Narayan Chandra Chakraborty v. Union Of India

JUDGMENT

1. The plaintiff along with one Giridharilal Ganatra used to carry on business as brokers in the Jute and Hessian Market, in Calcutta long prior to 1964.

2. In the first week of November 1964, the defendant through its officer Mr. J.P Singh, the Chairman of the Central Board of Direct Taxes, New Delhi, made an announcement in a press conference which was published in the Times of India and The Statesman both dated 8.11.64 to the effect that the persons who would disclose their concealed income voluntarily would be treated ??? by the defendant in the manner mentioned in the said publication. It was further published that the rate of the reward to those furnishing informations about concealed income had been stepped up from 25%(?) to a minimum of 7.50% of the extra tax to be realised as a result of such information and in suitable cases the reward might go up to ???%. Similar announcements were published in the Sunday Tribune. ??? Hindusthan Times Weekly, Hindusthan Standard and Amrita Bazar Patrika all dated 8.11.64 The plaintiff and the said Giridharilal made a joint representation in writing dated 25/??? to the then Commissioner of Income-tax No. 1 giving informations of concealed inc me by seven firms in the Jute Market mentioned in paragraph 3 of the plaint and furnished valuable particulars regarding the books of accounts relating to their concealed income. Thereafter from time to time informations regarding about 52 firms guilty of concealing income were furnished by the plaintiff to the defendant and a list of such names has been set out in paragraph 8 of the plaint. On 31.1.67, the plaintiff along with Giridharilal actively helped the defendant's officers in raiding 37 business places. As a result of the ??? the defendant discovered concealed income to the extent of Rs. 4 crores, which was published in the Sunday Statesman on 5.2.67 According to the plaintiff, he acted on the basis of the promises made by the defendant and relied on its representations published in the newspapers mentioned above and as a result thereof he changed his position and suffered disadvantages. In the alternative, the plaintiff stated that he had furnished those informations and rendered active help to the defendant not intending to do so gratuitously and as a result thereof, the defendant derived benefit by discovering conce led income and realising huge extra taxes and as such the defendant is bound to compensate the plaintiff by payment of the promised reward under S. 70 of the Indian Contract Act. Section 70 was specifically pleaded by way of amendment. It is the plaintiff's case that he received Rs. 100/- from the defendant for conveyance and Rs. 12,500/- by way of interim reward on 18.11.69 The plaintiff made several demands for settlement his claims but without any result. The defendant, through its officer Sri B.K Naba I.T.O S.I.B wrote a letter dated 29.4.70, acknowledging the defendant's liability to the plaintiff in writing. Thereafter on 29.10.70, the Central Board of Direct Taxes, informed the plaintiff by a telegram that a further reward had been sanctioned. Pursuant to the same, a further sum of Rs. 12,500/- was offered to the plaintiff for acceptance in full and final settlement of all his claims against the defendant but the plaintiff refused to accept the same as according to him his claims would be much more than what was offered to him. The plaintiff by his letter dated 21.1.71 requested the defendant to furnish him certain informations regarding assessments relating to his claims but the defendant through its officer, Mr. B.K Naha refused to give any information by its letter dated 4.3.71 and alleged that rewerd was ex gratia. Being unable to recover his legitimate dues from the defendant, the plaintiff moved this High Court in its writ jurisdiction under Article 226 of the Constitution by a writ petition being Civil Rule No. 2619(W) of 1971. In the said application the defendant filed an affidavit-in-opposition affirmed on 29.6.72 by one Coimbatore Kumaro Krishnamurthi the Commissioner of Income-Tax, West Bengal No. II and in paragraph 24 of the said affidavit, the defendant admitted its liability in writing by saying that the reward was payable on determination of the extra taxes to be recovered as a result of the information furnished by the plaintiff but the assessments not being complete, the quantum of reward could not be ascertained at that stage. The plaintiff had filed a supplementary affidavit in that proceeding affirmed on 14.8.72 in which he stated in paragraph I, that the defendant had recovered more than 8 crores by way of extra taxes and this allegation was not denied by the defendant by filing any affidavit although the suplementary affidavit was duly received by the defendant on 16.8.72 On the basis of the allegation by the defendant that assessment was incomplete, the plaintiff did not press the said Rule and withdraw the same with leave to take out a fresh proceeding. By the order dated 27.9.72, disposing off the said Rule, this Court directed the defendant to make an ad-interim payment to the plaintiff at an early date and to expedite the matter. The plaintiff, thereafter gave several reminders to the defendant. The defendant by its letter dated 2.6.73 informed the plaintiff that the matter could not be finalised due to various litigations instituted by the assessees and the question of final reward would be taken up after the relevant assessments would become final and on realisation of extra taxes. As the defendant remained silent and no final reward was paid, the plaintiff inrtituted the present suit for recovery of rupees two lakhs after service of notice under S. 80 of the Code of Civil Procedure. According to plaintiff no part of his claims is barred by limitation on account of various acknowledgments in writing by the defendant and/or its duly authorised officers.

3. The defendant filed its written statement admitting that the accouncements in the newspapers were duly published as alleged in the plaint. The authority of the persons making the accouncements were not disputed. It was also admitted in the written statement at the plaintiff and Giridharilal Ganatra furnished informations and there were raids on 31.1.67 It was however denied that the plaintiff and Giridharilal gave active help on 31.1.67 or the result of the raid on 31.1.67 was published in the Statesman dated 5.2.67 as alleged by the plaintiff. The defendant stated that by letter dated 25/26.2.70 the plaintiff and Giridharilal were informed by the defendant that their claim for reward would depend on the discovery of concealment after examination of the seized materials and on completion of the assessments and collection of extra taxes and by the letter dated 4.3.71 the plaintiff was informed that the rewards payable to the informer was in the nature of ex gratia payments and the plaintiff was not entitled to any information in respect of any assessment. The defendant, denied that by the announcements in the newspapers the defendant made any promise to pay or made any representations as alleged by the plaintiff or that the plaintiff acted on the basis of such representation or relied on the same or suffered any disadvantages or detrimental alleged or at all. The defendant also denied having any knowledge of the plaintiff's supplementary affidavit dated 14.8.74 and disputed the correctness of the contents thereof. It is alleged that the payment of reward being ex gratia in its nature, the present suit misconceived and is not maintainable in law. The validity and legality of the notice under S. 80 of the Code of Civil Procedure were denied and it was alleged that there was do acknowledgement of liability by the defendant.

4. On the pleadings the following issues were raised:—

ISSUES

1. (a) Has the defendant made any representations to the plaintiff to pay a reward as alleged in the plaint?

(b) If so, has the plaintiff suffered to his detriment by acting on the alleged representations alleged to have been made by the defendant?

2. Is the plaintiff entitled to recover the money claimed in the suit under S. 70 of the Indian Contract Act?

3. Has the defendant through its Income-tax Commissioner Mr. Krishnamurthy admitted the plaintiff's claim in writing by affidavit affirmed on 29th February 1972 in C.R No. 2619(W) of 1971 as alleged in paragraph 19 of the plaint?

4. Did the defendant realise Rs. 8 crores as alleged in paragraphs 1 and 3 of the plaintiff's supplementary affidavit dated 14th August 1972 alleged in paragraph 20 of the plaint?

5. Has the plaintiff any cause of action against the defendant?

6. To what relief, if any, is the plaintiff entitled?

5. On behalf of the plaintiff, plaintiff himself add Giridharilal Ganatra were examined. No oral evidence was adduced on behalf of the defendant.

6. The plaintiff proved the Hindusthan Times, Weekly Sunday, Hindusthan Standard, Sunday Statesman and Sunday Amrita Bazar Patika all dated 8.11.64 containing the announcements of payment of reward to the informant of concealed income as alleged in the plaint and the same were marked as Exhibits A/1, B/1, C/1 and D/1. The correspondence disclosed in the suit clearly established that by letters dated 27.10.65 (Ext. E), 29.10.65 (Ext. F) and 10.2.69(Q), the plaintiff supplied the defendant the names of the tax dodgers. By letter dated 30.5.69, the defendant informed the plaintiff that their reward in respect of jute cases could not be considered on account of pending proceedings in court and thereby acknowledged the defendant's liability in writing. By letter dated 16.7.69, addressed to the defendant's officer, the plaintiff recorded that on the basis of the assurance given by the defendant and/or its officers, the plaintiff had given all kinds of co-operation by explaining the system of accountancy, and helping the defendant in detecting forged vouchers as a result thereof the defendant had discovered quite a few lakhs of rupees, jewelleries and duplicate account books. In that letter, the plaintiff further stated that he was in helpless condition and requested the defendant to make necessary arrangement for settling his claims. By letter dated 29.10.69, the defendant informed the plaintiff that an interim reward of Rs. 12,500/- was sanctioned in connection with the Jute cases. The plaintiff admittedly received this money on ???. By tetter dated 24.11.69 addressed to the defendant, the plaintiff recorded that at the time of raid on 31.1.67 the plaintiff and Guidharlal had given their utmost help to the defendant's officers resulting in ??? of the huge amount of cash and jewellery worth several lakhs of rupees from Ramkishore & Sons, Rameswar Shroff Ramchand & Co. and others and that the reward in that connection would exceed a few lakhs of rupees. This letter was not replied to by the defendant and the facts alleged therein remained uncontradicted. By another letter dated 7.2.70 addressed to the Chairman Central Board of ??? Taxes, the plaintiff specifically mentioned the names of 13 firms about whom the plaintiff had given information earlier and demanded settlement of his claims. By a letter dated 29.4.79, Mr. B.K Naha, defendant's Income Tax Officer, Special Investigation Branch, Calcutta, wrote to the plaintiff as follows:—

“I am directed to inform you that at this stags no further reward is admissible to you in respect of the information supplied by you in the jute cases which are being assessed in this charge. The claim for reward in these cases will depend on discovery of concealment, if any, after examination of all the seized materials and upon their assessments and on realisation of tax on such assessment.”

7. This letter is a clear admission and acknowledgement of defendant's liability to the plaintiff in writing. It appears that by the end of November 1976, the defendant offered the plaintiff to accept another sum of Rs. 12,500/- in full and final settlement of his claims for reward. The plaintiff by his letter dated 4.12.70 refused to accept the said sum in full and final settlement of his claims. By a letter dated 21.1.71, the plaintiff requested the defendant's D.H Dutta, Deputy Director of Inspection to furnish him with copies of search list and seizure lists and wanted to know what steps the defendant had taken for completing the assessment and what amounts had been assessed as extra taxes. In reply to this leter Mr. B.K Naha wrote the plaintiff on 4.3.71 that the plaintiff was not entitled to any information and that the payment of reward was ex gratia in nature and was entirely within the discretion of the government. It would be significant to note that this allegation of reward being an ex gratia payment, was made for the first time in this letter. Shocked at the stand taken by the defendant, the plaintiff took out an application under Article 226 of Constitution of India, being C.R No. 2619(W) of 1971 against the defendant. In that writ petition, the plaintiff filed a supplementary affidavit affirmed on 14.8.72 which was duly received by the defendant on 16.8.72 In paragraph 3 of the said affidavit the plaintiff alleged that the total extra income tax assessed for the years 1960 to 1965 from all these assessees were mare than 8 crores. The defendant did not deny the allegations in the said affidavit. The Income Tax Department, by the first week of February 1977 announced to the press that documents relating to tax worth Rs. 4 crores had been realised and the said informations was published in the “STATESMAN” dated 5.2.1967 (Ext. DDD/1). The plaintiff stated that he got this news item verified by the Deputy Director of Investigation Mr. D.H Dutt (Plaintiff qs. 193-196). He further deposed that he made claims on the basis of the announcements made in the newspapers and pursuant to the assurance given by the Department. The recovery of Rupees 4 crores was on the basis of informations supplied by the plaintiff (Q. 205-210). In C.R No. 2619(W) of 1971, the defendant filed an affidavit-in-opposition affirmed on 29.6.72 by one Coimbatore Kumaro Krishnamurthi, the Commissiner of Income Tax, West Bengal No. II (Ext. GGG). In paragraph 24 of the affidavit the defendant stated as follows:

“……..I submit that reward is payable on the determination of extra taxes thereon as a result of the information furnished. As in the instant case relevant assessments have not been completed, at this stage, the final reward could not be ascertained.”

8. This statement amounts to clear acknowledgment in writing of the defendant's liability to pay the reward to the plaintiff upon ascertainment of the extra taxes payable by the assessees. On the basis of this averments of the defendant, and relying on the same the plaintiff did not press the said Rule and the same was disposed of by the court by order dated 27.9.72 (Ext. EEE) observing as follows:

“It is however, expected that the authorities will expedite the matter and will also consider if it is possible for them to make another interim payment, if due to the petitioner in the meantime. If so, the authorities will make such ad-interim payment to him at an early date.”

9. It is to be noted that in the writ petition, the defendant did not take the stand that the plaintiff had no legal right to recover the reward or the reward was in the nature of ex gratia payment and would depend on the discretion of the authorities as alleged in the written statement before me or in the letter dated 4.3.71 Subsequent to the disposal of this Rule, the plaintiff made various representations to the defendant for payment of his rewards but without any result. Being exasperated, the plaintiff by a letter dated 10.11.72 addressed to the Chairman, Central Board of Direct Taxes, recorded the whole history of the case. It was specifically recorded that on 31.1.67, the Department made sudden raids in 37 places pursuant to the informations given by the plaintiff. In that letter the plaintiff staled that the defendant had realised rupees 8 crores by way of extra taxes. A long list of names supplied by the plaintiff to the defendant was enclosed with that letter. There was no reply to this letter and no denial of the facts recorded in that letter. Subsequently by two letters dated 22.1.73 and 2.5.73 the defendant informed the plaintiff that his claims was receiving attention and was under consideration and the Board's decision would be communicated to him in due course.

10. In the written statement, the defendant denied receipt of most of the plaintiff's letters mentioned in the plaint but at the time of hearing, no one on behalf of the defendant came forward to establish that denial. On the contrary, all the correspondence mentioned above were duly proved and exhibited by the plaintiff without any objection on the part of the defendant and as such they are good evidence before me.

11. In his oral evidence, the plaintiff corroborated the entire case recorded in the correspondence. He said that alter the raids he helped the department in finding cut the manipulations in the books of accounts. The officers concerned were one Mr. Talapatrs, one Mr. Ghoshal and one Gouri all I.T.O.s (Plaintiff's Qs. 230-233). He came to know from the market that Rs. 8 croses were realised by the department. Thereafter Mr. Srinivasan, a member of the Central Board of Direct Taxes, confirmed this information and he is still in service as a member of the Board (Plaintiff Qs. 253-255). He supplied information and helped the defendant relying on the representations of Mr. J.P Singh, Chairman of the Board of Direct Taxes (Plaintiff Qs. 249-251, 260-261). The plaintiff mentioned several names of the officers of the defendant in this connection but none of them was tendered as a witness by the defendant.

12. Giridharilal Ganatra was next examined by the plaintiff who corroborated the plaintiff's oral evidence as well as the facts recorded in the correspondence. He further deposed that within a very short period after giving information to the defendant, both the plaintiff and Ganatra faced great difficulties in their business as the news of their giving information to the defendant leaked out in the Jute Market. They suffered financial loss and he and the plaintiff went out of Jute market (Giridharilal Q 29.31, 92, 206-211). He said that he had to accept Rs. 25,000/- as he badly needed money at that time for his daughter's marriage (Giridharilal Q. 89). He further said that Mr. R. Prosad, Assistant Inspector, Jute Circle and Mr. R. Chopra, Commissioner of Income Tax told him that assessments have been completed and tax had been realised and these officers are still in service (Giridharilal Q 103-118, 241-243). Giridharilal mentioned names of several officers of the defendant who according to him had given information to Ganatra about the realisation of huge taxes but none of these officers came forward to deny this oral testimony. Both the documentary and the oral evidence before me remained unchallenged and unrebutted. The entire record of assessments and informations and records of recovery of extra taxes have been withheld by the defendant from court. The defendant has not come forward to assist the court in this matter. Mr. Dasgupta, the plaintiff's counsel submitted that the whole records relating to assessment and realisation of taxes were suppressed. The shyness of the defendant's officers to go to the witness box and to face cross examination and the suppression of all relevant records from court, naturally would give rise to the adverse presumption that the records, if produced, would go against the defendant and would support the plaintiff's case of realisation of extra taxes to the extent of at least 8 crores by the defendant. He pointed out that under S. 106 of the Evidence Act, the onus was on the defendant to prove what was the extra tax realised by the defendant as all the faces are within the special knowledge of the defendant. It is not for the plaintiff to prove the amount realised by the defendant by way of extra taxes. The S. 106 is as follows:—

“When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him.”

13. In this connection Mr. Das Gupta, counsel for the plaintiff relied on AIR 1974 SC 859 (Collector of Customs, Madras v. Bhoormull) at page 864 where it was held:—

“On the principle underlying S. 106 Evidence Act, the burden to establish those facts is cast on the person concerned; and if he fails to establish or explain those facts, an adverse inference of facts may arise against him.”

On the same point he also relied on AIR 1975 SC 667 (Ch. Razik Ram v. Ch. J.S Chouhan) at page 688 paragraph 116:—

“In the first place it may be reme abered that the principle underlying S. 106 Evidence Act which is an exception to the general rule governing burden of proof—applies only to such matters of defence which are supposed to be especially within the knowledge of the defendant/respondent. It cannot apply when the fact is such as to be capable of being known also by persons other than the respondent.”

14. He submitted that the plaintiff wanted the informations relating to assessments which were refused by the defendants. The plaintiff made applications for orders for discovery of relevant records including all assessments orders but the defendant wrongfully took the stand that there was a statutory bar against discovery of such documents. One of such applications is still awaiting decision. In the premises, the plaintiff was not in a position to give direct evidence regarding the amount of extra tax actually realised by the defendant. The plaintiff has given evidence regarding recovery of extra taxes on the basis of informations received from the defendant's officers as well as from publication of news in the newspapers which evidence remained uncontradicted. All the records relating to recovery of taxes are in the custody and control of the defendant and all informations are within the special knowledge of the defendant. Hence it is for the defendant to prove what sum has actually been realised by the defendant. The defendant failed to discharge that onus. It is a fit case where adverse presumption should be raised against the defendant under S. 114(g) of the Evidence Act. The counsel for the defendant submitted that there was no question of suppression of records by the defendant. The assessment records are secret documents as there is a statutory prohibition against disclosure of these documents. He very strongly relied on S. 54 of the Income Tax Act 1922 and S. 137 of Income Tax Act of 1961. Mr. Das Gupta thereupon invited my attention to the fact that S. 137 of the Income Tax Act of 1961 was deleted with effect from 1.4.64, by Finance Act 1964 and whatever statutory ??? was there was removed from April 1964. He cited 85 ITR 342 (Nazir Mohammad v. Jamila Bibi). In this case the effect of omission of S. 137 from the Income Tax Act of 1961 by Finance Act 1964 with effect from 1.4.64 was considered and it was held at page 345 as follows:—

“Thus it appears, after the omission of S. 137 ??? the Statute, the restriction in respect of disclosure of informations has been confined only in respect of Banking Companies and none other.”

The plaintiff's counsel also relied on 94 ITR 276 (H.N Malik v. Aziz S. Yusuf) at page 284:—

“The intention of the Legislature is further clear from the fact that S. 137 of the Income Tax Act 1961 has been deleted. Therefore, in my opinion, now it is not possible to hold that though S. 54 of the Old Act or S. 137 of the Income Tax Act 1961 have been deleted by the legislature from the statute book, still it was the intention of the legislature in effect to continue the same protection to the assessee.”

15. It should be noted that even under S. 137 of the Income Tax Act 1961, there was exceptions provided under sub-s. (3)(iv) in a case where the income tax authorities or the government was a party. If the suit related to or arose out of any proceeding under Income Tax Act, the prohibition against disclosure was not applicable. The defendant should have disclosed all relevant records but the same have been suppressed from court.

16. The next point argued by the plaintiff's counsel is that the announcements in the news papers about payment of 7.50% or 10% reward to the informant on the extra tax realised upon discovery of concealed income, is a clear representation by the defendant to the public in general with the intention that whoever would act on that basis and would supply information leading to discovery of concealed income and realisation of extra taxes, would be entitled to get the reward promised by the defendant. It is clear from the facts of this case, that on the basis of these representations, the plaintiff in fact supplied informations regarding several tax dodgers and the plaintiff's said services were accepted by the defendant. The defendant's counsel however submitted that there was no representations, by the defendant by the announcements in the newspaper. It was an offer to the general public and whoever would have accepted the offer should have entered into a contract with the defendant. In this case no contract was entered into in writing in accordance with the provisions of Article 299 of the Constitution. Hence the parported contract, if any, is totally void as against the defendant. He relied on 1892 (2) QB 484 (Carlill v. The Carbolic Smoke Bail Company) in support of his contention.

17. But this case of making an offer to the general public does not find any place in the written statement. In paragraph 2 of the written statement, the defendant admitted that certain statements were made by the Chairman. Central Board of Direct Taxes. New Delhi and reported in Press. In paragraph 31 of the written statement, the defendant's case is:—

“This suit is not maintainable as the payment of reward is in the nature of ex gratia payment.”

18. This case of offer and acceptance or void contract has on basis whatsoever as the plaintiff has not come to court to enforce any contractual right against the defendant. The cause of action in the suites ‘promissory estoppel’ or S. 70 of the Contract Act. Although this particular term promissory estoppel has not been used in the plaint, both the parties have argued this branch of law in full. Hence this Carbolic Smoke Ball case has no application on the facts of this case. According to the defendant's counsel, the question of promissory estoppel would not arise as no legal relationship or right was in existence between the parties when the alleged representations were made by the defendant. The defendant's counsel submitted that where an existing legal right is varied or modified by the promisor by subsequent agreement or promise without having any fresh consideration for the same from the promisee, the promisor is not allowed to go back on his promise and this promise becomes enforceable in law as a promissory estoppel. Promissory estoppel, standing alone, without any pre-existing legal right or jural relationship between the parties does not give rise to any cause of action. In support of his contention he cited 1966 (1) AER 256 (Central London Property Trust Ltd. v. High Trees House Ltd.), 1964 (3) AER 556 (Emmanuel Aijodiji Ajaji v. R.T Briscoe) and AIR 1972 SC 1311 (Turner Morrison & Co. Ltd. v. Hungerford Investment Trust Ltd.). He then argued that the principle of promissory estoppel cannot be applied and/or enforced against the government. On this point he relied on AIR 1976 SC 2237 (Excise Commissioner, U.P Allahabad v. Ram Kumar). His next point is that in case of a promissory estoppel, the plaintiff has to establish that the plaintiff acting on the basis of the representations of the defendant has changed his position to his prejudice and has suffered some injuries, loss or damages. According to him, in the present case, the plaintiff failed to prove that he had altered his position to his prejudice. On this point the defendant's counsel cited 1978 (2) CLJ 166 (Kanchanoor Bhaskar v. State of West Bengal). The plaintiff's counsel on the other hand argued that the promissory estoppel, standing alone, without any pre-existing legal right or jural relationship between the parties, gives rise to a cause of action. According to him, promissory estoppel is enforceable against the government and in a case based on a promissory estoppel, the plaintiff is not required to prove that while acting upon the representations of the defendant he has altered his position to his prejudice. He has only to prove that he has acted upon the representations of the defendant. In support of his contention, the plaintiff's counsel relied on AIR 1968 SC 718. (The Union of India v. Anglo Afgan Agencies) AIR 1971 SC 1021 (Century Spg and Mfg. Co. Ltd. v. Ullasangar Municipal Council) and AIR 1979 SC 621 (Motilal Padampat Sugar Mills Co. Ltd. v. The State of Uttar Pradesh).

19. I am not dealing with the cases cited by the defendants' counsel and the plaintiff's counsel separately as the entire law of promissory estoppel including the cases relied on by both the plaintiff and the defendant have been throughly dealt within the epoch making judgment of Bhagawati J. reported in AIR 1979 SC 621. The entire law has been summarised and setttled in this case and the apparent inconsistency in AIR 1976 SC 2237 relied on by the defendants' counsel and AIR 1958 SC 718 relied on by the plaintiff's counsel has been resolved on the basis of the ratio of both these judgment as will clearly appear from that decision. This case clearly lays down that so far as the Indian Courts are concerned, they have always held that promissory estoppel, standing alone, without any consideration or pre-existing legal or jural relationship between the parties, gives rise to a cause of action and on this point there is clear depature from the law in England. In India the law on this point is uniform since 1880. It is worthwhile reproducing paragraph 19 of AIR 1979 SC 621 where the Supreme Court in bold language held as follows:

“When we turn to Indian law on the subject it is heartening to find that in India not only has the doctrine of promissory estoppel been adopted in its fullness but it has been recognised as affording a cause of action to the person to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise. The doctrine of promissory estoppel has also been applied against the government and the defence based on executive necessity has been categorically negatived. It is remarkable that as far back as 1880, long before the doctrine of promissory estoppel was formulated by Denning, J. in England, a Division Bench of two English Judges in the Calcutta High Court applied the doctrine of promissory estoppel and recognised a cause of action founded upon it in the Ganges Mfg Co. v. Sourujmull (1880) ILR 5 Cal. 669. The doctrine of promissory estoppel was also applied against the Government in a case subsequently decided by the Bombay High Court in Municipal Corporation of Bombay v. Secretary of State, (1905) ILR 29 Bom 580.”

Bhagawati J. quoted a passage from ILR 29 Bom 580 at page 641:

“The municipality gave up the old stable, levelled the ground, and erected the movable stables in 1866 in the belief that they had against the government an absolute right not to be turned out until not only the expiration of six months notice, but also other suitable ground was furnished that this belief is referrable to an expectation created by the government that their enjoyment of the land would be in accordance with this belief, and that the government knew that the Municipality were acting in this belief so created.”

Strongly relying on this Bombay case, the Supreme Court held at page 641:

“This decision of the Bombay High Court is a clear authority for the proposition that it is open to a party who has acted on a reprerentation 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 not recorded in the form of a formal contract as required by the constitution.”

20. Even if the promise to pay the reward was in the nature of an ‘offer’ to the general public as submitted by the defendant's counsel and on acceptance of such offer, there could be a binding contract if it was enbodied in writing in accordance with the Article 299 of the Constitution, but the same not being done it became void on account of non-compliance with this constitutional provisions that would not stand in the way of enforcing the equitable principle of promissory estoppel against the government. It will not give the defendant a valid defence as will appear from the observation of the Supreme Court at page 648 of this report where relying on the case of Anglo Afgan Agencies case (A 1968 SC 718) it was held:

“It was thus laid down that a party who was acting in reliance on a premise made by the government altered his position, is entitled to enforce the promise against the government, even though the promise is not in the form of a formal contract as required by Article 299 and that Article does not militate against the applicability of the doctrine of promissory estoppel against the government.”

21. The defendants' counsel had argued that the doctrine of promissory estoppel was not applicable in this case because there is no evidence, so far as the plaintiff is concerned that he had suffered any prejudice or detriment by acting on the representation made by the defendant. It is true that the plaintiff has not said in his evidence that he had suffesed any detriment. This point has also been answered in AIR 1979 SC 621 as similar argument was made in that case. It was held at paragraph 33 of this report:

“This contention of the state is clearly unsustainable and must be rejected. We do not think it is necessary in order to attract the applicability of the doctrine of promissory estoppel, that the promisee acting in reliance on the promise, should suffer any detriment. What is necessary is only that the promisee should have altered his position in reliance on the promise.

….….….….….….….….

If the promise is ‘acted on’ ‘such action’ in law as in physics, must necessarily result in an alteration of position.”

Then again at page 651:

“We do not think that in order to invoke the doctrine of promissory estoppel, it is necessary for the promissee to show that he suffered detriment as a result of acting in reliance on the promise. But we may make it clear that if by detriment we mean injustice to the promisee which would result if the promisor were to resile from his promise, then detriment would certainty come in as a necessary ingredient. The detriin such a case is not some prejudice suffered by the promisee by acting on the promise but the prejudice which would be caused to the promisee, if the promisor were allowed to go back on the promise.”

22. On the facts of this case, it is an admitted position that pursuant to the promise and/or representation of the defendant to pay the promised reward, the plaintiff in fact acted on such representations and assurances and gave informations to the defendant pursuant to which the defendant was able to discover concealed income and realise extra taxes. The promise has been acted upon by the plaintiff and “such action” in law as in physics, must necessarly have resulted in an alteration of position irrevocably. It is no longer possible by the plaintiff to resume position of 1965. It has not been proved or argued on behalf of the defendant that it will be inequitable to hold the defendant to the promise made by it by enforcing this equitable doctrine against it. So far as the facts of this case are concerned, the case is almost undefended. The government cannot claim to be exempted on some indefinite and undisclosed ground. The defendant's allegation at a very late stage, that the promise was not a representation but was an intimation of an ex grasia payment to the informant depending on the discretion of the government cannot be accepted. In the premises, I hold that the plaintiff has a cause of action on the basis of promissory estoppel and the suit is maintainable against the defendant. Moreover, Ganatra has said that both he and the plaintiff had to give up their business in the Jute market.

23. Section 70 of the Contract Act has been introduced by way of amendment in paragraphs 3A and 4A of the plaint. As against this, the defendant's counsel has raised three points.

1. This case does not find any place in S. 80 notice and cannot be entertained.

2. The plaintiff admitted in the plaint that he had supplied information “pursuant to the request” of the defendant. Section 70 does not contemplate any such “request” and its operation would, therefore be excluded.

3. This amendment was made at a time when the plaintiff could not have filed any suit on this cause of action as it was barred by limitation.

24. The plaintiff's counsel on the other hand submitted that the question of limitation would not arise at all as all the facts required to be pleaded under S. 70 of the Contract Act were already pleaded in the plaintiff. By amendment, S. 70 was specifically mentioned to make explicit what was implicit in the plaint. The defendant's counsel, however, relied on AIR 1977 SC 329 (Union Of India v. Sita Ram Jaiswal.) in support of his contention that all the ingredients were not pleaded and as such S. 10 introduced a new cause of action in the plaint. In paragraph 6 of this report the requirements of S. 70 were set out:

1. The good are to be delivered lawfully or anything has to be done for another person lawfully.

2. The thing done or delivered “not inteading to do so gratuitiously”

3. The person to whom the goods are delivered “enjoys the benefit thereof.”

25. The plaintiff in that case alleged that certain goods supplied to the defendant were wrongfully rejected by the defendant alter lapse of reasonable time. The plaintiff claimed the price of goods and his alternative case was that plaintiff was entitled to the sum for supply of the goods because the same were not supplied gratuitously. The Supreme Court held that there was no proper pleading under S. 70 of the Contract Act. It was so held because it was a case of rejection of goods and there was no express pleading of acceptance of benefit by the defendant. In spice of this state of pleading the Supreme Court did not disturb the finding of the trial Court as the parties had gone to trial on the basis of S. 70. In my opinion, this case has no application on the facts of the present case as all the aforesaid three requirements would be found to have been sufficiently pleaded in the original plaint to attract S. 70 of the Contract Act and as such the question of limitation will not arise in this case as no new case or cause of action has been introduced by way of amendment.

26. The defendant's counsel further submitted that in paragraph 3 of the plaint it was specifically pleaded that the plaintiff supplied information in pursuance to the said announcement” and this pleading will exclude the operation of S. 70 of the Contract Act. The defendant's counsel relied on AIR 1959 Cal 247 (B.N Ellas & Co. Ltd. v. State of West Bengal). In paragraph 29 of this case it has been held that where goods are delivered pursuant to a request. S. 70 of Contract Act has no application and that there must be a pleading for compensation under S. 70. According to the defendant's counsel under S. 70, compensation is the market value of the goods which is a question of fact and there must be proper pleading and proof of market value. The plaintiff did not plead or prove market value of work done by him and the suit must be dismissed on that ground. The plaintiff's counsel, however, submitted that AIR 1959 Cal 247 has been overruled by implication by AIR 1962 SC 779 (State of West Bengal v. B.K Mondal & Sons). The facts of the case were that the plaintiff at the request of the defendant submitted its estimate for certain construction works and completed the same and became entitled to Rs. 2322/81 from the defendant. There after the Sub-Divisional Officer requested the plaintiff to erect certain storage sheds which were done by the plaintiff and his bill came up to Rs. 17003/-. In the suit these two amounts were claimed. There was no pleading under S. 70 of the Act. The defence was that there was no valid or binding contact under S. 175(3) of the Government of India Act 1935. The trial court on the facts or that case, held, that there was no binding contract between the parties but allowed the claim holding that the claim of the plaintiff would be justified under S. 70 of the Contract Act. It paragraphs 24 and 43 of AIR 1962 S it was held:

“Turning to the facts of this case it is clear that both the courts have found that the acts done by the respondents (plaintiff) were done in facts in pursuance of the requests invalidly made by the relevant officers of the appellant and so they must be deemed to have been done without contract. It was not deputed in the courts below that the acts done by the respondent have been accepted by the appellant and the buildings constructed have been used by it.”

Para 43—“The request by the officers does not affect the question that arises in this case. It had no compelling effect and no effect as a promise and in fact no effect at all.”

27. On these findings, the Supreme Court held that S. 70 was rightly applied by the learned trial Court. It is true that AIR 1959 Cal 247 was not considered in AIR 1962 SC 779 but after this Supreme Court decision, the decision in AIR 1959 Cal. 247 cannot be considered to be a good law and the effect of this Judgment would amount to overruling this Calcutta decision by implication and I accept this submission of the plaintiff's counsel on this point. As stated earlier there was no express pleading of S. 70 in the plaint in that case but the Supreme Court held that all the three ingredients required for invoking S. 70 were already in the plaint and applied the provisions of S. 70 without having any specific pleading to that effect or having any proof regarding the compensation:

“The position there is that the respondent had done the work for the government without any contract with anybody. The question is, are the three requisites of S. 70 as very correctly formulated by G.K Mitter J. satisfied? We think they are. There is no dispute that government had taken the benefit of the work. We also feel no doubt that the respondent did not intend to do the work gratuitiously. It submitted its estimate for the work and was very prompt in submitting the bill after work was done.”

28. The aforesaid observation of the Supreme Court is fully applicable to the facts of this case. The supply of information and the active help by the plaintiff and the discovery of concealed income by the defendant on the basis of plaintiffs' information are not only admitted by the defendant but also have been fuly established by both oral and documentary evidence of the plaintiff in this suit. That the plaintiff had no intention to act gratuitiously is also proved by the oral and documentary evidences which show that the plaintiff had been repeatedly demanding the promised reward from the defendant. The plaintiff's counsel rightly submitted that all the requisites under S. 70 of the Act were already pleaded in the original plaint and the amendment only clarified the position. This also disposed of the other point taken by the defendant that S. 80 notice did not mention anything about cause of action under S. 70 and as such the plaintiff was not entitled to recover the claim on that basis. I have carefully gone through the notice and am satisfied shat all the requirements under S. 70 have been fully and substantially pleaded in the said notice.

29. Then comes the question of evidence of compensation in this suit. According to the defendant, the plaintiff has not given any evidence of the reasonable value of the work done by him and the suit must fail on this ground only. The value of the informations to be supplied or works to be done had been assessed and fixed by the defendant by announcing that 7.50% of the extra tax would be the reward and in suitable cases that might go upto 10%. The plaintiff has accepted this assessment and the defendant is bound by its own assessments and promise to pay the same. No other evidence is necessary in this case.

30. But what is the extra tax realised? The entire relevant records of this case regarding assessment of tax have been suppressed by the defendant from court. The defendant government tried to take shelier under the provisions of S. 54 of Income Tax Act of 1922 and S. 137 of Income Tax Act of 1961 in spite of the fact that the protection given to the revenue was withdrawn by the Finance Act or 1964 with effect from 1.4.64 The Finance Act of 1964 was passed by the defendant and it was fully acquainted with its provisions. None one came forward to tell the Court as to what was the state of affair regarding assessments, whether they were complete or incomplete or what was the extra tax realised. There is a clear and unchallenged evidence on record that some of the important officers of the defendant who gave information to the plaintiff and the witness Ganatra about the quantum of tax realised are stitt in the employment of the defendant. But all of them avoided the witness box. The defendant not only suppressed the assessment record but also withheld all oral evidence from court regarding realisation of extra tax by the defendant. On the facts of this case and on the basis of the aforesaid conduct of the defendant I hold that the provisions of S. 106 and 114(g) of the Evidence Act apply in full force. The onus to prove the realisation of extra tax is on the defendant and the court is entitled to raise the presumption that the defendant has suppressed all available evidence from Court because all such evidence would support the plaintiff's case that the defendant has realised extra tax to the extent of rupees eight crores. In the written statement it was alleged by the defendant that some of the parties whose names were mentioned by the plaintiff subsequently made voluntary disclosures and the plaintiff was not entitled to claim anything in respect of the same. But the defendant did not come forward to prove this case. The defendant failed to discharge that onus.

31. In the promises there will be no order on the plaintiff's application for discovery. The issues are therefore, answered as follows:

Issue No. 1(a) — Yes. Issue No. 1(b) — Yes. Issue No. 2 — Yes. Issue No. 3 — Yes. Issue No. 4 — Yes. Issue No. 5 — Yes.

32. The plaintiff has already received Rs. 12,500/- from the defendant. There will be a decree for a further sum of Rs. 200,000/- in favour of the plaintiff against the defendant and this sum will carry interim interest at the rate of 6% per annum from the date of institution of the suit upto the date of the decree, interest on judgment at the rate of 6% per annum until realisation and costs. The defendant is given 3 months time from date for payment of the decretal dues. In default of payment by the defendant within the period aforesaid, the plaintiff will be entitled to execute the decree. Certified for two counsel.

Suit decreed.