG in not re-transferring  

the respondents to its service is erroneous. They, therefore, prayed for  

quashing the said order dated 26.11.1998 with a consequential direction  

to  TANMAG  to  re-transfer/absorb  the  respondents  in  the  service  of  

TANMAG with all benefits such as seniority on par with their immediate  

juniors, arrears of pay and allowances with service benefits that would  

have been accrued in favour of the respondents if they had continued in  

the service of TANMAG.   

9. The TANMAG resisted the writ petitions by filing counter affidavit  

by  contending  that  TANMAG  is  a  separate  entity  and  no  writ  is  

maintainable against it.  It was pleaded that even though the Board of  

Directors are named by the Government, the Company is managed by  

the  Managing  Director  under  the  control  and  superintendence  of  the  

Board of  Directors.   It  is  also stated in the counter affidavit  that the  

respondents  were  recruited  for  the  project  as  per  the  advertisement.  

Thereafter the respondents were transferred to the JVC on the basis of  

the advance notice dated 18.3.1991. It was made clear that their services  

were permanently transferred and they were relieved from TANMAG from  

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31.7.1991.  It is accepted that their service conditions were protected at  

the time of transfer to the JVC. After the transfer the respondents have  

lost their lien. They became the employees of the JVC. Therefore they  

have no right to demand reversion to TANMAG merely because the JVC  

had  been  closed.   It  is  also  stated  in  the  counter  affidavit  that  the  

respondents having opted and given their willingness to be absorbed in  

the  JVC,  it  was  not  open  to  them to  claim  that  they  should  be  re-

transferred to TANMAG on the closure of the JVC.  

10. The learned single Judge after considering the rival submissions  

held that the respondents have lost the lien in TANMAG due to their  

transfer to the JVC. On transfer, they became the staff of the JVC. The  

claim of the respondents for being sent on deputation, under Clause 2.17  

of the Service Rules having been rejected they cannot claim that they  

should be  reverted  back to  TANMAG. Consequently  the writ  petitions  

were dismissed.  

11.  Being aggrieved by the aforesaid judgment of the learned single  

judge  respondents  filed  the  three  writ  appeals.   On  behalf  of  the  

respondents it was submitted before the Division Bench that TANMAG  

was a shareholder of JVC.  It had transferred the land and machinery to  

the  aforesaid  company.   The  services  of  the  respondents  had  been  

transferred to the JVC as the appellant had an interest in JVC.  In such  

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circumstances  the  company  was  not  justified  in  claiming  that  the  

respondents had lost their lien in TANMAG on being transferred to JVC.  

They are,  therefore,  entitled  to  be reverted  back to TANMAG.  It  was  

emphasised that none of the respondents was willing to join the joint  

venture company.  They were literally compelled to join in view of the  

agreement that had been signed by them at the time when they initially  

joined the services of TANMAG.  

12.  On the other hand, it was submitted by the appellant that on the  

permanent absorption of the respondents in the JVC, they had lost their  

lien.  The closure of the JVC cannot revive the lien in TANMAG.  

13.  The Division Bench upon consideration of the submissions of the  

parties concluded that the respondents are entitled to be taken back by  

TANMAG in terms of the earlier transfer order, which protects the service  

conditions of the respondents.  It was further held that TANMAG is not  

justified in contending that appellants having lost their lien in TANMAG  

cannot  be  retransferred.   The  assurance  given  in  the  letter  dated  

11.5.1991  clearly  states  that  the  transfer  of  service  is  without  any  

disadvantage.   It was, therefore, held that the stand taken by TANMAG  

is contrary to the assurance given to the respondents when they were  

compulsorily transferred to the JVC.  It is noticed that all the assets of  

JVC on  its  closure  have  been  taken  over  by  TANMAG.   There  is  no  

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justification in denying absorption of the respondents who are unable to  

seek any other employment at this age of above 50 years.   It is held that  

TANMAG is  bound  by  the  assurance  given  to  the  respondents  while  

seeking their consent for transfer to JVC. This is particularly so, as it  

was stated that the terms and conditions of employment enjoyed by them  

in TANMAG are protected. It is further held that since JVC was closed at  

the instance of  TANMAG, the appellant has put the respondents in a  

disadvantageous  position.   Therefore,  TANMAG  is  estopped  from  

contending  that  the  respondents  will  not  be  absorbed.    With  these  

observations the judgment of the learned Single judge has been set aside.  

The  appellant  has  been  directed  to  absorb  the  respondents  with  

continuity of service and other attendant benefits without back wages.  

14. We have heard the learned counsel for the parties.  Mr. P.P. Rao,  

learned Senior Advocate, appearing for the appellant submitted that the  

Division Bench has erred in applying the principle of estoppel.  The only  

promise made to the respondents was that during their services with the  

JVC their terms and conditions and employment will be protected.  No  

assurance was given that JVC will not be closed down in the future at  

any time.   There was also no promise held out that in case the company  

is closed down they would be reabsorbed in the appellant.  In any event  

learned  senior  counsel  submitted  that  the  writ  petition  did  not  even  

claim the relief on the basis of the promissory estoppel.  There are no  

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pleadings to lay the foundation to claim any relief on the basis of the  

doctrine of promissory estoppel.

15.    Learned  counsel  for  the  respondents,  however,  submitted  that  

initially 16 persons had been transferred to the JVC.  Subsequently most  

of these persons joined some other concerns.  They are, therefore, not  

claiming re-absorption.  At present, there are only three respondents who  

need to be accommodated by the appellant.

16. We have considered the submissions made by the learned counsel  

for the parties.  A perusal of the correspondence would show that initially  

the respondents were reluctant  to  leave  the services of  the appellant.  

However, they were aware that their services were liable to be terminated  

due to non-availability of work for which they were qualified.  On 2.5.91  

respondents addressed a letter to the appellants that they would like to  

continue the services in TANMAG, otherwise as per Clause 2.17 of the  

Service  Rules  they  were  wiling  to  work in the JVC.  Rule  2.17 of  the  

Service Rules provides as under:

        “The Management reserves the Right to depute any  staff  member/officer  of  the  company  to  any  other  organization,  on  terms not  inferior  to  those  enjoyed  by  him in the company.”  

        The request  of  the respondents to be sent on deputation was not  

accepted by the appellants.  By letter dated 11.5.1991 the respondents  

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were informed that it is not possible to depute them to JVC as per Clause  

2.17.  The respondents were permanently transferred to the JVC by letter  

dated 20.6.1991.  They were also informed that the date of joining in  

service in TANMAG shall be deemed to be the date of joining at the JVC  

for reckoning the length of service for all purposes including the payment  

of gratuity.  Therefore, it becomes quite evident that the appellant as well  

as  the  respondents  were  well  aware  about  the  nature  of  terms  and  

conditions  which were  protected.   After  the  permanent  transfer  fresh  

letter of appointment dated 25.7.1991 was served upon the respondents.  

Therefore, it is clear that the services of the Respondents having been  

terminated, their lien in TANMAG, also stood terminated.     

17. It was only when the respondent No.1 S. Manickam, petitioner in  

Writ Petition No.3707/2001 became apprehensive about the closure of  

the unit, he submitted a representation on 21.6.1996 to the respondents  

seeking re-absorption in TANMAG. In this letter, the respondent narrated  

the entire history of his services with TANMAG. It is emphasized that his  

services were transferred to the JVC under compelling circumstances.  

At that time, he had been assured that there will not be any change in  

the terms and conditions of employment as stipulated in TANMAG. It is  

stated that he had accepted the transfer under compelling circumstances  

and joined JVC on the clear understanding that all privileges, perquisites  

and other facilities enjoyed by him in TANMAG shall be protected. His  

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grievance was that since his transfer to JVC, he has been working in the  

same cadre in which he had joined TANMAG in 1983. Had he remained  

in  TANMAG,  he  would  have  become  eligible  for  promotion.  He  also  

emphasized that there was a loss of more than Rs.2000/- per month in  

his remuneration. Finally, he stated that it has not been possible for the  

JVC to take up the work on Chemical Beneficiation Project. Many of the  

officers whose services had been transferred to JVC along with him have  

left the service. He was therefore apprehensive of his future employment  

career.  Hence, he sought his reversion back to the respondents.  

18.   A perusal of the aforesaid letter makes it  abundantly clear that  

there was no representation made to this respondent that he would be  

ensured employment till the age of superannuation with the JVC. The  

other two respondents have also not referred to any document which  

would indicate that any promise of future continuous employment was  

held out to them by TANMAG. In fact they had been earlier categorically  

informed that  their  services were liable  to  be terminated as they had  

become surplus. They were offered an alternative to be transferred to the  

JVC. Therefore, with their eyes open, the respondents had accepted the  

job in JVC. Their request for deputation, as provided under Clause 2.17  

of the Service Rules, had been specifically rejected. They were in danger  

of  losing their jobs under Clause 2.14 which enables the company to  

terminate services  of  the employees by giving three months’  notice or  

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salary in lieu thereof. They, therefore, accepted the alternative of a job  

with JVC.  This was clearly, so to speak, “lesser of the two evils”. A job in  

JVC was better than no job at all. The Division Bench noticed that the  

respondents had accepted the loss of their lien in TANMAG. They were  

seeking re-absorption on the closure of the JVC. There was no assurance  

that there will be no closure of the JVC under any circumstances. The  

Division  Bench  in  its  anxiety  to  help  the  respondents,  who  were  in  

danger of losing their jobs at the age of 50 years and above, seems to  

have stretched the principle of promissory estoppel beyond the tolerable  

limits.  Undoubtedly,  while  exercising  the  extraordinary  original  

jurisdiction under Article 226/227 of The Constitution of India the High  

Court ought to come to the rescue of those who are victims of injustice,  

but  not  at  the  cost  of  well  established  legal  principles.   The  

circumstances in which a High Court could issue an appropriate writ  

under these articles was delineated by a constitution bench of this Court  

in the case of State of Orissa Vs. Ram Chandra Dev, AIR 1964 SC 685  

wherein Gajendragadkar, J. speaking for the court observed as follows:  

“Under Article 226 of the Constitution, the jurisdiction of  the High Court is undoubtedly very wide. Appropriate writs  can be issued by the High Court under the said article even  for  purposes  other  than  the  enforcement  of  the  fundamental rights and in that sense, a party who invokes  the special jurisdiction of the High Court under Article 226  is  not  confined  to  cases  of  illegal  invasion  of  his  fundamental rights alone. But though the jurisdiction of the  High Court  under  Article  226 is  wide  in  that  sense,  the  concluding words of the article clearly indicate that before a  writ or an appropriate order can be issued in favour of a  party, it must be established that the party has a right and  

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the  said  right  is  illegally  invaded  or  threatened.  The  existence  of  a  right  is  thus  the  foundation  of  a  petition  under Article 226.”

The aforesaid settled position was reiterated in the case of State of     W.B.    

Vs.  Calcutta  Hardware  Stores,  (1986)  2  SCC  203 in  the  following  

words:  

“Although the powers of the High Court under Article  226 of the Constitution are far and wide and the Judges  must  ever  be  vigilant  to  protect  the  citizens  against  arbitrary executive action, nonetheless, the Judges have a  constructive role and therefore there is always the need to  use such extensive powers with due circumspection. There  has to be in the larger public interest an element of self- ordained restraint.”

In this case, there is no finding recorded by the Division Bench as to  

which legal or fundamental right of the respondents has been infringed.  

The relief  in this case is  granted only on the basis of  the doctrine of  

promissory estoppel. In these circumstances it was the duty of the High  

Court to analyze the facts to ensure that the principles of estoppels could  

appropriately be invoked in this case to help the respondents.  In our  

opinion, the High Court erred in not performing this cautionary exercise.  

In view of the factual situation, as noted above, we are unable to accept  

that  the  respondents  were  put  to  disadvantage  acting  upon  any  

unequivocal promise made by the appellants.   

19.  The  doctrine  of  promissory  estoppel  as  developed  in  the  

administrative  law  of  this  country  has  been  eloquently  explained  in  

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Kaniska Trading Vs.  Union of India (1995)  1 SCC 274 by Dr.  A.S.  

Anand, J, in the following words :

“11.  The  doctrine  of  promissory  estoppel  or  equitable  estoppel is well established in the administrative law of the  country.  To  put  it  simply,  the  doctrine  represents  a  principle evolved by equity to avoid injustice. The basis of  the doctrine is  that  where any party has by his word or  conduct made to the other party an unequivocal promise or  representation by word or  conduct,  which is  intended to  create legal relations or effect a legal relationship to arise in  the  future,  knowing  as  well  as  intending  that  the  representation,  assurance or the promise would be acted  upon by the other party to whom it has been made and has  in fact been so acted upon by the other party, the promise,  assurance or representation should be binding on the party  making it and that party should not be permitted to go back  upon it,  if  it  would be inequitable to allow him to do so,  having regard to the dealings, which have taken place or  are intended to take place between the parties.”

In our opinion, on the basis of facts on record in this case, the claim of  

the  respondents  would  not  be  covered  by  the  principles  enunciated  

above. In view of the facts narrated above, the Division Bench clearly  

committed an error of law in concluding that there has been a breach of  

principles of promissory/ equitable estoppel. Therefore, the High Court  

erred in issuing the direction/writ in the nature of mandamus directing  

the appellants to reabsorb the appellants in the service of TANMAG.  

20.    Before we part with the judgment, it would be appropriate to notice  

that  during  the  hearing  of  these  appeals,  the  respondents  had  been  

permitted  to  make  the  representation  to  the  appellants  for  

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reconsideration  of  their  request.  The  respondents  had,  therefore,  

submitted  a  representation  on  15.2.2010.  Learned  counsel  for  the  

appellant, however, stated that it was not possible for the appellant to  

accommodate the respondents, however, in case in future any vacancy  

arises, the request of the respondents may be considered.  

21. In  view  of  the  above,  the  appeals  are  allowed.  The  impugned  

judgment of the Division Bench under appeal is set aside.  There will be  

no order as to costs.      

                                ...….…………………………J.                            [ B. SUDERSHAN REDDY ]

………..………………………….J. NEW DELHI:                  [ SURINDER SINGH NIJJAR ]  MARCH 29, 2010.   

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