Upendralal Waghray, J.:— This appeal is filed by the respondents 2 and 3 in the writ petition viz., Visakhapatnam Port Trust (hereinafter referred to as ‘Port Trust’) and its Traffic Manager against the Judgment of the learned single Judge allowing W.P No. 15897/1986, D/- 5-12-1986 filed by four petitioners viz., (1) Bihar Alloy Steels Limited (hereinafter referred to as Company); (2) a Principal Officer and Shareholder of petitioner No. 1 — Company; (3) Sarat Chatterjee & Co., (shipping agents of the Company) and (4) a Director of the said shipping agent. The 1st respondent in the writ petition is the Union of India, Ministry of Surface Transport, which is also impleaded as a respondent in writ appeal. No relief is granted against the 1st respondent in the writ petition. The parties are referred to according to their rank in the writ petition. The 1st petitioner is a Public Limited Company, which has a Mini-steel Plant at Patratu near Ranchi for manufacturing special alloy steels. The Company imports scrap iron (one of its raw materials) through Visakhapatnam Port, which is governed by the Major Port Trusts Act, 1963 and is managed by its Board of Trustees.

2. The petitioners initially filed a writ petition in the Calcutta High Court, which was disposed of on 23-10-1986 holding that it had no territorial jurisdiction. Thereafter, they have filed the present writ petition in this court on 30-10-1986 seeking the following relief:

“…………. appropriate writ, order or direction directing the respondents to allow the petitioners to remove their melting scrap of Carbon Steels (Shredded Scrap) from Visakhapatnam Port on payment of usual lease amount for the period from 1-8-1986 to 31-10-1986 and pass such other orders.”

During the pendency of the writ petition a direction was issued to the respondents not to sell or dispose of the goods pending further orders. The learned single Judge has by the impugned judgment issued a direction to respondents 2 and 3 to allow the petitioners to remove the scrap viz., 12,000 MT (approximately) from the G.C.B area of Port on payment of lease charges at Rs. 237-60 per 100 square meters per month in respect of 4000 square meters and at Rs. 475-20 per 100 square meters per month in respect of 3,000 square meters for the period 1-8-86 to 31-10-1986. Pursuant to the interlocutory orders passed in the appeal the petitioners have removed the scrap after furnishing Bank guarantee and undertaking of the Directors.

3. The scrap meant for the Company was unloaded from two ships during first week of June, 1986 to 6th August, 1986 at the General cargo berth of the Port, the actual berth is a cement platform abutting the sea and there is an adjacent open space beyond it. The berth and the adjacent area are generally known as G.C.B area and is enclosed by a Customs barrier. Any goods unloaded from a ship on the berth are immediately pushed away and kept in the adjacent open space and have to be removed within the prescribed period viz., two days by the consignee. Otherwise, transit charges and demurrage is levied as per rules. This is also for proper functioning of the Port, as keeping the goods at such place obstructs the loading and unloading of other cargo.

4. The company in its letter dated 25-7-1986 addressed to the Traffic Manager of the Port Trust stated that due to a labour strike since 13-6-1986 the Company was not in a position to organise the movement of the cargo from the Port to the Plant and at that time about 16,500 metric tons of imported shredded scrap was lying at the Port. They pointed out to the good relations between the Company and the Port Trust and also the fact that they were one of the major importers of scrap through this Port and pleaded to consider and allow the Company to store their cargo at the north-western corner in an area of 10,000 square meters. This was apparently a request to lease out that area on payment of the lease charges to avoid payment of transit charges and demurrage. This was followed by another letter dated 31-7-1986 stating that due to strike their plant was inoperative and requesting to lease out atleast 7,500 square meters for a period of two months. No reply was given to these letters by the Port Trust authorities. However, the Shipping Agent wrote a letter dated 3-9-1986 which reads as follows:

“Arat Chatterjee & Co. (Visakhapatnam) Pvt. Limited. Visakhapatnam.

Ref: No. 971/86Dated 3rd Sept. 86.

The Traffic Manager,

Visakhapatnam Port Trust,

Visakhapatnam

Dear Sir,

Sub: Leased area at G.C.B for storage of Scrap.

Please refer to the correspondence of our valued principals Bihar Alloy Steels Ltd., resting with their letters 29th and 31st July.

We have not heard anything in the matter and would request you to kindly issue formal sanction in our favour for Occupying the said area on lease terms w.e.f 1-8-86 to 11-10-86.

We assure you of taking effective steps to expeditiously despatch the said cargo within October 86 itself.

Thanking you for your kindness in acceding to our request.

Yours faithfully,

for Bharat Chatterjees & Co. (VSP) Pvt.

Director

Co: Bihar Alloy Steels Ltd.,

9/1, R.N Mukerjee Road,

Calcutta — for information.”

To this letter of the Shipping Agent a reply dated 4-9-1986 was given by the Traffic Manager of the Port Trust which reads as follows:

“Office of the

Traffic Manager,

Visakhapatnam Port Trust

Sarat Chatterje & Co.,

Visakhapatnam.

Dear Sir,

Sub:— Leased area of G.C.B for the storage of scrap.

Ref:— Your lr. NO. 971/86 dt. 3-9-86.

Please refer to the above cited letter under reference.

In the circumstances explained by you, it is proposed to lease out an area of 4000 Sq. Mtrs. at the back up space of G.C.B asavery special case.

You are hereby advised to shift the entire cargo of scrap lying at G.C.B to the proposed leased area duly paying the transit dues and the date of effect of lease will be immediately after shifting of the full cargo to the leased area.

Yours faithfully,

for TRAFFIC MANAGER.”

The Shipping Agents immediately replied to the Traffic Manager by their letter dated 5-9-1986 and it is useful to extract it in full:

“Barat Chatterjee & Co. (Visakhapatnam)

Pvt. Ltd. Visakhapatnam.

Ref. No. 973/865th Sept. 86.

The Traffic Manager,

Visakhapatnam Port Trust,

Visakhapatnam.

Sub:— Leased area of G.C.B for the storage of scrap.

Dear Sir,

We acknowledge with thanks the receipt of your letter dated 4-9-86 on the above subject.

Though we feel greatly satisfied at your acceding to our request, as a very special case, as mentioned in the 2nd para of the letter cited, we are very much perturbed over the condition of leave elaborated in the last para i.e that it will be effective from the date of stacking in the earmarked area after shifting and that transit dues should be paid for the integennum (interregnum) period.

In this connection, we wish to state that approximately 12,000 Mt. of scrap is lying at GCB area for which as pointed out by our principals in their letter of 29th July that minimum area required is 7500 Mt. as the normal space occupancy ratio is 1 ton scrap for 1 M area and hence the total cargo which has been double stacked by us and is occupying an area of approximately 7000 Mt. without creating any hindrance to other cargo movements in the GCB area.

Further you are well aware that lease request was made by our Principals due to the extraordinary situation of their plant being closed due to strike on and from 10th June 1986 and they had requested lease facilities from August 1986 with an undertaking to hand over back the area within two months of opening of the factory. For your information their factory has finally reopened on 30th August, as per the telex received by us from our principals on 3rd September and it is in this context, we requested you to formalise lease terms from 1-8-86 to 31-10-86.

Sir, you will kindly appreciate that by your gesture of granting lease you have appreciated the bona fide distress conditions faced by our principals but earmarking of an inadequate area and leaving a gap between occupation of the space and formal effective date of the lease is a paradox, which if not ratified, leads to payment of Transit Dues. Surely it is not your intention to penalise the importer, while trying to give new lease of life to a customer who has already lost millions due to over two and a half month closure of the factory.

In the light of the forgoing we fervently appeal to you to allot further 3000 M2 and formalise the lease agreement for 7000 M7 effective from 1-8-86 to 31-10-86.

Yours faithfully,

For Barat Chatterjee & Co. (VSP)

Sd/- Director.

CC: The Chairman, Visakhapatnam Port Trust, Bisakhapatnam — for information with a fervent request to issue suitable instructions to the T.M to ensure justice is done to maintain growing tempo of scrap imports through our Good Port.”

It appears there were some reports in the newaspapers around 25-9-86, including Deccan Chronicle, that there was an effort to avoid payment of transit and demurrage charges by the Company. The Traffic Manager has addressed a letter dated 7-10-1986 to the Shipping Agents which reads as follows:

“Office of the Emblem Traffic Manager, Visakhapatnam Port Trust Grams: ‘PORTRUST”, TELEX: 0496-286 Phone: 64841 Visakhapatnam-910835 (Andhra Pradesh) Date 7th October, 1986 No. TM/Rev.

Sarat Chatterjee Co.,

(Visakhapatnam) Pvt. Ltd.,

Visakhapatnam

Dear Sirs,

Sub: Leasing of area at G.C.B for the Storage of scrap.

Ref:— Bihar Alloy Steels Ltd.,'s

i) letter No. BASL/CAL/Imp/scrap/86/318, dt. 25/28-7-86.

ii) Letter dt. 31-7-86

iii) dt. 1-8-86

iv) Your letter No. 971/86 dt. 3-9-86

v) This office letter dt. 4-9-86

vi) Your letter No. 973/86 dt. 5-9-86

Please refer to the letters cited.

As you did not agree to the terms and condition; of the proposal made in this office letter referred to as Item (v) cited i.e letter dt. 4-9-1986 and as the strike at the factory is also called off please treat our proposal made in this office letter dt. 4-9-86 is hereby withdrawn and cancelled.

As such your request made in your letter dt. 5-9-86 referred to as items (vi) cited to lease further area of 3,000 Sq. meters will not arise.

You are requested to clear the cargo duly paying the demurrage charges for the entire period.

Yours faithfully,

TRAFFIC MANAGER”

Thereafter on 8-10-1986 two notices were issued to the Company regarding the cargo unloaded from the two ships to the effect that the cargo was lying in Port premises for over two months and unless cleared before 25-10-1986 it will be auctioned as contemplated by Ss. 62 and 63 of the Major Port Trusts Act. This has given rise to the present writ petition.

5. The contention of the petitioners is that the letter dated 4-9-1986 of the Traffic Manager amounts to acceptance of a contract to lease or in the alternative a promise is held out to lease the area on which the cargo was then stored. It is also contended that the letter dated 7-10-1986 was issued because of the Press reports and was not a bona fide action.

6. The case of the contesting respondents 2 and 3 i.e the appellants is that, by the letter dated 4-9-1986 willingness to lease out about 4000 square meters in the back up space (i.e north-western corner mentioned in the letter of the Company) was given conditionally upon the petitioner's moving the cargo from its existing site to the proposed leased space and on payment of Transit dues till the goods are moved. As the petitioner did not move the cargo or paid the Transit charges, the letter dated 7-10-1986 was written withdrawing the offer in the letter dated 4-9-1986. The action of the respondents in bringing to sale the cargo which was lying in the back-up space immediately behind the general cargo berth for over two months and without payment of transit dues was justified in view of Ss. 62 and 63 of the Major Port Trusts Act. It is denied that there was any promise, offer or acceptance to lease out the area where the cargo has been lying since immediately after being unloaded. The respondents describe this part of the backup space as the transit area because the cargo which is to be unloaded or loaded on to ships will have to pass over that space which is immediately behind the cargo berth. A plan was also placed before the court indicating the location of the general cargo berth (i.e cement platform) and the back up space within the limits of the customs' barrier. This entire area is called ‘general cargo area’. The space beyond the berth i.e the platform is called the ‘back-up space’. According to the respondents, the portion immediately next to the plat form where the company had allowed its goods to lie is known as the ‘transit area’, and there is no practice of leasing out any portion of this area. It is further explained that the letters of the company written in July, extracted above, clearly indicate that, at the time of the letter dated 4-9-1986 was written about 16,000 metric tons were lying at the same place since it was unloaded. The petitioners in their letter requested for leasing of 10,000 square meters in the north-western corner of the back-up space as a special case. These letters as well as reply of the Shipping Agent dated 5-9-86 clearly indicate that the willingness to lease in letter dated 4-9-86 was for an area different from where the cargo was then lying and was so understood by the petitioners and their agents. Apparently, the petitioners were also aware of the difficulty in getting a part of the transit area on lease. It is urged that, no lease was granted or any promise to have was made in respect of the area where the goods were lying. According to him, there is no case of a promissory estoppel against the Board and the issue of mandamus by the learned single Judge is wrong. He has placed reliance upon a recent decision of the Supreme Court reported in Vasantkumar Radhakisan Vora v. Board of Trustees of the Port of Bombay, AIR 1991 SC 14 in support of his contention that the principle of promissory estoppel could not be invoked in this case.

7. Sri P. Ramachandra Reddy, learned counsel appearing for the petitioners (respondents in the appeal) urged that the authorities had promised to lease out the area where the goods were lying and because of it the petitioners had not moved the goods and, therefore, the learned single Judge was right in issuing a mandamus that the petitioners could remove the goods on payment of the lease amount. He has placed reliance upon the decisions of the Supreme Court reported in Union of India v. Godfrey Philips India Ltd., AIR 1986 SC 806; M.P Sugar Mills v. State of U.P, AIR 1979 SC 621; Century Spg. & Mfg. Co. v. Ulhasnagar Muncipality, AIR 1971 SC 1021 and Union of India v. Anglo Afghan Agencies, AIR 1968 SC 718. In support of his contention that respondents 2 and 3 in the writ petition are bound by the principles of promissory estoppel and are not entitled to take any action otherwise than by treating the area occupied by the goods as leased out to the petitioners.

8. Two points, therefore, arise for consideration in this case viz., AIR 1991 SC 14 whether there was a lease in favour of the petitioners in the writ petition in respect of the area where their goods were lying? AIR 1986 SC 806 Alternatively, even if there is no lease whether on the basis of the letter dated 4-9-1986 the petitioners were entitled to invoke the principle of promissory estoppel against the Board of Trustees preventing it from taking the action impugned in the writ petition?

9. The respondent No. 2 is constituted under the Major Port Trusts Act, 1963 (Act 38 of 1963) (hereinafter called the Act) and it is useful to examine some of its provisions. The preamble and the other provisions indicate that the administration, control and management of the ports covered by the Act are vested in various authorities constituted under it. Chapter IV with the Heading ‘property and contract’ comprises of Sections 29 to 34. Chapter VI with the Heading imposition and recovery of rates at Ports' comprises of Ss. 48 to 65. S. 48(1)(d) reads as follows:—

“48. Scales of rates for services performed by Board or other person:—

(1) Every Board shall from time to time frame a scale of rates at which, and a statement of the conditions under which, any of the services specified hereunder shall be performed by itself or any person authorised u/S. 42 at or in relation to the port or the port approaches—

(a) to (c) xxxxxxxxxxxxxxxx

(d) wharfage, storage or demurrage of goods on any such place;

(e) xxxxxxxxxxxxxxxx

Section 51 gives the power to the Board to levy concessional rates in certain cases and S. 53 confers the power on the Board to grant exemption from rates or charges or remission of the same. S. 58 provides for the time for payment of rates on goods while S. 59 creates a lien for rates in favour of the Board over the goods. Ss. 61 and 62 confer power on the Board not only to effect recovery by sale of goods but also to sell any goods which are lying beyond a particular period. S. 49 in the same chapter enables the Board to frame a scale of rates for use of the property of the Board. S. 49(1)(c) reads thus:

“49. Scale of rates and statement of conditions for use of property belonging to Board:—

(1) Every Board shall, from time to time, also frame a scale of rates on payment of which, and a statement of conditions under which, any property belonging to, or in the possession or occupation of, the Board, for any place within the limits of the Port or the Port approaches may be used for the purpose specified hereunder:—

(a) to (b) xxxxxxxxxxxxxx

(c) leasing of land or sheds by owners of goods imported or intended for export or by steamer agents, x x x x x x x x.”

A perusal of S. 29 in Chapter IV indicates that the assets and liabilities of the Central Government are to vest in the Board and the relevant portion of S. 29 is as follows:

“29. Transfer of assets and liabilities of Central Government, etc. to Board:— (1) As from the appointed day in relation to any port:—

(a) all property, assets and funds and all rights to levy rates vested in the Central Government or as the case may be, any other authority for the purposes of the Port immediately before such day, shall vest in the Board;

(b) all debts, obligations and liabilities incurred, all contracts entered into and all matters and things engaged to be done, by, with or for the Central Government or, as the case may be, the other authority immediately before such day, for or in connection with the purposes of the port shall be deemed to have been incurred, entered into and engaged to be done by, with or for the Board.

(c) all non-recurring expenditure incurred by the Central Government or any State Government for or in connection with the purpose of the Port up to such day and declared to be capital expenditure by the Central Government shall be treated as the capital provided by the Central Government or, as the case may be, the State Government to the Board.

(d) xxxxxxxxxx”

Section 31 contained in the same Chapter reads:

“31. Repayment of capital with interest:— A Board shall repay, at such intervals and on such terms and conditions as the Central Government may determine, the amount of capital provided under cl. (c) of sub-sec. (1) of S. 29 with interest at such rate as may be fixed by that Government and such repayment of capital or payment of interest shall be deemed to be part of the expenditure of the Board.”

Section 34 provides for mode of executing contracts on behalf of the Board and it is as follows:

“34. Mode of executing contracts on behalf of Board:—

(1) Every contract shall, on behalf of a Board, be made by the Chairman or by any such officer of the Board not below the rank of the Head of a Department as the Chairman may, by general or special order, authorise in this behalf and shall be sealed with the common seal of the Board:

Provided that no contract whereof the value or amount exceeds such value or amount as the Central Government may from time to time fix in this behalf shall be made unless it has been previously approved by the Board:

Provided further that no contract for the acquisition or sale of immovable property or for the lease of any such property for a term exceeding thirty years, and no other contract whereof the value or amount exceeds such value or amount as the Central Government may from time to time fix in this behalf, shall be made unless it has been previously approved by the Central Government.

(2) Subject to the provisions of sub-sec. (1), the form and manner in which any contract shall be made under this Act shall be such as may be prescribed by regulations made in this behalf.

(3) No contract which is not made in accordance with the provisions of this Act and the regulations made thereunder shall be binding on the Board.”

Apart from these two Chapters, two other provisions are also relevant — one is S. 102 in Chapter VIII with the Heading ‘Revenue and Expenditure’, providing for maintenance of accounts by the Board and their audit by the Comptroller and Auditor-General of India every year. The other is contained in Chapter II viz., S. 21 regarding delegation of powers which reads as follows:

“21. Delegation of powers:— A board may, with the approval of the Central Government, specify—

(a) the powers and duties conferred or imposed upon the Board by or under this Act, which may also be exercised or performed by the Chairman; and

(b) the powers and duties conferred or imposed on the Chairman by or under this Act, which may also be exercised or performed by the Deputy Chairman or any officer of the Board and the conditions and restrictions, if any, subject to which such powers and duties may be exercised and performed:

Provided that any powers and duties conferred or imposed upon the Deputy Chairman or any officer of the Board under cl. (b) shall be exercised and performed by him subject to the supervision and control of the Chairman.”

A scheme of aforesaid provisions for vesting of the Management and control of the property, (which is public property) in the Board, the obligation to charge rates and the requirement to repay certain amounts to the Central Government, the need for maintenance of accounts and the requirement of audit read with the provisions for concessional rates and remission indicates checks and control over the functioning of the statutory body viz., the Board, particularly in the matter of levy of rates and charges. The charges leviable may be exempted or remitted in accordance with the statutory provisions but it is difficult to visualise any other method of wiping out of the liability of any rates or charges like transit charges or demurrage payable in respect of any goods. On being asked about the conditions and scale of rates fixed by the Board u/S. 49(1)(c) and the delegation of powers in favour of Chairman u/S. 21, the counsel for the Board has placed before us copies of some documents under which a lease for annual rent of up to Rs. 25,000/- only is delegated to the Chairman on the conditions mentioned in it u/S. 21. The condition for lease are, to say the least, very vague. In the context of the scheme noticed above, it is difficult to visualise leasing with a retrospective effect or lease by an authority not competent to lease or of place like the transit area, which will take away the liability incurred for rates as contemplated by the Act and affect the functioning of the Port. The Board would do well to spell out the conditions and rates u/S. 49 more clearly to avoid any ambiguity or possibility of abuse. Not only the conditions are vague but the rates of lease are very low and have no relation to the rates prevailing in the area or the liability of transit charges. Such a situation is likely to give rise to imagined or actual arbitrary action. S. 34 extracted above provides for mode of executing contracts including leases on behalf of the Board which will include leases. Sub-sec. (3) contains a prohibition that no contract which is not made in accordance with the provisions of the Act and regulation made thereunder shall be binding on the Board.

10. The controversy and the points raised in this case and the decisions cited by the parties are to be examined, in view of the aforesaid statutory provisions and the correspondence between the parties. The petitioners have only relied on the letter dated 4-9-1986 and do not refer to any other representation. The learned single Judge has relied upon the notes in the office of the Chairman of the Board for inferring that the letter dated 4-9-1986 written by the Traffic Manager contains a promise to lease the area where goods were lying and the statements contained in the letter were mistake of fact. In the facts of this case it is doubtful whether, apart from the correspondence any notings in the office of the Port Trust can be relied upon for a decision of the controversies. The petitioners have not pleaded that there was any mistake of fact in the letter dt. 4-9-1986 and, if so, what was the mistake. A perusal of the notes as extracted by the learned single Judge and copies of which have also been filed in the paper book does not support the conclusion reached by the learned single Judge. Initially, on receipt of the letters from the company in July, the Traffic Manager had made a proposal in August, 1986 for leasing out the area as requested in the letters of the Company which is in the north-western corner of the back-up space and also payment of transit dues up to the date of shifing of the goods to that place. This was objected to by the Accounts Department on the ground that this will amount to avoiding payment of transit dues. However, after obtaining further views of the Traffic Manager and the Deputy Chairman, the Chairman had approved the proposal of the Traffic Manager on 30-8-1986. The Traffic Manager wrote the letter dt. 4-9-1986 which correctly reflects the decision arrived at. Whether the objection of the Accounts Department was correct or not need not detain us in this case. It is interesting to note that the shipping agents wrote to the authorities on 3-9-1986 without reference to the earlier correspondence by the Company and requesting for issue of formal orders of lease. This was apparently after they vaguely came to know of the approval of the Chairman. After the letter dated 4-9-1986 was received by them the Shipping Agents replied by their letter dated 5-9-1986 which takes note of the requirement of shifting of the goods to the proposed leased space of a lesser area and also payment of transit dues till shifting and requesting for reviewing on conditions. It is clear, therefore, that there was no mistake in the mind of either the authorities or the shipping agents about what was contained in the letter dated 4-9-1986 viz., that the goods were to be moved to the proposed area to be leased viz., 4000 square meters in northwestern corner and payment of the transit charges up to the date of shifting. The petitioners neither removed the goods nor paid anything towards transit charges and reports appeared in the newspapers on 26th or 27th Sept. 1986, apparently on their getting information from the Port Office that the petitioners were being given undue favour. A day or so before the reports appeared in print the authorities initiated action to withdrawn the proposal contained in the letter dated 4-9-1986 and after the Chairman had approved this, the letter dated 7-10-1986 was written withdrawing the offer. This was followed by the letter dated 8-10-1986 requiring the goods to be moved after payment and in default the threat of sale of goods u/Ss. 61 and 62 of the Act.

11. The correspondence shows that pursuant to the company's request for having 10,000 or 7,500/- square meters in the north western corner the letter dated 4-9-86 indicated readiness to give only 4000 meters on the condition mentioned in it. The 4000 square meters were not even marked out at that stage. It is difficult to spell out a contract of lease from the aforesaid circumstances. When the counsel for the writ petitioners was asked whether the letter dated 4-9-1986 was to be treated as an offer or an acceptance of Company's request, on realising the difficulty he said that it was an acceptance. If it were to be an acceptance, then the proposal itself contained in the letters of the Company written in July contemplated leasing an area in north-western corner i.e different from where the goods were lying. Further, the acceptance, if any, is only conditional. If it is treated as an offer it will have to be taken on its face value i.e on the terms mentioned in it. There was no mistake in the minds of any of the parties. Therefore, it is difficult to say that any agreement of lease had emerged from the correspondence. There is no reference to any other material apart from the letter dated 4-9-1986. Apart from this, no contract which does not satisfy the requirements of S. 34 will be binding on the Board. Therefore it has to be held on point No. 1 that there was no agreement of lease between the parties in respect of the area where the goods were lying in the port.

12. Point No. 2: The next question which arises for consideration is whether the petitioners are entitled to any relief on the basis of the equitable doctrine of promissory estoppel against the Port Trust because of any representation made in the letter dated 4-9-1986. The earliest case of our Supreme Court where this doctrine was applied even against the Government is reported in Union of India v. Anglo Afghan Agencies (AIR 1968 SC 718) (supra). The controversy there was about the change in export and import policy of Government of India and its effect on persons who had already acted on the policy prior to its change. The judgment of the three-Judge Bench is rendered by Shah, J. It is useful to extract a portion of para 10 which reads as follows:—

“10………We are unable to accede to the contention that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment. Under our Constitutional set-up, no person may be deprived of his right or liberty except in due course of and by authority of law; if a member of the executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law — common or statute — the courts will be competent to, and indeed would be bound to protect the rights of the aggrieved citizen.”

The contention of the counsel for the Union in that case was to the effect that export and import policies by nature had to be flexible and on that account the power of Government to modify it cannot be restricted on the plea of promissory estoppel. After approving certain observations of Lord Denning and referring to some earlier decisions of our Supreme Court it was held that the Government was bound by the representations made in its policy to the persons who had acted to their detriment.

13. The next decision is reported in Century Spg. and Mfg. Co. v. Ulhasnagar Municipality (AIR 1971 SC 1021) (supra) which is also a judgment of Shah, J. and is a case relating to levy of octroi duty by Municipality where he has referred to his earlier judgment reported in Union of India v. Anglo Afghan Agencies (AIR 1968 SC 718) (supra) in para 11 and held in para 12 as follows:

“12. If our nascent democracy is to thrive different standards of conduct for the people and the public bodies cannot ordinarily be permitted. A public body is in our judgment not exempt from liability to carry out its obligation arising out of representations made by it relying upon which a citizen has altered his position to his prejudice.”

14. The next case cited is reported in M.P Sugar Mills v. State of U.P (AIR 1979 SC 621) (supra). The judgment was rendered by P.N Bhagwati, J. (as he then was) and relates to withdrawal of a concession by the State Government regarding sales tax on the finished products of a factory within three years after it was set up in the specified area. After reviewing the several English and American decisions and the decisions of our Supreme Court and other Indian High Courts it was held, that the doctrine of promissory estoppel may not only afford a defence but also could be utilised for enforcement of their rights flowing from such representation. It was also held that the Government cannot plead the need of executive exigency to avoid any obligation arising from the applicability of the doctrine. It is instructive to reproduce certain passages from paras 24 and 27 (page 644):

“24. ……….But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise an equity in favour of the promisee and enforce the promise against the Government………”

“27. ……………..Lastly, a proper reading of the observation of the court clearly shows that what the court intended to say was that where the Government owes a duty to the public to act differently, promissory estoppel cannot be invoked to prevent the Government from doing so. This proposition is unexceptionable, because where the Government owes a duty to the public to act in a particular manner and here obviously duty means a course of conduct enjoined by law, the doctrine of promissory estoppel cannot be invoked for preventing the Government from acting in discharge of its duty under the law. The doctrine of promissory estoppel cannot be applied in teeth of an obligation or liability imposed by law.”

15. The next case is reported in Union of India v. Godfrey Philips India Ltd., AIR 1986 SC 806) (supra), which is a judgment of a Bench consisting of three Judges presided over by P.N Bhagwati C.J, on the other aspects of the controversy the opinion of the learned Chief Justice was a minority opinion, but so far as his conclusions on the question of promissory estoppel are concerned, the other two Judges have agreed with him. In this judgment, the ratio of the two Bench judgment in Motilal Padampat Sugar Mills Co. v. State of U.P, AIR 1979 SC 621 on the decision of promissory estoppel was reaffirmed and the other decision of a Bench of two Judges reported in Jit Ram v. State of Haryana AIR 1980 SC 1285 was not approved. It is useful to extract para 14 of the said judgment (at pp. 815 and 816 of AIR 1986 SC 806):

“14. Of course we must make it clear, and that is also laid down in Motilal Sugar Mills case AIR 1978 SC 621 (Supra) that there can be no promissory estoppel against the legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires, if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it. This aspect has been dealt with fully in Motilal Sugar Mills case (supra) and we find ourselves wholly in agreement with what has been said in that decision on this point.”

The aforesaid decisions have been cited by the counsel for the Company and also referred to by the learned single Judge.

16. The recent decision of the Supreme Court reported in Vasankumar Radhakisan Vora v. Board of Trustees of the Port of Bombay, AIR 1991 SC 14 (supra) has been relied upon by the counsel for respondents 2 and 3 that is, appellants. It is a case dealing with the leasing of the property of Bombay Port Trust which is also now governed by the Major Port Trusts Act. Certain extracts of para 12 of this judgment are relevant:

“12. It is equally settled law that the promissory estoppel cannot be used compelling the Government or a public authority to carry out a representation or promise which is prohibited by law or which was devoid of the authority or power of the officer of the Government or the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine it must yield place to the equity, if larger public interest so requires, and if it can be shown, by the Government or public authority, for having regard to the facts as they have transpired that it would be inequitable to hold the Government or public authority to the promise or representation made by it. The Court on satisfaction would not, in those circumstances raise the equity in favour of the persons to whom a promise or representation is made and enforce the promise or representation against Government or the public authority.

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Though Executive necessity is not always a good defence, this doctrine cannot be extended to legislative acts or to acts prohibited by the statute.”

From the several decisions of the Supreme Court it is beyond dispute that relief on the basis of the doctrine of promissory estoppel is available against public bodies and the Government also on necessary facts for its applicability being established. The theory that executive or administrative exigencies alone absolves the Government or public authorities from the applicability of this doctrine is no longer tenable. At the same time it has been recognised that any such relief will not be granted where its grant itself will lead to injustice or is prohibited by law. Generally, this doctrine has been invoked in cases where a charge of policy result in adversely affecting persons who had already suffered detriment or taken action relying upon the policy in force prior to its change. This is to protect obligations or rights already acquired because of the detriment suffered and upholding the plea by the State of executive exigency alone will be harsh and inequitable to deny the relief. But, if grant of any such relief is itself illegal or prohibited by law such prohibition cannot be ignored or relief granted on the basis of promissory estoppel.

17. In the instant case the provisions of S. 34 prescribe the manner in which a contract is to be made on behalf of the Board of Trustees and further sub-section (3) contains a prohibition that a contract not made in accordance with the earlier portions of Section shall not be binding on the Board. It has been held by the Supreme Court in its decision reported in H.S Rokhy v. New Delhi Municipality AIR 1962 SC 554 that the effect of such a prohibition as is contained in sub-sec. (3) of S. 34 renders the contract itself void and unenforceable. In that case the controversy was about estoppel against New Delhi Municipal Corporation which was governed by the Punjab Municipal Act, 1911, which contains a similar provision viz., S. 47.

18. In this case the position is this: In view of S. 34(3) of the Act, any promise in the letter of Traffic Manager dated 4-9-1986: to lease an area of Port Trust will be void and unenforceable against the Board of Trustees. The doctrine of promissory estoppel cannot be invoked for enforcing what is illegal. Apart from this, as noticed earlier, it is doubtful whether the Chairman could have sanctioned a lease in respect of the area keeping in view the annual rent in the light of the powers delegated to him. The scheme of the Act indicates that any purported action to lease the area as contended by the petitioners wipes out the liability to pay charges due to the Port Trust and will be illegal. The petitioners have not shown what action they have taken to their detriment after the letter dated 4-9-1986 was written. In view of the findings recorded while discussing Point No. 1 and the ratio emerging from the decisions referred to above, the petitioners are not entitled to any mandamus on the basis of the letter dated 4-9-1986, either on the premise of any contract of lease or promissory estoppel or a representation to lease that area. As a result, the appeal is allowed and the judgment of the learned single Judge set aside and the writ petition is dismissed. The appellants will have their costs throughout.

Appeal allowed.