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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.