The Judgment of the Court was delivered by

Salil Kumar Datta, J.:— This is an appeal from the judgment and order of Murari Mohun Dutt, J. dated June 27, 1974 whereby the connected Rule was discharged. On June 11, 1962 the Government of India granted an import licence to the appellant company for the import of capital goods (Plants and Machinery) valued at Rs. 35 lakhs for the manufacture of cast iron spun pipes. The licence was subject inter alia to the condition that the company would have to export 15% of its total production for six years starting from the date of regular production. The export obligation, as required, was secured by an undertaking of the company dated Aug. 4, 1965. It will appear from its statement of export performance, the production commenced from Jan. 1966 when the requisite export commenced and continued thereafter.

2. By a circular dated Aug. 17, 1966 the Government of India informed the Secretary, Export Promotion Council that it was decided to grant cash assistance against exports effected from June 6, 1966 the date of devaluation of the Indian rupee, on specified engineering products. Under that circular, there is no dispute (vide para. 12 of the petition, the company's claim in respect thereof is admitted in the affidavit-in-opposition para. 10 as substantially correct) that cast iron spun pipes, classified under ferrous castings would be entitled to cash assistance at the rate of 20%. The Joint Chief Controller of Imports and Exports of the Government (hereinafter referred as JCCI and E) issued cheques from time to time of sundry amounts as such cash assistance in favour of the company and during the period from July, 1966 to June, 1967 in all a sum of Rs. 2,81,267.00 as cash assistance was paid to the company by Sept. 18, 1967.

3. On June 4, 1969, JCCI and E informed the company that according to the then policy, no cash assistance was admissible against exports in discharge of export obligation in C.G cases i.e capital goods licences issued with prospective export obligation. By letter dated Dec. 28, 1970 the company was informed by JCCI and E that for export of Rubber Rings the company was considered entitled to cash assistance of Rs. 2,59,935/- for April-June, 1969, Rs. 1,76,256/- for July-September, 1969, for Rs. 1,00,497/- for October-December, 1969 and Rs. 59,579/- for January-March, 1970 all at 10%. Thereafter the company was informed by the said letter as follows:—

“You were paid an amount of Rupees 2,81,267/- against export of July, ‘66-June, ‘67 though you were under C.G Licence obligation. So the entire amount of Rs. 2,81,267/- has been adjusted from the above cases viz. full amount of your A-J ‘69 exports i.e Rs. 2,59,935/- and the balance amount of Rs. 21,332/- from your export of July-September, 1969. (Annexure ‘K’ to the petition).

4. It may be noted here that from a letter of June 12, 1970 issued by the Engineering Export Promotion Council to the Company, it appears that—

“………… in supersession of the above instructions, on the above subject (i.e Grant of Cash assistance against exports made in fulfilment of export obligations imposed on C.G Licences), it has been decided to allow cash assistance under the scheme of cash assistance to registered exporters, in terms of instructions issued from time to time, against exports, effected on or after 1st April, 1969, onwards in cases when C.G licences have been issued subject to export obligations and also subject to such conditions, as may be imposed in this regard … … … … … …”

5. The company's case is that on basis of the Government circular dated Aug. 17, 1966 the company had since exported engineering goods namely cast iron spun pipes and fittings on the faith and belief that it would “get the cash assistance mentioned in the circular.” The company relied on the basis of the aforesaid circular declaring the Government policy and effected exports and thereby suffered detriment. Further the cash assistance were treated by the company as trade receipts and shown as such in its books of account whereon income-tax was paid. The decision to withhold and adjust cash assistance was wrongful, illegal, unwarranted, arbitrary and discriminatory.

6. On the above allegations and contentions, the petitioner moved this court in constitutional writ jurisdiction praying for writs quashing the impugned decision of the Government withholding the cash assistance on exports during the relevant period as also the adjustment of its rightful dues against such cash assistance already paid. A writ in the nature of mandamus was also prayed for restraining the Union of India and its concerned authorities from giving effect to impugned circulars or decisions. On this application this Court issued a Rule on the said respondents to show cause why appropriate writ prayed for should not issue and such orders should not be passed as would be deemed fit and proper.

7. The respondents showed cause to the Rule by filing an affidavit-in-opposition affirmed by Bimal Kanti Biswas, Deputy Chief Controller of Imports and Exports. It was stated therein that the company accepted the terms of licence for import of plant and machinery providing for export of 15% of its annual production and executed an undertaking for securing such export. Further when the licence was granted there was no scheme for cash assistance. Accordingly as there was no alteration of position to its detriment by the company, there was no question of any estoppel or equity on the Government for grant of the said cash licence. The respondents had no concern with the alleged payment of income-tax on such cash assistance shown incorrectly as Trade receipts. The Export Promotion Scheme was applicable to normal exports without any tied condition under “export obligation scheme”, as it was not the policy of the Government to give cash assistance when there was an obligation for export. The Government subsequently decided on representation that exports made on or after April 1, 1969 in fulfilment of export obligation would qualify for cash assistance. The company was given credit of the same subject to adjustment of payments made by inadvertence without knowledge of export obligation which fact was suppressed by the company. In respect of all grants of cash assistance prior to April 1, 1969 for exports in discharge of obligation, adjustment were made against future entitlements of cash assistance after April 1, 1969. The allegations that orders, circulars, decision directing that the company was not entitled to such cash assistance against tied exports prior to April 1, 1969 were arbitrary, illegal or discriminatory were denied. It was further stated that these were administrative or executive acts for which no writ of certiorari was available. It was submitted that the petition was wholly misconceived and should be dismissed.

8. In its affidavit-in-reply the allegations and contentions in the affidavit-in-opposition were denied while those in the petition were reiterated. It was disputed that the Export Promotion Scheme was applicable only to normal exports without any tied condition of export. There was nothing in the licence imposing restriction on cash assistance and it was denied that the company was not entitled to any cash assistance since withdrawn and adjusted. It was further denied that there was any suppression of export obligation or that payment was made by inadvertence under the Export Promotion Scheme of 1962–63 and subsequent years, such cash assistance by way of incentive was granted to all exporters. The company reiterated that the decision was arbitrary, illegal and discriminatory.

9. Before the learned Judge, as also before us, the Export Promotion Scheme current for the relevant period was not produced. It was held that even though the scheme was not there on the assumption that there was no restriction or limitation in respect of cash assistance to which the company was entitled for obligated export, it could not be said that there was any alteration of position to its detriment by the company in exporting goods on the representation of cash assistance. The learned Judge was further of the opinion that the cash assistance subsequently withdrawn could not be treated as trade receipts. The Rule accordingly was discharged. The appeal before us is against this decision.

10. Mr. Noni Coomar Chakravarti learned Advocate for the respondents raised a demurrer contending that the company had neither pleaded nor established any legal right, which could be remedied by issuance of any writ in a proceedings under Article 226(1) of the Constitution. And it was not established that the company had a statutory right to cash assistance nor that there was any violation of any statutory provisions by the respondents. The application it was submitted accordingly was patently not maintainable in law.

11. It is true there is no specific pleading that the company's legal right had been affected by the impugned adjustment. Even so, the company, it is the admitted position, became entitled to considerable amount by way of cash assistance for exports after April 1, 1969 and such amounts were its property over which it had the full right of disposal or appropriation. By adjustment of the said property against the amount of cash assistance on its exports prior to the said date, the company was deprived of its property, according to the company, without any authority of law. Such action thus offended the provisions of Article 31(1) of the Constitution and the Company's right to the said amounts if wrongfully adjusted could thus be enforced in proceedings for issuance of appropriate writs. The application accordingly, in our opinion is maintainable in law.

12. The next point urged by Mr. R.C Deb is that the Company acted upon the promise of cash assistance held out by the respondents and showed the amount so paid by Government in discharge of its promise as trade receipts whereon income-tax was paid. In the petition it was also stated that the company exported goods on the basis of assurance of cash assistance. The company thus altered its position it was submitted, to its detriment. Accordingly the Government was bound by its promise and could not after the promise was acted upon be allowed to resile from its promise and saddle the company with the liability as if such promise was never made. Reference was made to the decisions in Union of India v. Anglo Afgan Agencies, AIR 1968 SC 718 and Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council, (1970) 1 SCC 582 : AIR 1971 SC 1021. In the latter case following the earlier case it was observed:—

“Public bodies are as much bound as private individuals to carry out representations of facts and promises made by them relying on which other persons have altered their position to their prejudice………….”

13. In the case before us, the company was granted a licence to import capital goods namely plant and machinery for manufacturing spun pipes. One of the conditions of licence was to export spun pipes as would be manufactured by that plant and machinery imported to the extent of 15% of its production and for due performance of the obligation, the company executed a written undertaking. It could not accordingly be said that the company exported its products on the basis of the promise for cash assistance and but for such promise it would not have exported tile goods, thereby altering its position to its detriment. In fact when the licence for import of plant and machinery with export obligation was given no question of grant of cash assistance against export arose as the grant was directed to be given by the circular of Aug. 17, 1966 with effect from June 6, 1966. It could not therefore be said that there was such representation of an existing fact which raised an estoppel or a representation of a future act which could be enforced at law or in equity. As to the Company's case that it entered the cash assistance as trade receipt, in its books of account and paid income-tax thereon, it is obvious that such entry as alleged to have been made was not based on any representation that it was to be treated as such. It was treated as such by the company on its own, prima facie on its mistaken conception and also it has not been shown to our satisfaction that such cash assistance is to be deemed as income assessable under the Income-tax Act, 1961. Accordingly in agreement with the learned Judge we hold that there was no question of any estoppel or any right in the company enforceable against the Government at law or in equity.

14. Mr. Deb lastly contended that the respondents had no right to recover or adjust the cash assistance alleged to have been paid by them by inadvertence against the admittedly legal dues of the company lying with them. Such adjustment according to him, was not permissible in law when the right to recover the cash assistance was disputed nor was any authority of law shown to establish the right to withdraw the cash assistance paid during the relevant period. Mr. Chakravarti contended on the other hand that when there are mutual demands between the parties, there was nothing wrong or illegal in straightway making adjustment of mutual claims between the parties.

15. Section 72 of the Contract Act, 1872 provides that “a person to whom money has been paid or anything delivered, by mistake or under coercion, must repay or return it.” There can thus be no dispute about the legal liability of person to repay money paid or any thing delivered to him by mistake or under coercion. But before the liability is fastened, there must be no dispute that the person receiving the money had no right to such money paid or the thing delivered.

16. As to adjustment also, there can be little dispute that when there are Mutual claims between the same parties in respect of same accounts, if not of other, accounts, an adjustment is permissible in law which is also permissible on consent or by agreement express or implied. When however there is a dispute about mutual claims and no consent or agreement between parties can there be an adjustment by unilateral action of one party ? We are inclined to think that it is not; to allow one party unilaterally to adjust his alleged claims, which are disputed on (by ?) the other against his debts to such other party will be to reverse the process of law and to put the aggrieved party to approach a court of law to remedy the illegal and wrongful act of the offending party.

17. In the case before us, by the circular issued by the Government of India in the Ministry of Commerce dated 17th Aug., 1966 the Government decided to grant cash assistance against exports effected from June 6, 1966 of specified engineering products in the context of devaluation of Indian rupee. This circular is Annexure ‘D’ to the petition and appears to be complete in all respect with list of products and percentage of assistance annexed. Item (29) of Group III is in respect of iron and steel casting which include spun pipes, cash assistance being at the rate of 20% of f. o. b. value on export. In this circular there is no provision that the cash assistance would not be available even when the exporter was under obligation to export a specified percentage of its production. The Export Promotion Scheme valid and current for the relevant period was not produced before the Court to establish that the scheme was applicable to normal exports without any tied condition under “Export obligation scheme.” In the affidavit-in opposition, it was stated that it was not the policy of the Government to give cash assistance where exports had been made in fulfilment of export obligation. Unfortunately no document was produced before the court to establish the Govt.'s intention based on authority as alleged that no assistance including cash assistance against exports prior to April 1, 1969 made in fulfilment of export obligation was to be granted. In the relevant circular of Aug 17, 1966 (Annexure ‘D’ to the petition) which set out the decision of the Government extending cash assistance to various products as listed therein with specific percentage of assistance no condition had been attached confining cash assistance only to normal exports free from any obligation as claimed. Admittedly such cash assistance was given to exports from April 1, 1969 even when there was the export obligation for the aforesaid period. In absence of relevant documents which the respondents having custody of the documents was required to produce before the Court and on the face of the aforesaid circular it is not possible for us on the materials on record to hold that the impugned adjustments depriving the appellant of their property in the form of money were with the authority of law in so far as the case before us is concerned.

18. Further as we have already seen, when a dispute has been; raised in respect of the cash allowance in respect of export prior to April 1, 1969, till such dispute is resolved by adjudication under the process of law, the Government on its own cannot make adjustments of suck payments against other funds of the company lying with it. Such action appears to be arbitrary and without the sanction of law.

19. We concur with the findings of the learned Judge that there was no question of estoppel and that the company could claim no legal right at law or in equity against adjustment on basis of promise or representation.

20. We however feel that in the view we have taken about the right of the Government to recover the cash assistance, the adjustment in the way done should be set aside. We accordingly allow the appeal and set aside the order discharging the Rule and make the Rule absolute. The order of the Government dated Dec. 28, 1970 Annex. ‘K’ to the petition adjusting the cash assistance on exports prior to April 1, 1969 against subsequent cash assistance is set aside and the respondents are restrained from giving effect or further effect to the same. Let appropriate writs issue accordingly. The respondents however will be at liberty to recover from the company, the impugned cash assistance if recoverable, in accordance with law. There will be no order for costs in the appeal.

21. G.N Ray, J.:— I agree.

22. Appeal allowed.