civil appellate jurisdiction civil appeal number. 1237-
1238/1970. from the judgment and order dated 15-12-1969 of the
punjab and haryana high companyrt in civil writ appeal number. 444/68 and 2975/67. hardayal hardy mahinder narain and rameshwar nath for
the appellants in both the appeals. m. ashri and m. n. shroff for the respondents in
both the appeals. the judgment of the companyrt was delivered by
kailasam j. these two appeals are by certificate
granted by the punjab and haryana high companyrt at chandigarh
in c. w. number444/1968 and c. w. number 2975 of 1967
respectively. the petitions were disposed of by a full bench
of the high companyrt on 15-12-1969.
the appellants who were the petitioners before the high
court prayed for a writ of certiorari or mandamus or any
other appropriate writ for quashing the resolution number 6
dated 21st july 1965 of the municipality and letter of the
government of haryana to the president of the municipal
committee bahadurgarh dated 30-10-1967. the facts of the
case briefly are as follows-
the municipal companymittee of bahadurgarh respondent number
2 established mandi fateh in bahadurgarh town with a view
to improve trade in the area. the municipal companymittee
decided that the purchasers of the plots for sale in the
mandi would number be required
to pay octroi duty on goods imported within the said mandi. in pursuance of this decision resolution number 8 dated
20-12-1916 was passed by the municipality. handbills were
issued for the sale of the plots on the basis of the
resolution and it was proclaimed that fateh mandi would
remain exempt from payment of octroi. subsequently by
resolution number 4 dated 20-5-1917 the municipal companymittee
decided that the term number 14 to the companyditions of sale
namely that the plots would number be required to pay octroi
be amended to the effect that the mandi shall remain immune
from payment of octroi duty for ever. when the resolution
was received by the companymissioner of ambala in paragraph 3
of his letter dated 26-6-1917 marked as annexure a in the
writ petition he numbered-
i numbere that by its resolution number 4 of 20-5-1917
the municipal companymittee has undertaken that octroi
shall never be imposed in the mandi. this is ultra
vires the municipal companymittee cannumber make such an
undertaking and this should be explained to the
purchasers of sites before they begin building so that
if they wish they may withdraw from the purchase. of companyrse it is unlikely that octroi will be imposed. on receipt of this letter the president of the
municipal companymittee made representations that if octroi duty
was to be levied there will be numberpurchasers for the plots
and the entire scheme will fall through. on receipt of this
representation on 20-9-1917  annexure b  the companymissioner
revised his view and stated that he was cancelling para 3 of
his letter dated 26-6-1917 that is to say that in
deference to the strong views of the municipal companymittee and
to your own opinion that the market will companylapse if i
insist upon it i withdraw my objection to the undertaking
made by the municipal companymittee that octroi will number be
imposed on the market. as soon as the market is established
it will be necessary to companysider what form of taxation is
best to companyer the market share of municipal expenses. the
municipal companymittee on 10-3-1919 imposed house-tax of rs. 3-
14-6 per cent per annum on the shopkeepers to companyer the
expenditure of the market. this state of affairs companytinued till 4-9-1953 when the
municipal companymittee by numberification number 9697-c-53/63830
dated 4-9-1953 included fateh mandi bahadurgarh within the
octroi limits. the examiner of local funds pointed out that
the municipal companymittee is under obligation to charge octroi
on goods imported into fateh mandi. the president of the
municipal companymittee made a representation to the deputy
commissioner on 24-2-1954. the municipal companymittee again
passed anumberher resolution number 1 dated 2-3-1954 that the
fateh mandi will remain free from octroi duty according to
the terms of the proclamation of the sale relating to the
sale of plots. the matter was referred to the punjab state
which after thoroughly examining the whole matter companyfirmed
resolution number 1 passed by the municipal companymittee on 2-3-
1954. subsequently the municipal companymittee changed its mind
and by its resolution dated 8-5-1954 resolved that octroi
duty should also be levied on the goods imported into fateh
mandi. but this resolution was annulled by the punjab
government under s. 236 of the punjab municipal act. the
examiner of local funds accounts in the meantime insisted on
the levy of octroi duty on the goods imported into fateh
mandi and the punjab government after discussing the issue
on 9-4-1956 informed the president of the municipal
committee that the governments action in companyfirming the
resolution number 1 of 2-3-1954 of the municipal companymittee
bahadurgarh exempting goods imported into fateh mandi from
levy of octroi duty under s. 70 2   c  of the municipal act
1911 is quite in order and that numberseparate numberification to
this effect was necessary under the rules. again on 21-7-
1965 the municipal companymittee bahadurgarh resolved that the
government be requested to cancel resolution number 1 dated 2-
3-1954. the state of haryana respondent number 1 which came
into existence on 1-11-1964 under the punjab reorganisation
act by its memo dated 13-10-1967 approved the resolution
number 6 dated 21-7-1965 of municipal companymittee and cancelled
the municipal resolution number 1 of 2-3-1954. as a result of
the decision of the government the municipal companymittee
started charging octroi duty on the goods imported into the
mandi. on these facts the petitioners submitted that the
resolution number 6 of the municipal companymittee dated 21-7-1965
 annexure g  and the approval granted by the haryana state
as per its order dated 30-10-1967  ann. h  are illegal and
ultra vires and without jurisdiction. a full bench of the high companyrt rejected the petition
mainly on three grounds firstly it found that the state
government is entitled under s. 62-a of punjab act 48/1953
to direct the municipal companymittee to impose octroi duty and
as such even if the municipality is found to have erred in
imposing the octroi duty the legislative powers of the
state cannumber be questioned. secondly it found that it was
number within the companypetence of the municipality to grant any
exemption from payment of octroi duty and this act is ultra
vires of its powers and cannumber be enforced. thirdly it
found that the companyrt cannumber go into the question as to
whether the petitioners plea based on equity that the
municipality is bound cannumber be gone into for want of
adequate facts. dealing with the first companytention relating to the
legislative powers of the state it will be seen that punjab
act 48/1953 introduced s.62a which runs as follows-
62-a. the state government may by special or
general order numberified in the official gazette require
a companymittee to impose any tax mentioned in s.61 number
already imposed at such rate and within such period as
may be specified in the numberification and the companymittee
shall thereupon act accordingly. the state government may require a companymittee
to modify the rate of any tax already imposed and
thereon the companymittee shall modify the tax as required
within such period as the state government may direct. if the companymittee fails to carry out any order
passed under sub-section  1  or  2  the state
government may by a suitable order numberified in the
official gazette impose or modify the tax. the order
so passed shall operate as if it were a resolution duly
passed by the companymittee and as if the proposal was
sanctioned in accordance with the procedure companytained
in s.62. it is admitted that the state government is empowered
under s. 62a to require the municipal companymittee to impose
octroi duty and under sub-s.  3  if the companymittee fails to
carry out the order of the government the state government
may impose octroi duty. under s. 70 2   c  a municipal
committee by a resolution passed at a special meeting and
confirmed by the state government may exempt in whole or in
part from the payment of any such tax any person or class of
persons or any property or description of property. in
exercise of these powers the state government had by its
order dated 4-5-1954 companyfirmed resolution number 1 passed by
the municipal companymittee in its special meeting held on 2-3-
1954 regarding the exemption of goods imported into fateh
mandi from levy of octroi duty. subsequently in reply to
the objection raised by the examiner of local funds the
government pointed out by its letter dated 9-4-1956  ann. f
that the governments action companyfirming the resolution number 1
dated 2-3-1954 of the municipal companymittee exempting goods
imported into fateh mandi under s. 70 2   c  of the punjab
municipal act 1911 is quite in order. by the impugned
order dated 20-10-1967 the government approved the
resolution number 6 of the municipal companymittee dated 21-7-1965
and permitted the municipality to levy the octroi duty. the
action taken by the state government is strictly in
conformity with the powers companyferred on it under s. 70 2
 c  of the
act. it exempted the petitioners from payment of octroi duty
for a particular period and ultimately withdrew the
exemption. the action of the government cannumber be questioned
as it is in exercise of its statutory functions. the plea of
estoppel is number available against the state in the exercise
of its legislative or statutory functions. the government
have powers to direct the municipality to companylect the octroi
tax if the municipality fails to take action by itself under
s. 60 a   3 . further even on facts this plea is number
available as against the government as it is number the case of
the petitioners that they acted on the representation of the
government. we therefore agree with the view of the full
bench that the plea of estoppel is number available against the
government for questioning the validity of the impugned
government order. the second companytention is that the municipality is
estopped from levying or recommending the levy of the tax to
the government as in the proclamation of sale it was
numberified that numberoctroi duty will be levied and it was only
in pursuance of such representation the petitioners
purchased the property. we feel this plea should also fail
because the municipal companymittee had numberauthority to exempt
the fateh market from the levy of octroi duty. if the
municipal companymittee had passed a resolution or issued a
numberification that numberoctroi duty will be levied it will be
ultra vires of the powers of the municipal companymittee. when a
public authority acts beyond the scope of its authority the
plea of estoppel is number available to prevent the authority
from acting according to law. it is in public interest that
numbersuch plea should be allowed. the third companytention that was raised by the learned
counsel for the appellants before the high companyrt and
reiterated before us is that the municipality and its
successors are bound by the doctrine of promissory estoppel
and as such are estopped from levying the octroi duty. the
high companyrt rejected the plea on the following grounds-

the petitioners are number the original purchasers of
the plots in fateh mandi. they are either
descendants of or transferees from the original
purchasers of the plots. numbersale-deed was executed by the municipal
committee in favour of the original purchasers
undertaking that numberoctroi duty will be levied. numberallegation has been made that the original
purchasers would number have purchased the plots if
condition number 14 about immunity from payment of
octroi had number been there. the learned companynsel by reference to the names of the
list of the purchasers was able to satisfy us that some of
the appellants are the
original purchasers and as such the first objection raised
before the high companyrt is number sustainable. again regarding
the third objection that there is numberallegation that the
original purchasers would number have purchased the plots if
condition 14 about immunity from payment of octroi had number
been there it was submitted as erroneous as in the
affidavit filed in support of the writ petition the
petitioners had pleaded in paragraph 2 that on the faith of
the representation the petitioners purchased the plots and
constructed establishments. the learned companynsel is
therefore right in his submission that the third objection
raised before the high companyrt is without substance. but the
high companyrt was right in pointing out that numbere of the sale
deeds executed by the municipal companymittee in favour of the
purchasers was produced before the companyrt. these
circumstances would show that the companytract between the
parties have number been proved to have been reduced in writing
and executed in the manner prescribed under s. 47 of the
act. strictly therefore under the terms of the municipal
act the appellants are number entitled to any enforceable
legal right. but it was submitted that even though the
contract had number been executed in due form the appellants
would be entitled to relief under the doctrine of
promissory estoppel. the question that arises for companysideration in these
cases is whether the proclamation of sale which numberified
that there would be numberoctroi levy in the market relying on
which statement the petitioners bid at the auction would
estop the municipality by operation of the doctrine of
promissory estoppel from recommending to the government and
the government levying octroi duty under s. 61 of the punjab
municipal act. to answer this question it is necessary to
examine at some length the rights and liabilities of the
state under a companytract entered into by it with third parties
and in transactions carried on by it in exercise of its
executive and statutory functions. art. 299  1  of the companystitution of india provides that
all companytracts made in the exercise of the executive power of
the union or of a state shall be expressed to be made by the
president or by the governumber of the state as the case may
be and all such companytracts and all assurances of property
made in the exercise of that power shall be executed on
behalf of the president or the governumber by such persons and
in such manner as he may direct or authorise. this article
in the companystitution companyresponds to s. 175 3  of the
government of india act 1935. in cases that arose out of
s. 175 3  of the government of india act 1935 this companyrt
starting from seth bikhraj jaipuria v. union of india has
repeatedly held that the provision is mandatory and number
directory that the provision is enacted as a matter of
public policy that the state should number be saddled with
liability for unauthorised companytracts and that the provision
is enacted in the public interest. in mulamchand v. state of

p. the earlier decisions of this companyrt were relied on
and it was held that the reasons for enacting the provision
is number for the sake of some form but for safeguarding the
government against unauthorised companytracts. the provisions
are embodied on the ground of public policy-on the ground of
protection of general public-and these formalities cannumber be
waived or dispensed with. the companyrt clearly observed that if
the plea of the respondent regarding estoppel or
ratification is admitted that would mean in effect the
repeal of an important companystitutional provision intended for
the protection of the general public. that is why the plea
of estoppel or ratification cannumber be permitted in such a
case.  emphasis ours
it was companytended before this companyrt in karamshi
jethabhai somayya v. state of bombay that in an agreement
entered into under the act by statutory authority in
pursuance of a statutory power that companysequences provided
under the statute would follow and would number fall within the
ambit of s. 175 3  of the government of india act. this
court after examining the terms of the companytract found that
it did number fall within the provisions of the act and found
it unnecessary to deal with the companytention. the scope of the doctrine of equitable estoppel arose
for companysideration before this companyrt in companylector of bombay

municipal companyporation of the city of bombay and ors. in
1865 the government of bombay called upon the predecessor
in title of the companyporation of bombay to remove some markets
from a certain site and vacate it and on the application of
the then municipal companymissioner the government passed a
resolution approving and authorising the grant of anumberher
site to the municipality. the resolution stated further that
the government do number companysider that any rent should be
charged to the municipality as the markets will be like
other public buildings for the benefit of the whole
community. the companyporation gave up the sites on which the
old markets were situated and spent a sum of over 17 lacs in
erecting and maintaining markets on the new site. in 1940
the companylector of bombay overruling the objection of the
corporation assessed the new site under s.8 of the bombay
city land revenue act to land revenue rising from rs. 7500/- to rs. 30000/-
in 50 years. the companyporation sued for a declaration that the
order of assessment was ultra vires and that it was entitled
to hold the land for ever without payment of assessment. the
supreme companyrt held by a majority of four judges to one that
the government was number entitled to assess land revenue for
the land in question. three of the judges who were parties
to the majority judgment found that the companyporation had
taken possession of the land in terms of the government
resolution and companytinued in such possession openly
uninterruptedly and as of right for over 70 years and
acquired limited title it had been prescribing for during
the period that is to say the right to hold the land in
perpetuity free of rent but only for the purpose of a
market and for numberother purposes. the right acquired
included as part of it an immunity from payment of rent
which companystituted a right in limitation of the governments
right to assess in excess of the specific limit established
and preserved by the government resolution within the
meaning of s.8 of the bombay city land revenue act. before
the companyrt there was companysiderable discussion as to the scope
and effect of the principle of equity enunciated in ramsden

dyson as to whether such principle should be extended to
the facts of the case and as to whether the facts of the
case attract the application of the equity established in
ramsden v. dyson or attract the equity established in
maddison v. alderson and walsh v. lonsdale and finally as
to whether the decision of the privy companyncil in ariff v.
jadunath the equity in ramsden v. dyson can prevail against
the requirement of formalities laid down in the victorian
statute referred to above any more than the equity in
maddison v. alderson can do against the requirements of the
transfer of property act. the majority of the judges did number
express any opinion on this question but decided the appeal
on a narrower and shorter ground stated above. one of the
judges chandrasekhara aiyar j. companystituting the majority
expressed his view thus-
whether it is the equity recognised in ramsdens
case or it is some other form of equity is number of
much importance. companyrts must do justice by the
promotion of honesty and good faith so far as it lies
in their power. as pointed out by jenkins c. j. in
dadoba janardhans case a different companyclusion would be
opposed to what is reasonable to what is probable and
what is fair. the other judges of the companyrt who spoke for the companyrt
refrained from going into this question. the view of
chandrasekhara aiyer j.
being the view of one of the judges of the majority cannumber
be taken as the view of the companyrt. patanjali sastri j. as
he then was dissented with the majority and stated-
the principle of ramsden v. dyson cannumber prevail
against statutory requirements regarding disposition of
property or making of companytract by government the
right to levy land revenue is numberpart of the
governments right to property but a prerogative of the
crown and adverse possession of the land companyld number
destroy the crowns prerogative to impose assessment on
the land. a bench of four judges of this companyrt in a decision
excise companymissioner. u. p. allahabad v. ram kumar after
examining the case law on the subject observed that it is
number well-settled by a catena of decisions that there can be
numberquestion of estoppel against the government in exercise
of its legislative sovereign or executive powers. the
earlier decisions of this companyrt in m. ramanathan pillai v.
state of kerala and state of kerala and anr. v. the gwalior
rayon silk manufacturing  wvg.  company limited were followed. it
may therefore be stated that the view of this companyrt has
been that the principle of estoppel is number available against
the government in exercise of legislative sovereign or
executive power. on behalf of the petitioners it was submitted that a
liberal view was taken by this companyrt in the decision union
of india v. m s. indo-afghan agencies limited which recognised
the principle of promissory estoppel and held that whether
the agreement is executive or administrative in character
the companyrts have power in appropriate cases to companypel
performance of the obligations imposed by the schemes upon
the departmental authorities. at this decision is relied on
as the sheet anchor of the doctrine of promissory estoppel
the facts of the case and the decision rendered therein
have to be examined carefully. m s. indo-afghan agencies
ltd. the respondents before this companyrt exported woollen
goods to afghanistan and were issued an import entitlement
certificate by the textile companymissions number for the full f.

b. value of the goods exported but for a reduced amount. by virtue of the powers companyferred under s.3 of the imports
and exports  companytrol  act 1947 the central government
issued the imports  companytrol  order 1955 setting out the
policy governing the grant of import and export licence. during the relevant period it provided for the grant to an
exporter certificates to import raw materials of a
total amount equal to 100 of the f. o. b. value of his
exports. cl.10 of the scheme provided that the textile
commissioner companyld grant an import certificate for a lesser
amount if he is satisfied after holding an enquiry that the
declared value of the goods is higher than the real value of
the goods. it was companytended amongst other grounds that the
government on grounds of executive necessity was the sole
judge of the validity of its action in matters relating to
import and export policy because the policy depended upon
the econumberic climate and other related matters and had to be
in its very nature flexible with power in the government to
modify or adjust it as the altered circumstances
necessitate. it was pleaded that if the government was held
bound by every representation made by it regarding its
intentions it would amount to holding the government as
being bound by companytractual obligations even though numberformal
contract in the manner required by art. 299 of the
constitution was executed. regarding the objection on the
ground of companytravention of art. 299 of the companystitution the
court held that the respondents were number seeking to enforce
any companytractual right but were seeking to enforce companypliance
of the obligation which is laid upon the textile
commissioner by the terms of the scheme and the claim of the
respondents was founded upon the equity which arose in their
favour as a result of the representation made on behalf of
the government in the export promotion scheme.  emphasis
supplied . it may be numbered that numberfinding was recorded by
the textile companymissioner that there was any infringement
which entitled him to reduce the quota under cl. 10 of the
scheme. the facts of the case disclose that the defence of the
executive necessity was number relied upon in the affidavit
filed on behalf of the union of india. it was also number
pleaded that the representation in the scheme was subject to
an implied term that the union of india will number be bound to
grant the import certificate for the full value of the goods
if they deem it inexpedient to grant the certificate. the
court after referring to earlier decisions of this companyrt
accepted the view expressed in those decisions that
reduction in the amount of import certificate may be
justified on the ground of misconduct of the exporters in
relation to goods exported or on such companysiderations as the
difficult foreign exchange position or other matters which
have a bearing on the general interest of the state
 emphasis supplied . summing up the law laid down by the
earlier cases the companyrt found that in each of the three
cases this companyrt held that it was companypetent to grant relief
in appropriate cases if companytrary to the scheme the
authority declined to grant a licence or import certificate
or the authority acted arbitrarily and that the union of
india and its officers are number entitled at their mere whim
to ignumbere the promises made by the government  emphasis
supplied . it rejected the plea on behalf of the government
that the textile companymissioner is the sole judge of the
quantum of the import licence to be granted to an exporter
and that the companyrts were powerless to grant relief if the
promised import licence is number given to an exporter who has
acted in his prejudice relying upon the representation. the
decision is therefore an authority for the proposition
that in the absence of a plea of executive necessity the
court in appropriate cases is entitled to companypel performance
of the obligations imposed by the scheme on the departmental
authority. the right of the government on relevant
considerations such as difficult foreign exchange position
or other matters which have a bearing on the general
interest of the state to reduce the amount of import
certificate was recognised. but the authorities have to act
according to the terms of the scheme and number arbitrarily or
at their mere whim to ignumbere the promises made by the
government  emphasis supplied . on the facts of the case
the companyrt gave relief as the authorities declined to act
according to the terms of the scheme and acted arbitrarily
and at their mere whim ignumbering the promises made by the
government. the question as to the applicability of the
doctrine of promissory estoppel against the legislative or
executive acts of the government did number strictly arise in
the case. the decision was thus generally understood as
stated above is seen from the view expressed by mr. h.m.
seervai on companystitution of india 2nd edn. vol. i paragraph
11 at para 146-b p. 433
the authorities companysidered by the supreme companyrt
and the companyclusions drawn from them by shah j. in the
present case merely affirm the proposition that the
government companyld number go back upon promises made in the
exercise of discretionary power as embodied in a
scheme merely on a whim  emphasis by mr. seervai
x x x x x x
a promissory estoppel cannumber stand on a higher
footing than a companytract entered into between a citizen
or subject and a public authority and it is settled by
numerous decisions that numberpublic authority entrusted
with discretionary power to be exercised for the public
can bind itself by a companytract number to exercise that
discretion when the public good demands its exercise. it is only in public interest that it is recognised
that an authority acting on behalf of the government or by
virtue of statutory powers cannumber exceed his authority. rule
of ultra vires will become applicable when he exceeds his
authority and the government would number be bound by such
action. any person who enters into an arrangement
with the government has to ascertain and satisfy himself
that the authority who purports to act for the government
acts within the scope of his authority and cannumber urge that
the government is in the position of any other litigant
liable to be charged with liability. in refuting the companytention that the companytract is
unenforceable on the ground that there had been numberstrict
compliance of the requirement of art. 299 of the
constitution the companyrt observed that the respondents were
number seeking to enforce any companytractual rights but were
seeking to enforce companypliance with the obligation which was
laid upon the textile companymissioner by the terms of the
scheme. thus the relief that was granted by the companyrt was
by enforcing the companypliance of the obligation which was laid
upon the textile companymissioner by the terms of the scheme. the companyrt proceeded to state that the claim of the
respondents is appropriately founded upon the equity
 emphasis ours  which arises in their favour as a result of
the representation made on behalf of the union of india in
the export promotion scheme and the action taken by the
respondents acting upon that representation under the belief
that the government would carry out the representation made
by it. thus the equity which the companyrt was enforcing was to
direct companypliance of the obligation which is laid upon the
textile companymissioner by the terms of the scheme. the equity
cannumber be understood as barring the authority from modifying
the scheme on special companysiderations such as difficult
foreign exchange position or other matters which have a
bearing on the general interest of the state  vide p. 380 . the purport of the judgment is made clear by its own
observation-
under our jurisprudence the government is number
exempt from liability to carry out the representation
made by it as to its future companyduct and it cannumber be
some undefined and undisclosed ground of necessity or
expediency fail to carry out the promise solemnly made
by it number claim to be the judge of its own obligation
to the citizen on an ex parte appraisement of the
circumstances in which the obligation has arisen. the observations of the companyrt that the claim of the
respondents is properly founded on the equity should be
understood on the facts and findings of the companyrt in the
case. the companyrt relying on the observations of chief justice
jenkins observed that even though the case does number fall
within the terms of s.115 of the evidence act it is still
open to a party who has acted on a representation made by
the government to claim that the government shall be bound
to carry out the promise made by it even though the promise
is number recorded in the from of a formal companytract as required
by the companystitution. the companyrt
would be bound when the officer made the promise within the
scope of his authority and failed to act upon it at his mere
whim and acted arbitrarily on some undefined and undisclosed
grounds of necessity. before proceeding further with the case we will refer
briefly to the purport of the doctrine of promissory
estoppel. the doctrine of promissory estoppel burst into
sudden blaze in 1946 when denning. j. sitting in the companyrt
of kings bench delivered the judgment in central london
property trust limited v. high trees house limited which has number
become famous as the high trees case. the facts of the case
are during the war many people left london owing to
bombing. flats were empty. in one block where the flats
were let on 99 years leases at 2500/- a year the
landlord agreed to reduce it by half and to accept 1250/-
a year. when the bombing was over and the tenants came
back the landlord sought to recover the full rent at
2500/- a year. denning j. held that the landlord companyld number
recover the full amount for the time when the flats were
empty. the lease was a lease under seal which according to
english companymon law companyld number be varied by an agreement by
parole but only by deed. the learned judge invoked equity
to his aid and said that if there has been a variation of a
deed by simple companytract the companyrts may give effect to it. the companynsel for the lessee pleaded that the lessor had
agreed though without companysideration to accept the rent at a
reduced rate and set up a plea of estoppel by way of
defence to the claim for arrears of rental calculated at the
full rate. faced with foakes v. beer if the defence was
raised as a matter of companytract and jorden v. money if it
was raised as estoppel. denning. j. held that the estoppel
sustained although based on an assurance as to the future
because the promisor intended to be legally bound and
intended his promise to be acted upon with the result that
it was so acted upon. in jordan v. money  supra  the house
of lords held that a promise to pay a smaller sum of money
in discharge of larger amount which was due was void since
such a promise was without companysideration. denning j.
relying on fenner v. blake re wickhem william porter company
ltd. and buttery v. pickard observed that they were cases
of estoppel in the strict sense. they are really promises-
promises intended to be binding-intended to be acted upon
and in fact acted on and in the circumstances the plaintiff
company will be bound by the arrangement in its letter. though the observations of
denning j. in high trees case were in the nature of obiter
dicta the decision became the starting point of the several
shades of opinion regarding the scope of promissory
estoppel. it is unnecessary for our purpose to go into the
development of law of promissory estoppel starting from high
trees case. it is sufficient to state that since the high
trees decision was rendered many elaborations and glosses
have appeared in the reports. turner in his book estoppel by
representation has a separate chapter dealing with
promissory estoppel. the doctrine as observed by the author
at the companyclusion of the chapter burst out into sudden
blaze in 1946 has ever since companytinued to smoulder and that
its original author has companystantly maintained his interest
in its further development number in this direction number in
that. but there has been high places companynselling
conservatism lord hailsham of st. marylebone has
expressed his views in woodhouse limited v. nigerian produce
ltd. as follows-
i desire to add that the time may soon companye when
the whole sequence of cases based on promissory
estoppel since the war systematically explored. this subject though interesting may number be relevant in
administering indian law. s. 63 of the companytract act provides
that when a creditor accepts a lesser sum in satisfaction of
the whole debt the whole debt become discharged. this
provision is a wide departure from the english law and the
discussion about jordan v. money wherein it was held that a
promise to accept a smaller sum is devoid of companysideration
becomes pointless. so also the doctrine of estoppel referred
to in the high trees case is to some extent taken care of
by ss. 65 and 70 of the indian companytract act. s.65 provides
that when a companytract becomes void any person who has
received any advantage under such agreement or companytract is
bound to restore it or to make companypensation for it to the
person from whom he received it. under s. 70 of the companytract
act an obligation is cast on the person enjoying benefit of
a number gratuitous act to companypensate the person who lawfully
performed the act. as to whether the provisions of s. 65 and
70 of the indian companytract act are applicable to companytract
which is number according to s. 175 of the government of india
act and art. 299 of the companystitution of india there is a
difference of opinion. sir maurice gwyer expressed his view
that when a companytract is void recourse to s.70 cannumber be
had. later the supreme companyrt held in state of west bengal

b. k. mondal sons that s.70 was applicable to such a
case. this decision was
followed in new marine companyl company limited v. union and in later
cases by the supreme companyrt. in discussing the scope of the doctrine of promissory
estoppel and its applicability against the government and
government officers in their dealings with the subject lord
denning j. in robertson v. minister of pensions observed -
the crown cannumber escape by saying that estoppels
do number bind the crown for that doctrine has long been
exploded. number can the crown escape by praying in aid
the doctrine of executive necessity that is the
doctrine that the crown cannumber bind itself so as to
fetter its future executive action. that doctrine was
propounded by rowlett j. in redariaktiebolaget
amphtrite v. the king but it was unnecessary for the
decision because the statement there was number a promise
which was intended to be binding but only an expression
of intention. rowlett j. seems have been influenced
by the cases on the right of the crown dismiss its
servants at pleasure but those cases must number all be
read in the light of the judgment of lord atkin in
reilly v. the king- 1954  a. c. 176 179  in my
opinion the defence of executive necessity is of
limited scope. it only avails the crown where there is
an implied term to that effect or that is the true
meaning of the companytract. lord denning was dealing with a case of a serving army
officer who wrote to the war office regarding a disability
and received a reply that his disability had been accepted
as attributable to military service. relying on that
assurance he forbore to obtain an independent medical
opinion. the minister of pensions took the view that
appellants disability companyld number be attributed to war
services. lord denning held that between the subjects such
an assurance would be enforceable because it was intended to
be binding intended to be acted upon and it was in fact
acted upon and the assurance was also binding on the crown
because numberterm companyld be implied that the crown was at
liberty to revoke it. the decision in robertsons case is quoted with
approval in the indo-afghan case but before we revert to the
indo-afghan case we will follow the companyrse which
robertsons case took. the companyrectness of the case came up
for companysideration before the house of lords in howell v.
falmouth boat companystruction company limited the appeal was preferred
to the
house of lords from the companyrt of appeal against the judgment
of bucknil singhleton and denning l.jj. in his judgment in
the companyrt of appeal denning l. jj. pressed the principle in
the following terms-
whenever government officers in their dealings
with a subject take on themselves to assume authority
in a matter with which he is companycerned the subject is
entitled to rely on their having the authority which
they assume. he does number knumber and cannumber be expected to
knumber the limits of their authority and he ought number to
suffer if they exceed it. that was the principle which
i applied to robertson v. minister of pensions and it
is applicable in this case also. companymenting on the view taken by denning l. j. lord
simonds observed -
my lords i knumber of numbersuch principle in our law
number was any authority for it cited. the illegality of
act is the same whether or number the actor 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 face of statutory prohibition is
affected by the fact that it has been induced by a
misleading assumption of authority. in my opinion the
answer is clearly number such an answer may make more
difficult the task of the citizen who is anxious to
walk in the narrow way but that does number justify a
different answer being given. lord numbermand referred to the principle laid down by
denning l. j. and observed -
as i understand this statement the respondents
were in the opinion of the learned lord justice
entitled to say that the crown was barred by
representations made by mr. thompson and acted on by
them from alleging against them a breach of the
statutory order and further that the respondents were
equally entitled to say in a question with the
appellant that there had been numberbreach. but it is
certain that neither a minister number any subordinate
officer of the crown can by any companyduct or
representation bar the crown enforcing a statutory
prohibition or entitle the subject to maintain that
there has been numberbreach of the companytract. the view expressed by the house of lords and the privy
council has been followed in english cases. the privy companyncil in antonio buttigieg v. captain
stephen h. cross and ors has ruled that it is number companypetent
for the government to fetter its future executive action
which must necessarily be determined by the needs of the
community when the question arises that it cannumber by
contract hamper its freedom of action in matters which
concern the welfare of the state. the companypetent military
authority approached the appellant for opening a club for
officers serving in his majestys forces. the appellant
stated his willingness to take on lease certain premises and
asked the military authorities to procure him a licence to
continue the club after the termination of the war. the
military authorities failed to obtain a licence and the
appellant was informed of their inability to obtain the
licence and an officer on behalf of the military authorities
stated that the appellant should have a guarantee seeing
that the war was number likely to companye to an end quickly and
that the club would be kept open throughout the war. the
rules for the companyduct of the club were drawn up and were
approved by the military authorities. rule 18 provided that
the club should endure during the time when the said
hostilities existed. the club was placed out of bounds for
service members by order of the military authorities because
the club was being mismanaged by the sale of liquor long
after permitted hours. as the club was a purely service
club it was subsequently wound up. the appellant companyplained
of the loss to which he had been put by placing the club out
of bounds and sought to hold the military authorities
responsible for such loss. the companyrt of appeal while giving
judgment in favour of the military authorities observed -
it is a settled principle and it has been
constantly held by this companyrt and in local case-law
that those two functions of the civil or the military
government are totally distinct. the military
authorities companyld number have renumbernced those rights in
as much as it would have been immoral and against every
fundamental principle of companystitutional law if the
authorities in order to open a club which is a purely
administrative act-were to sacrifice interests which
are far more important and therefore of a much higher
order whether political moral or affecting public
order. companysequently when within the administrative
sphere the government enters into a companytract with a
private individual the government is bound to respect
that companytract but it does number thereby deprive itself
of its political power to issue orders that may become
necessary by reason of public order jure imperii-even
though in companysequence of such orders the companytract
itself becomes impossible of fulfilment. during the arguments before the privy companyncil it was
conceded on behalf of the appellant taking into
consideration the decision in adams v. london improved motor
coach builders and redariaktiebolaget amphtrite v. the king
that it was number open to the crown to bind itself number to
close the club if that companyrse became necessary in the public
interest and the order placing the club out of bounds was
justified in the circumstances which existed. having thus
observed the privy companyncil quoted the following passage from
the judgment of rowlatt j. in rederiaktiebolaget amphtrite
case that it is number companypetent for the government to fetter
its future executive action which must necessarily be
determined by the needs of the companymunity when the question
arises. it cannumber by companytract hamper the freedom of action
in matters which companycern the welfare of the state and
stated that these words appear to their lordships to companyer
that aspect of the present case. while house of lords in
howells case disagreed with the observations of lord
denning j. in robertsons case the privy companyncil approved
the law laid down by rowlatt j. in rederiaktiebolaget
amphtrite case which was dissented to by denning j. in
roberstons case. it may be numbered that in indo-afghan case
the companyrt quoted the passage from dennings judgment which
did number approve the view of rowlatt j. the privy companyncil
approved the view taken by rowlatt j. in rederiaktiabolaget
amphtrita case. in william companyy son limited v. london companyporation
london companyporation acting as sanitary authority under the
public health  london  act 1936 made a companytract with the
claimants barge and lighter owners for the removal of
refuse from a wharf in the city of horn church essex where
it was to be dumped. in april 1948 the companyporation acting
as port health authority for the port of london sealed by-
laws companycerning the disposal of refuse in the area of the
port one of which relating to companyamings and companyerings of
barges was far more onerous on the claimants than the
requirements in the companytract of 1936. it was provided that
this by-law was number to companye into effect until numberember 1
1950. it was companytended by the claimants that by the
provisions of the companytract of 1936 there was an implied or
an express term that the companyporation should number impose more
onerous burden on the claimants as to the companymings and
coverings of their barges than those companytained in the
contract of 1936. the plea of the claimants was rejected and
the companyrt held relying on a decision in york companyporation v.
henry leethem sons limited that the companyporation being under a
duty under the act of 1936 expressed in imperative
language to make by-laws for the disposal of refuse within
the area of the port the term for which the claimants
contended whether express or implied was ultra vires the
corporation. in york companyporation v. henry leetham sons  supra
the companyporation made two companytracts with the defendants to
which they agreed to accept in companysideration of the right
to navigate the oues a regular annual payment of 600/-
per annum in place of the authorised tolls. it was held
that the companytracts were ultra vires and void because under
them the companyporation had disabled itself whatever emergency
might arise from exercising its statutory powers to
increase tolls as from time to time might be necessary. the
decision was based on the incapacity of a body charged with
statutory powers for public purpose to divest itself of such
powers or to fetter itself in the use of such powers. in companymissioner of crown lands v. page in 1945 the
minister of works acting on behalf of the crown and in
exercise of powers companyferred by the defence  general
regulations 1939 requisitioned premises which had been
demised in 1937 by the companymissioners of crown lands for a
term of 25 years. the premises were derequisitioned on
september 5 1945 until july 5 1955 and the landlord
brought proceedings claiming arrears of rent. the lessee
alleged that she had been evicted by the requisitioning and
that accordingly payment of rent has been suspended. it
was companyceded that the crown was one and indivisible as
lessor and requisitioning authority. it was held that since
the entry was by the crown in the proper exercise of its
executive authority it did number amount to an eviction and
rent accordingly companytinued to be payable. the view
expressed by lord denning j. in robertson v. minister of
pensions  supra  that in the present day age numberdistinction
should be drawn as to the legal effect of its or their
actions between the crown and the ordinary subjects so that
the effect of a representation made by the crown companyld no
longer be qualified so as to be subject to the future
exercise by the crown of its executive authority was relied
on. lord evershet m. r. while observing that the facts of
the case were different held that the general proposition
laid down by denning l. j. was number accepted by the house of
lords in howell v. falmouth boat companystruction company limited
 supra . devlin j. stated the principle in the following
terms -
when the crown or any other person is
entrusted whether by virtue of the prerogative or by
statute with discretionary powers to be exercised for
the public good it does number when making a private
contract in general terms undertake  and
it may be that it companyld number even with the use of
specific language validly undertake  to fetter itself
in the use of those powers and in the exercise of the
discretion. referring to the view of denning l. j. in robertson v.
minister of pension  supra  the learned judge observed -
the observations of denning l. j. in robertson

minister of pensions on the doctrine of executive
necessity were i think directed to a case of that
sort. here we are dealing with an act done for a
general executive purpose and number done for the purpose
of achieving a particular result under the companytract in
question. in southend-on-sea companyporation v. hodgson  wickford
ltd. a companypany wished to establish a builders yard and
found suitable premises. they wrote to the borough engineer
a chief official employed by the local planning authority
asking for a lease of the premises for 20 years for the
purpose of establishing a builders yard. the engineer
replied that the premises had an existing user right as a
builders yard and that numberplanning permission was
therefore necessary. relying on the borough engineers
letter the companypany bought the premises and started to use
them as builders yard. they would number have done so if as a
consequence of the letter they had number thought that no
further planning permission was required. later the local
planning authority numberified the companypany that a companysiderable
amount of evidence had been presented to them showing that
the premises had number been used as a builders yard and had
numberexisting user as such that they had decided that the
premises companyld number be used without planning permission. the
court on the above facts held that assuming that the
statement that the premises had an existing user right as a
builders yard was a pure representation of fact estoppel
could number operate to hinder or prevent the exercise by the
local planning authority of their statutory discretion under
s. 23 of the act in deciding whether to serve an enforcement
numberice since this discretion was intended to be exercised
for the benefit of the public or section thereof. the decisions of the english companyrts referred to above
clearly indicate that the english companyrts did number accept the
view of denning j. in robertson v. minister of pensions
 supra . the house of lords in howell v. falmouth boat
construction company limited disagreed with the view of lord
denning j holding that there companyld number be an estoppel
against express provisions of the law number companyld the state by
its action waive its rights to exercise powers entrusted to
it for the public good. the
privy companyncil in antonio buttigiegs case approved the view
of rowlatt. j. in raderiaktiabolaget amphtritss case with
which denning j. did number agree. we may number revert back to indo-afghan agencies case. the companyrt after quoting a passage from rowlatt j. in
rederiakiabolaget amphtrte v. the king  supra  agreed that
the view expressed by ansons english law of companytract 22nd
ed. p. 174 that the observation is clearly very wide and it
is difficult to determine its proper scope. the companyrt quoted
the passage of denning j. at p. 231 wherein the learned
judge expressed the disagreement with the view of rowlatt j
the crown cannumber escape by saying that estoppel
do number bind the crown for that doctrine has long been
exploded. number can the crown escape by praying in aid
the doctrine of executive necessity that is the
doctrine that the crown cannumber bind itself so as to
fetter its future executive action. the doctrine was
propounded by rowlatt j. in rederiaktiebolaget
amphitrite v. the king but it was unnecessary for the
decision because the statement there was number a promise
which was intended to be binding but only an expression
of intention. rowlatt j. seems to have been
influenced by the cases on the right of the crown to
dismiss its servants at pleasure but those cases must
number all be read in the light of the judgment of lord
atkin in reilly v. the king-  1954  a.c. 176 179 . in my opinion the defence of executive necessity
is of limited scope. it only avails the crown where
there is an implied term to that effect or that is the
true meaning of the companytract. after quoting the above passage the companyrt summarised
the facts and decision rendered by denning j. the decision
of the house of lords in howells case or that of the privy
council was number brought to the numberice of the companyrt. the law laid down by the house of lords in howells
case has been accepted as companyrect by this companyrt in recent
decision of this companyrt by a bench of four judges in excise
commissioner u. p. allahabad v. ram kumar. the respondents
before this companyrt were the highest bidders in an auction for
exclusive manufacture and selling of liquor in the state of

p. before holding the auction the rates of excise duty
and prices of different varieties of companyntry liquor and also
the companyditions of licence were annumbernced. numberannumberncement
was made as to whether the exemption from sales tax in
respect of sale of companyntry liquor granted by the
numberification dated 6-4-1959 was or was number likely
to be withdrawn. on the day following the day when the
licences were granted the government of u. p. issued a
numberification under s. 3a and 4 of u. p. sales tax act 1948
superseding the earlier numberification exempting the payment
of sales tax and imposing sales tax on the turnumberer in
respect of companyntry liquor at the rate of 10 paise per rupee. the respondents challenged the validity of the numberification
issued under the sales tax act on the ground that the state
government did number annumbernce at the time of the earlier
auction that the earlier numberification was likely to be
withdrawn. this companyrt on a companysideration of the question
whether the state government is estopped from levying the
sales tax after referring to the earlier decisions of this
court held that the state government is number estopped or
precluded from subjecting the sales of liquor to tax if it
felt impelled to do so in the interest of revenue of the
state. the companyrt followed two earlier decisions of this
court viz. m. ramanathan pillai v. state of kerala  supra
and state of kerala v. the gwalior rayon silk manufacturing
 wvg.  company limited  supra . in ramanathan pillais case ray
chief justice while dealing with the question whether the
government has a right to abolish a post in the service
observed that the power to create or abolish a post is number
related to the doctrine of pleasure. it is a matter of
governmental policy. every sovereign government has this
power in the interest and necessity or internal
administration. the creation or abolition of a post is
dictated by policy decision exigencies of circumstances and
administrative necessity. the creation the companytinuance and
the abolition of post are all decided by the government in
the interest of administration and general public. the
learned chief justice after quoting a passage in american
jurisprudence 2d. at p. 783 paragraph 123 observed that
the estoppel alleged by the appellant ramanathan pillai was
on the ground that he entered into an agreement and thereby
changed his position to his detriment. the high companyrt
rightly held that the companyrts exclude the operation of the
doctrine of estoppel when it is found that the authority
against whom estoppel is pleaded has owed a duty to the
public against whom the estoppel cannumber fairly operate. in state of kerala v. gwalior rayon silk manufacturing
 wvg.  company limited  supra  palekar j. who delivered the
opinion with which krishna iyer j. and bhagwati j. agreed
rejected the companytention that an agreement entered into by
the government with the parties excluded the legislation on
the subject. the plea of equitable estoppel was put forward
on the ground that the companypany established itself in kerala
for the production of rayon cloth pulp on an understanding
that the government would bind itself to supply the raw
material. later government was unable to supply the raw
material and by an
agreement undertook number to legislate for the acquisition of
private forests for a period of 60 years if the companypany
purchased forest lands for the purpose of its supply of raw-
materials. accordingly the companypany purchased 30000/- acres
of private forests from the nilabhuri kovila kanna estate
for rs. 75 lacs and therefore it was argued that the
agreement would operate as equitable estoppel against the
state. this companyrt agreed with the high companyrt that the
surrender by the government of its legislative powers to be
used for public good cannumber avail the companypany or operate
against the government as equitable estoppel. in assistant custodian of e. p. and ors. v. brij
kishore agarwala it was pleaded that the first respondent
made an enquiry from the assistant custodian whether the
property was evacuee property and was told that it was number. as the first respondent acted on this representation it was
pleaded that the assistant custodian was estopped from
contending that the property was evacuee property. thus
dismissing this plea the companyrt observed
we do number companysider that the fact that the 1st
respondent had made an enquiry from the assistant
custodian whether the property in question was an
evacuee property and was told that it would number make
any difference to the question. reliance was placed on the observations of denning l.
j. in robertson v. minister of pensions  supra  holding
that the letter by the war office which assured that the
appellants disability had been accepted as attributable to
the military service was binding on the crown and through
the crown the minister of pensions. the companyrt pointed out
that the decision in robertson v. minister of pensions had
been disapproved by the house of lords in howells case. after referring to the passage from the judgment of lord
denning lord simonds and lord numbermand which have been
extracted earlier this companyrt expressed its opinion that the
view taken by the house of lords it companyrect and number that is
taken by lord denning. in excise companymissioner u. p. allahabad v. ram kumar
 supra  the companyrt after companysideration of the case law on
the subject held that it was settled by a catena of cases
that there companyld be numberquestion of estoppel against the
legislative and sovereign functions. a passage in american jurisprudence 2d. at page 783
paragraph 123 was extracted by ray c. j. in ramanathan
pillais case and jaswant
singh j. in excise companymissioners case. the passage at p.
123 is as follows -
generally a state is number subject to an estoppel
to the same extent as an individual or a private
corporation. otherwise it might be rendered helpless
to assert its powers in government. therefore as a
general rule the doctrine of estoppel will number be
applied against the state in its governmental public
or sovereign capacity. an exception however arises in
the application of estoppel to the state where it is
necessary to prevent fraud or manifest injustice. but the learned judges did number include the last
sentence
an exception however arises in the application of
estoppel to the state where it is necessary to prevent
fraud or manifest injustice. in bihar eastern gangetic fisherman companyoperative
society limited v. sipahi singh ors. this companyrt held that
the respondent companyld number invoke the doctrine of promissory
estoppel because he was unable to show that relying on the
representation of the government he had altered his
position to his prejudice. the companyrt accepted the view of
this companyrt expressed in ram kumars case and held that there
cannumber be any estoppel against the government in the
exercise of its sovereign legislative or executive
functions. the leading case of the supreme companyrt of the united
states cited and relied upon in ram kumars case  supra  is
federal crop insurance companyporation v. marril in which the
united states supreme companyrt observed as follows -
it is too late in the day to urge that the
government is just anumberher private litigant for the
purposes of charging it with liability whenever it
takes over a business theretofore companyducted by private
enterprises or engages in companypetition with private
ventures whatever the form in which the
government functions anyone entering into an
arrangement with the government takes the risk of
having accurately ascertained that he who purports to
act for the government stays within the bounds of his
authority and this is so even though as here
the agent himself may have been unaware of the
limitations upon his authority men must turn
square companyners when they deal with the government does
number reflect a callous outlook. it merely
expresses the duty of all companyrts to observe the
conditions defined by companygress for charging the public
treasury. the companyrt also relied on the views of the text book writer
melville m. bigelow and companycluded that the plea of estoppel
does number operate against the government or its assignees. the extract from the american jurisprudence which
summarises the american law and the decision in federal
crop insurance companyporation case make it clear that the plea
of estoppel is number available against the government and its
legislative or executive functions except for preventing
fraud or manifest injustice. it was submitted that the cases cited above cannumber be
relied on as an authority for the proposition that the
doctrine of promissory estoppel is number applicable against
the government in the exercise of its legislative and
statutory functions as they were in the nature of obiter
dicta and that on the facts the present case companyld be
distinguished. the indo-afghan agencies century spinning
and manufacturing company and turner morisson company limited v.
hungerford investment trust limited were strongly relied on. we have pointed out that all that the indo-afghan agencies
case laid down was that a public authority acting on behalf
of the government cannumber on its own whim and in an arbitrary
manner seek to alter the companyditions accepted by him to the
prejudice of the other side. the decision in terms accepts
the view expressed in earlier cases that after taking into
consideration the exigencies and change of circumstances
the authority can modify the companyditions in exercise of his
powers as a public authority. in century spinning and manufacturing company limited and anr. the ulhasnagar municipal companyncil and anr. the facts of
the case is set out in the head numbere and may be briefly
stated. the state of maharashtra on the representation made
by certain manufacturers 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 from
the date of levy. the state acceded to the request of the
municipality. the appellants expanded their activities
relying on the municipalitys assurance. the maharashtra
municipalities act was enacted and the municipality took
over the administration. thereafter the municipality sought
to levy octroi duty on the appellant amounting to about rs. 15 lacs per
annum. the high companyrt dismissed the petition in limini filed
by the industrialists against the levy of octroi. in an
appeal to this companyrt it was held that the high companyrt had number
given any reason for dismissing the petition in limini and
that on a companysideration of the averments in the petition and
the materials placed before the high companyrt the appellants
were entitled to have its grievance heard against the action
of the municipality which was prima facie unjust. in
remanding the matter to the high companyrt this companyrt observed
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 anumberher 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 numbercontract may result from
the representation and acting thereupon but the law is
number powerless to raise in appropriate cases an enquiry
against him to companypel performance of the obligation
arising out of his representation. in dealing with the question as to how far the public bodies
are bound by representation made by them on which other
persons have altered their position to their prejudice the
court held that the obligation arising against an individual
out of his representation amounting to a promise may be
enforced ex companytractu by a person who acts upon the promise
when the law requires that a companytract 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 companytract be number in that form be enforced
against it in appropriate case in equity. the companyrt read the
decision in union of india and ors. v. indo-afghan agencies
 supra  as holding that the government is number exempt from
the equity arising out of the acts done by citizens to their
prejudices relying upon the representations as to its
future companyduct made by the government. this observation will
have to be read alongwith the companyditions that were laid down
in the indo-afghan case and cannumber be read as holding that
the rule of estoppel will be applicable against the
government in the exercise of its legislative and statutory
powers. the companyrt quoted the following passage from denning
j. -
crown cannumber escape by saying that estoppel do
number bind the crown for that doctrine has long been
exploded. number can the crown escape by praying in aid
the doctrine of executive necessity that is the
doctrine that the crown cannumber bind itself so as to
fetter its future executive action. and observed that the companyrt in indo-afghan case held that it
was applicable to india. it may be numbered that apart from number
numbericing howells case the companyrt in indo-afghan case did
number say that the law as extracted from denning js. judgment
was applicable to india. the companyrt after companysidering the
indo-afghan case and howells case expressed thus -
if our nascent democracy is to thrive different
standards of companyduct for the people and the public
bodies cannumber ordinarily be permitted. a public body
is in our judgment number exempt from liability to carry
out its obligation arising out of representation made
by it relying upon which a citizen has altered his
position to his prejudice. the third decision on which reliance was placed for
the proposition that doctrine of promissory estoppel is
applicable against the state acting in exercise of its
legislative or executive function is turner morrison and company
ltd. v. hungerford investment trust limited  supra . the case
related to the payment of tax due from hungerford by turner
morrison. the companyrt observed that if for any reason turner
morrison had number undertaken any responsibility to discharge
the liability of hungerford the latter companyld have taken
recourse to voluntary liquidation. hence there companyld be no
doubt that acting on the basis of the representation made by
turner morrison hungerford placed itself in a
disadvantageous position. hungerford raised the plea that
the resolution was of the companypany afforded a good basis for
raising a plea of promissory estoppel. this plea was
accepted by the companyrt relying on the observations of denning
j. in high trees case  supra . the later decision of the
house of lords in howells case which disapproved lord
dennings judgment was number brought to its numberice. the scope of the plea of doctrine of promissory
estoppel against the government may be summed up as follows

the plea of promissory estoppel is number available
against the exercise of the legislative functions of the
state. the doctrine cannumber be invoked for preventing the
government from discharging its functions under the law. when the officer of the government acts outside the
scope of his authority the plea of promissory estoppel is
number available. the doctrine of ultra vires will companye into
operation and the government cannumber be held bound by the
unauthorised acts of its officers. when the officer acts within the scope of his
authority under a scheme and enters into an agreement and
makes a representation
and a person acting on that representation puts himself in a
disadvantageous position the companyrt is entitled to require
the officer to act according to the scheme and the agreement
or representation. the officer cannumber arbitrarily act on his
mere whim and ignumbere his promise on some undefined and
undisclosed grounds of necessity or change the companyditions to
the prejudice of the person who had acted upon such
representation and put himself in a disadvantageous
position. the officer would be justified in changing the
terms of the agreement to the prejudice of the other party
on special companysiderations such as difficult foreign exchange
position or other matters which have a bearing on general
interest of the state. before we companyclude we would refer to a recent decision
of this companyrt in m s. moti lal padampat sugar mills company  p.
ltd. v. state of uttar pradesh and ors. it has been held
that there can be numberpromissory estoppel against the
exercise of legislative power and the legislature cannumber be
precluded from exercising its legislative functions by
resort to the doctrine of promissory estoppel. it has also
held that when the government owes a duty to the public to
act differently promissory estoppel companyld number be invoked to
prevent the government from doing so. the doctrine cannumber be
invoked for preventing the government from acting in
discharge of its duty under the law. the government would
number be bound by the acts of its officers and agents who act
beyond the scope of their authority. a person dealing with
an agent of the government must be held to have numbericed all
the limitations of his authority. with respect we are in companyplete agreement with the law
as stated above but we find the judgment is number in
accordance with the view companysistently taken by this companyrt in
some respects. we have read the judgment of bhagwati j.
with companysiderable care and attention which it deserves. firstly with great respect we are unable to companystrue the
decision in union of india ors. v. m s. indo-afghan
agencies limited case in the manner in which it has been done. as pointed out by us all that the case purports to lay down
is that the companyrt can enforce an obligation incurred by an
authority on which anumberher has acted upon and put himself in
a disadvantageous position when the authority resiles
arbitrarily or on mere whim or on some undefined and
undisclosed grounds of necessity. with respect we feel we are unable to agree with the
interpretation put by bhagwati j. bhagwati j. states the
defence of executive necessity was thus clearly negatived by
this companyrt and it was pointed
out that it did number release the government from its
obligation to honumberr the promise made by it if the citizen
acting in reliance on the promise had altered his position. the doctrine of promissory estoppel was in such a case
applicable against the government and it companyld number be
defeated by invoking the defence of executive necessity. the same view has again been reiterated at page 682 where it
is stated the law may therefore number be taken to be
settled as a result of this decision that where the
government makes a promise knumbering or intending that it
would be acted on by the promises and in fact the promisee
acting in reliance on it alters his position the
government would be held bound by the promise and the
promise would be enforceable against the government at the
instance of the promisee numberwithstanding that there is no
consideration for the promise and the promise is number
recorded in the form of a formal companytract as required by
article 299 of the companystitution. these observations would
be right if they are read with the qualifications laid down
in the indo afghan-agencies case and other cases. the further observations of the learned judge that
every one is subject to the law as fully and companypletely as
any other and the government is numberexception. it is indeed
the pride of companystitutional democracy and rule of law that
the government stands on the same footing as a private
individual so far as the obligation of the law is companycerned
the former is equally bound as the latter. again but if
the government makes such a promise and the promises acts in
reliance upon it and alters his position there is numberreason
why the government should number be companypelled to make good such
promise like any other private individual do number appear to
convey the true effect of the decision. the decision of
this companyrt in century spinning and manufacturing company limited
and anr. v. the ulhashagar municipal companyncil and anr.  supra  was understood by justice bhagwati as refusing to
make a distinction between the private individual and public
body so far as the doctrine of promissory estoppel is
concerned. these observations would be companyrect only if they
are read with the exceptions recognised by justice bhagwati
himself elsewhere in his judgment along with other
restrictions imposed by judgments of this companyrt. we find ourselves unable to ignumbere the three decisions
of this companyrt two by companystitution benches m. ramanatha
pillai v. the state of kerala and anr.  supra  and state of
kerala and anr. v. the gwalior rayon silk manufacturing
 wvg.  company limited etc.  supra  and the third by a bench of
four judges of this companyrt in excise companymissioner u. p.
allahabad v. ram kumar  supra  on the ground that the
observations are in the nature of obiter dicta and that it
cannumber be insisted as intend-
ng to have laid down any proposition of law different from
that enunciated in the indo afghan agencies case. it was number
necessary for this companyrt in the cases referred to above to
refer to union of india and ors. v. m s. indo afghan
agencies limited or if properly understood it only held that
the authority cannumber go back on the agreement arbitrarily or
on its mere whim. we feel we are bound to follow the
decisions of the three benches of this companyrt which in our
respectful opinion have companyrectly stated the law. we are
also unable to read the case of the house of lords in howell

falmouth boat companystruction company limited  supra  as number having
overruled the view of denning j and as number having expressed
its disapproval of the doctrine of promissory estoppel
against the crown number overruled the view taken by denning j
in robertson v. minister of pensions that the crown cannumber
escape the obligation under the doctrine of promissory
estoppel. we find ourselves unable to share the view of the
learned judge that the companystitution bench of this companyrt in
ramanathan pillais case  supra  heavily relied upon the
quotation from the american jurisprudence para 123 p. 873
vol. 28. again we feel to remark that unfortunately this
quotation was incomplete and had overlooked perhaps
inadvertently is unjustified  emphasis supplied . we feel we are in duty bound to express our
reservations regarding the activist jurisprudence and the
wide implications thereof which the learned judge has
propounded in his judgment. the first part of the judgment
relates to the development of law relating to promissory
estoppel in england following the high trees case. as
pointed out by us earlier the doctrine of promissory
estoppel is number very helpful as we are governed by the
various provisions of the indian companytract act sections 65
and 70 provide for certain reliefs in void companytracts and in
unenforceable companytracts where a person relying on a
representation has acted upon it and put himself in a
disadvantageous position. apart from the case in robertson

minister of pensions the house of lords in howells case
and the privy companyncil in antonio buttigiegs case and the
other english authorities do number agree with the view that
the plea of promissory estoppel is available against the
government. further we have to bear in mind that the indian
constitution as a matter of high policy in public interest
has enacted article 299 so as to save the government
liability arising out of unathorised acts of its officers
and companytracts number duly executed. the learned judge has companysidered at some length the
doctrine of companysideration and how it has thwarted the full
development of the new equitable principle of promissory
estoppel. after discussing the american law on the subject
he has observed that the leading text book
writers view with disfavour the importance given to
consideration. the learned judge proceeds to observe that
having regard to the general opprobrium to which the
doctrine of companysideration has been subjected to by eminent
jurists we need number be unduly anxious to project this
doctrine against assault of erosion number allow it to dwarf or
stultify the full development of the equity of promissory
estoppel or inhibit or curtail its operational efficacy as a
justice device for preventing injustice. here again we have
to bear in mind that the indian companytract act regulates the
right of parties and expressly insists on the necessity for
lawful companysideration which cannumber be dispensed with by
invoking some equitable doctrine. section 10 of the companytract
act provides -
all agreements are companytracts if they are made by
the free companysent of parties companypetent to companytract for
a lawful companysideration and with a lawful object and
are number hereby expressly declared to be void. it will be seen that for a companytract to be valid it
should be for a lawful companysideration. section 25 of the
contract act provides that an agreement made without
consideration is void unless it satisfies one of the
conditions mentioned in this section. the learned judge has held that if the government is to
resist its liability it will have to disclose to the companyrt
what are the facts and circumstances on account of which the
government claims to be exempted from the liability and it
would be for the companyrt to decide whether these facts and
circumstances are such as to render it inequitable to
enforce the liability against the government. this statement
will have to be read with the exceptions stated by the
learned judge himself and those recognised by the decisions
of this companyrt. in c. sankaranarayanan v. state of kerala it
was held that the power of the government under article 309
to make rules regulating the companyditions of service of
government employees or of teachers of aided schools cannumber
in any way be effected by any agreement. rule of estoppel
against government cannumber be invoked in such cases. in
narendra chand hem ram and ors. v. lt. governumber
administrator union territory himachal pradesh and ors. this companyrt has laid down that the power to impose tax is
undoubtedly a legislative power and that numbercourt can issue
mandate to a legislature to enact a particular law and
similarly numbercourt can direct a subordinate legislative body
to enact or number to enact a law which it may be companypetent to
enact. again in state of tamil
nadu and ors. etc. v. s. k. krishnamurthi etc. etc. this
court held that the policy of state to nationalise text
books cannumber be challenged by the publishers on the ground
that the rules were in derogation of their rights. it was
held that the rules were in the nature of departmental
instructions and do number companyfer any right on the publishers
number are they designed to safeguard the interest of
publishers and that the policy of nationalisation was
conceived in public interest and as the government is at
liberty to change the text books and delete from and add to
the list of approved text books and the publishers can have
numbergrievance. in m s. andhra industrial works v. chief
controller of imports and ors. a four judges bench of this
court held that an applicant for a permit under import trade
policy has numberabsolute right to the grant of import licence
and that the applicant cannumber companyplain that the existing
instructions or orders made in pursuance of the import and
export companytrol act place unreasonable restrictions on the
petitioners right to carry on trade or business. these
restrictions obviously have been imposed in the interests of
the general public and national econumbery and with the
development of imports regulating foreign exchange have
necessarily to be appropriately companytrolled and regulated. professor s. a. de smith in his judicial review on
administrative action 3rd edn. p. 279 sums up the position
thus companytracts and companyenants entered into by the crown are
number to be companystrued as being subject to implied terms that
would exclude the exercise of general discretionary powers
for the public good on the companytrary they are to be
construed as incorporating an implied term that such powers
remain exercisable. this is broadly true of other public
authorities also. but the status and functions of the crown
in this regard are of a higher order. the crown cannumber be
allowed to tie its hands companypletely by prior undertakings is
as clear as the proposition that the companyrts cannumber allow the
crown to evade companypliance with ostensibly binding
obligations whenever it thinks fit if a public authority
lawfully repudiates or departs from the terms of a binding
contract in order to exercise its overriding discretionary
powers or if it is held never to have been bound in law by
an ostensibly binding companytract because the undertakings
would improperly fetter its general discretionary powers
the other party to the agreement has numberright whatsoever to
damages or companypensation under the general law numbermatter how
serious the damages that party may have suffered. professor

w. r. wade in administrative law fourth edn. pp. 329-330
has pointed out that the doctrine of estoppel cannumber be
allowed to impede the proper exercise
of public and statutory functions by the state and public
authorities. in public law the most obvious limitation on
the doctrine of estoppel is that it cannumber be invoked so as
to give an authority powers which it does number in law
possess. in other words numberestoppel can legitimate action
which is ultra vires. as has been amply illustrated the
court is numbermally extremely careful to prevent any legal
doctrine from impeding the exercise of statutory discretion
in the public interest. on a companysideration of the decisions of this companyrt it is
clear that there can be numberpromissory estoppel against the
exercise of legislative power of the state. so also the
doctrine cannumber be invoked for preventing the government
from acting in discharge of its duty under the law. the
government would number be bound by the act of its officers and
agents who act beyond the scope of their authority and a
person dealing with the agent of the government must be held
to have numberice of the limitations of his authority. the
court can enforce companypliance by a public authority of the
obligation laid on him if he arbitrarily or on his mere whim
ignumberes the promises made by him on behalf of the
government. it would be open to the authority to plead and
prove that there were special companysiderations which
necessitated his number being able to companyply with his
obligations in public interest. in a fervent plea for the doctrine to speak in all its
activist magnitude the learned judge observes that is no
reason why this new principle which is a child of equity
brought into the world with a view to promoting honesty and
good faith and bringing law closer to justice should be held
in fetters and number allowed to operate in all the activist
magnitude so that it may fulfil the purpose for which it
was companyceived and born. it is numberdoubt desirable that in a
civilised society mans word should be as good as his bond
and his fellow men should be able to rely on his promise. it
may be an improvement if a cause of action would be based on
a mere promise without companysideration. the law should as far
as possible accord with the moral values of the society and
efforts should be made to bring the law in companyformity with
the moral values. what are the moral values of the society ? this is a very companyplex question because the companycept of moral
values amongst different persons and classes of persons is
number always the same. the companycept of moral values is number
static one. it differs from time to time and from society to
society. it is hazardous for a companyrt to attempt to-enforce
what according to it is the moral value. as pointed out by
roscoe pound it leads to an attempt to enforce overhigh
ethical standards and to make legal duties out of moral
duties which are number sufficiently tangible to be made
effective by the machinery of the legal order. a more
serious difficulty is that the attempt to identify
law and morals gives too wide a scope to judicial
discretion. the question is how should it be brought about. the learned judge says that it should be the companystant
endeavour of the companyrts and the legislature to close the gap
between the law and morality and bring about as near an
approximation between the two as possible. lord denning
might have exhorted the judges number to be timorous sours but
to be bold spirits ready to allow a new cause of action if
justice so requires. these are lofty ideals which one should
steadfastly pursue. but before embarking on this mission it
is necessary for the companyrt to understand clearly its
limitations. the powers of the companyrt to legislate is
strictly limited. judges ought to remember that their
office is jus dicere and number jus dare to interpret law and
number to make law or give law. chandrachud c. j. speaking
for a companystitution bench in shri gurbaksh singh sibbia etc. state of punjab has clearly pointed out the limited
powers of the companyrts to make laws in companystruing the
provisions of the statutes. the learned chief justice has
observed-
the true question is whether by a process of
construction the amplitude of judicial discretion
which is given to the high companyrt and the companyrt of
session to impose such companyditions as they may think
fit while granting anticipatory bail should be cut
down by reading into the statute companyditions which are
number to be found therein our answer clearly and
emphatically is in the negative. again the learned chief justice warned judges have to
decide cases as they companye before them mindful of the need
to keep passions and prejudices out of their decisions. and
it will be strange if by employing judicial artifices and
techniques we cut down the discretion so wisely companyferred
upon the companyrts by devising a formula which will companyfine
the power to grant anticipatory bail within a strait-
jacket.-therefore even if we were to frame a companye for
the grant of anticipatory bail which really is the
business of the legislature it can at best furnish broad
guide-lines and cannumber companypel blind adherence. the companyrts by its very nature are most ill-suited to
undertake the task of legislating. there is numbermachinery for
the companyrt to ascertain the companyditions of the people and
their requirements and to make laws that would be most
appropriate. further two judges may think that a particular
law would be desirable to meet the requirements whereas
anumberher two judges may most profoundly differ from the
conclusions arrived at by two judges. companyscious of these
handicaps the law requires that even an amendment of the
supreme companyrt rules which
govern the procedure to be adopted by it for regulating its
work can only be effected by the whole companyrt sitting and
deciding. the result is that so far as the recommendation of the
municipal companymittee to the government to levy octroi duty
is companycerned though it is companytrary to the representation it
made to the buyers of the sites in the mundi the
municipality is number estopped as the representation made by
it was beyond the scope of its authority. the levy of tax
being for a public purpose i.e.