Govindan Chengaiath v. Cochin Shipyard Ltd.

JUDGMENT

1. The petitioner was an Assistant Executive Engineer of the Cochin Shipyard, Ltd., a company registered under the Companies Act. Under schemes of technical exchange, the Government of India was sponsoring candidates for employment in foreign countries. On 19 November, 1977, the Central Government wrote exhibit PI latter to the company about possibilities of utilising the services of its engineers in assignments abroad, suggesting that interested personnel register their names for inclusion in appropriate panels. The petitioner applied for registration, and his application was forwarded by the company. He was selected for employment under the Government of Iraq in its Ministry of Agriculture and Agrarian Reforms. On 17 July, 1980, the Central Government advised the company as per exhibit. P-3 letter to release the petitioner, grant him a no-objection certificate, and treat him “as on deputation to a foreign Government in the public interest, with lien retained in the post held by him”. But on 19 July, 1980, another employee of the company similarly selected for service abroad was in formed that he would have to resign from the company's cervices, if he was to take up the foreign assignment. Apprehending that similar conditions involving loss of lien would be imposed on the petitioner also, he filed the present original petition on 28 July, 1980; and on 29-July, 1930, this Court gave an interim direction that he be relieved from duty, leaving the question of retention of lien to be decided in the writ petition. The petitioner was accordingly relieved, but it appears that an order exhibit R-3 was issued by the company on the same day informing him that he too would have to resign, for taking up the foreign assignment. The petitioner has served his term in Iraq and is now said to be back in India.

2. The main prayer in the writ petition as it now stands after due amendment, is to quash exhibit R-3. According to the petitioner, the company had represented to him that he could take up assignments abroad on condition that his lien would be retained during the period of foreign service. Acting on this representation, he entered into a contract of service with the Iraq Government, thereby altering his position. The company is estopped under the circumstances from insisting that he should resign and surrender the lien. The company is a public sector undertaking and a “State” as defined in Art. 12 of the Constitution. The scheme for foreign service was itself sponsored by the Central Government, for lending the services of Indian experts to foreign Governments on short-term basis, with provision for retention of lien. The company had accepted this scheme and encouraged the petitioner to participate in its working; it could not go back on the assurance and leave him high and dry, against the settled principles of promissory estoppel.

3. Broadly stated, estoppel is a rule which estops or prevents a person, by reason of certain circumstances, from urging a plea or proving something which he could otherwise do, in a Court of law. It is primarily a rule of evidence. Estoppels are generally classified into three;

(1) estoppel by record;

(2) estoppel by deed; and

(3) estoppd in pais.

4. Estoppel by matter of record is mainly concerned with the effect of judgments and their admissibility in evidence. For instance, S. 40 of the Evidence Act provides that the existence of a judgment which prevents a Court from taking cognisance of any suit is relevant, when the question is whether the Court ought to take cognizance of it. A binding decision inter partes operating as res judicata can thus be pressed into service by a dependant to estop the plaintiff from enforcing a claim. Res judicata is in a sense estoppel by judgment, though it is really a prohibition against the Court from enquiring into a matter, while estoppel in the strict sense is a prohibition against a party.

5. Estoppal by deed prevents a person from averring or proving anything contrary to what he has solemnly averred in a deed relating to disposal of property. But this doctrine of English law is rarely applied in India where the art of conveyancing is more simple and informal; deeds and contracts are liberally construed in this country, ignoring forms and literal construction. Even otherwise, what operates as estoppel in the case of a deed is the solemn representation it contains, and in this view, estoppel by deed is not different from estoppel by representation.

6. Estoppel in pais is estoppel with regard to matters outside the record, and stands on a different footing from the two preceding ones. Conduct of a party or the representation of a party is the basis on which it operates. Where a person, by word or conduct, induces another to believe that a certain state of affairs exists, and thereby causes that other to act on that belief in a manner he would not have done had be known the facts, the former will not be allowed to prove that the state of affairs was really different from what it was represented to be, because to allow him to do so would cause serious prejudice to the other. To attract this rule of estoppel, the following conditions should ordinarily be satisfied;

(i) there must be an unequivocal representation by word or conduct by one party;

(ii) the representation must induce the other to believe the existence of certain state of things; and

(iii) the other must act or alter his previous position on the strength of such belief.

Sections 115 to 117 of the Evidence Act are instances of estoppel in pais. Section 113 specifically deals with a case where the representation of one party induces a belief in the other and the other acts on that belief; the former will not, “in any suit or proceedings” be allowed to deny the truth of the thing. The thrust of S. 115 is against any attempt on the part of the representor to go back on the truth of his representation, where the other person has altered his position believing in the truth of such representation. Similarly, Ss. 116 and 117 prevent a tenant, a licensee, a bailee or an accept or of a bill of exchange, to question the title or authority of the landlord, licensor, bailor or drawer of the bill of exchange. What is significant to notice is that estoppel in pais is a rule of evidence limiting the freedom of a party to a litigation to bargain for a position different from the one he himself had set up earlier, and on the basis of which the other party had acted to his prejudice.

7. Closely resembling common law estoppel, but supposed to be different in origin and nature, is the doctrine developed by the Equity Courts of England that where a man seeks to enforce his legal rights, he could be prevented from doing so if he is guilty of such inequitable conduct as requires the intervention of equity to protect the other party. Thus where ‘A’ and ‘B’ have entered into a legal relationship and ‘A’ subsequently enters upon a course of negotiation w??? ‘B’ inducing him to believe that the strict rights arising from the original relationship will not be enforced, ‘A’ will not thereafter be allowed to enforce those rights where it would be inequitable to permit him to do so, having regard to the dealings that have taken place between the parties. The rule was that there would be estoppel when a representation as to existing facts was made with the intention that the other party could act upon it and that party in fact acted upon it to his prejudice. By the nineteenth century, the doctrine was extended to representations as to intention also, as distinct from representation as to existing facts. A representation as to intention is only a promise, unsupported by consideration, and this branch of “equitable estoppel” afterwards came to be known as “promissory estoppel”. Developed in this form, the rule was this, Snell, Principles of Equity, 28th Edn., page 556:

“Where by his words or conduct one party to a transaction makes to the other an unambiguous promise or assurance which is intended to affect the legal relation between them (whether contractual or other wise), and the other party acts upon it, altering his position to his diriment, the party making the promise or assurance will not be permitted to act inconsistently with it”.

Equity, it should be remembered, is a body of rules existing by the side of original civil law and founded on distinct principles supposed to supersede the civil law by virtue of a superior sanctity inherent in those principles. Equity intervenes to mitigate the rigours of strict law, and the rules of equity are not rules of evidence. All the same, the doctrine was developed to prevent fraud, and to protect victims of fraud, when legal rights were attempted to be pressed into service, so much so that equitable estopped and promissory estoppel were supposed to be weapons for being used only in defence. They were never recognised as causes of action in themselves. When it is said that ‘A’ will not be allowed to insist on his legal rights after he makes a promise to ‘B’ and ‘B’ acts upon it to his detriment, all that is meant is that the promise, though not enforceable as a contract, for want of consideration, will be treated a; binding on ‘A’ if ‘B’ sets up such a defence. A himself will not be allowed to enforce his promise at variance with true relationship, because the promise never matured into an enforceable agreement.

8. The point can be better explained by referring to two decisions of Lord Denning, the most prominent among the protagonists of promissory estoppel The first is the well-known High Trees case — Central London Property Trust, Ltd. v. High Trees House, Ltd., [1947 K.B 130], where it was said:

“There has been a series of decisions over the last fifty years which, although they are said to be cases of estoppel are not really such. They are cases in which a promise was made which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made, and which was in fact so acted on. In such cases the Courts, have said that the promise must be honoured …”.

Apparently thinking that the above was an authority for holding that every promise was enforceable, the Judge at first instance granted a decree against the husband in Combe v. Combe, [(1951) 2 K.B 215], where the husband had made no more than a promise to the divorced wife to pay certain amounts. Disagreeing with the above conclusion, when the case reached the Court of Appeal, Lord Denning said:

“That principle does not create new causes of action where none existed before. It only prevents a party from insisting upon his strict legal rights, when it would be unjust to allow him to enforce them, having regard to the dealings which have taken place between the parties …. Sometimes it is a plaintiff who is not allowed to insist on his strict legal rights. Thus a creditor is not allowed to enforce a debt which he has deliberately agreed to waive, if the debtor has carried on business or in some other way changed his position on reliance on the waiver … On other occasions. It is a defendant who is not allowed to insist on his strict legal rights. His con-duct may be such as to debar him from relying on some conditions, denying some allegations, or taking some other point in answer to the claim…. A tenant who had encroached on an adjoining building, assenting that it was comprised in the lease, was not allowed afterwards to say that it was not included in the lease… In none of these cases was the defendant sued on the promise, assurance or assertion, as a cause of action in itself.

Seeing that the principle never stands alone as giving a cause of action in itself, it can never do away with the necessity of consideration when that is an essential part of the cause of action. The doctrine of consideration is too firmly fixed to be overthrown by a side wind. Its ill-effects have been largely mitigated of late, but it still remains a cardinal necessity of the formation of a contract, though not of its modification or discharge. I fear that it was my failure to make this clear which misled the Judge in the present case. He held that the wife could sue on the husband's - promise as a separate and independent cause of action by itself, although, as he held, there was no consideration for it. That is not correct. The wife can only enforce it if there was consideration for it…”

9. Another class of equitable estoppel is “proprietary estoppel”. This concerns with acquisition of rights in or over land. Section 116 of our Evidence Act deals with one species of estoppel arising from representations made in relation to land, when it lays down that when one person demises land to another, the latter cannot deny the title of the former during the continuance of the tenancy, even if there was no such title in law. By his conduct in getting a demise of land from the landlord, the tenant acknowledges the landlord's title and he is, therefore, estopped from disputing it, just as the person giving the demise is estopped from questioning the right or interest of the tenant in the land, Where a person spends money and labour on the land of another, he has ordinanly no claim to reimbursement or to any proprietary interest in the property; but where such spending is the result of representation, inducement or encouragement of the owner, equity intervenes and prevents the owner from acting, contrary to the belief he has created, in the matter of ejecting the other. In Ramson v. Dyson, [1866 L.R I. H.L 129], Lord Cranworth L.C explained the nature of this estoppel in the following terms:

“If a stranger begins to build on my land, supposing it to be his own, and I, perceiving his mistake, abstain from setting him right, and leave him to persevere in his error, a Court of equity will not allow me afterwards to assert my title to the land on which he had expended money on the sap-position that the land was his own. It considers that, when I saw the mistake into which he had fallen, it was my duty to be active and to state my adverse title; and that it would be dishonest in me to remain wholly impassive on such an occasion, in order afterwards to profit by the mistake which I might have prevented”.

Proprietary estoppels of this kind more permanent in their effect, because the promisor or the representor cannot easily resile from his position as in the case of other promissory estoppels, by giving notice to the promisee so that he may have a reasonable opportunity of resuming his former position. The name “estoppel in pais” is said to have been coined by Coke to mean estoppel “by the matter in the country or on the land, or on the spot”, to denote transactions relating to la d taking place on the same land and with such solemnity as to make them equivalent to transactions by deed. This kind of estoppel was, therefore, more durable and was of earlier origin and mere well denned. And in this view, proprietary estoppels we e also capable of operating positively so as to create a cause of action.

10. Passing here for a minute, it will be useful to notice that estoppel as a rule of evidence, and equitabie estoppel as a rule of equity, have something in common: the philosophy behind both is that some’ thing inequitable, immorel or unjust must be discouraged. Where ‘B’ alters is position when induced by ‘A’ to believe that a state of things exists, it will be unfair to allow ‘A’ to turn round and show that the real state of things was different; he should be precluded from proving this position, if ‘B’ is not to be defrauded. Similarly, where ‘A’ makes a promise and ‘B’ acts upon it to create a new relationship, it is only fair that ‘A’ is held to his promise, though such promise may not amount to a binding contract. A consideration of what is fair, moral, equitable or just is the essence of both the approaches. Unfortunately, however, all moral principles are not legal principles the Courts can recognise and act upon, though many moral principles are closely assimilated to law. Every legal system contains elements connected with certain aspects of morality. Th???ft is a crime because society considers it immoral. Just as criminal law and the law of civil wrongs are designed to prevent infliction of injuries on others, the law of contracts oblige us to keep our promises. In most of its branchs, law touches upon human behaviour classified as proper or improper by standards of current social consciousness. Law attempts to strike a balance, imposing certain minimum standards of conduct and when an individual feels that the restrictions are unreasonable or unfair in the light of contemporary values, he reacts with anger and frustration, inviting sanctions the laws have imposed. Conventional morality and enlightened criticism have been influencing the development of law at all times, and in a sense, law is institutionalised ethics. The difference between moral and legal authority, however, survives because moral principles continue to be optional until they are elevated as legal principles when alone they become obligatory. Even in the realm of legal rules, t??? are undefined areas where the Courts have to make a choice between conduct which is proper and conduct which is improper; and at least in regard to those areas, urges make law, in the course of administering the law, by condemning a conduct which the law does not strictly condemn, and recognising a rule which the law does not strictly recognie Preventing a pron from a setting rights which are legal, and giving binding effect to promises unsupported by consideration are only instances where courts attempt to reach conclusions which are fair and just. And herein lies the difficulty of finding a common thread between cases where equitable estoppel is allowed full play, and cases where it is not because the concept of what is just and fair varies from person to person. Our moral sentiment are made up of sympathies and antipathies and in trying to hold the scales even, Judges as human beings are apt to tip ???? Where the inputs of judicial law-making are notions of the maker about what is good or bad, just or unjust, fair or unfair, the danger of divided counsels of law cannot altogether be avoided. As was pointed out by the Lord Chancellor in Woodhouse v. Niger tan Produce, [1972 A.C 741], the doctrine of promissory estoppel was raising

“problems of coherent exposition which have never been systematically explored”.

11. The manner in which principles of private law estoppel have been extended to that branch of public law where administrative agencies are forced to adhere to representations made on their behalf, also deserves notice. In all systems of civilised administration, citizens expect the concerned departments and agencies to act in conformity with the procedure they have established for themselves or the promises they have made. Departure from that procedure or promise, be it a mere rule of practice, frustrates legitimate expectations, and the citizens turn to the Courts for redress against arbitrary action. The Courts will then have to decide whether the procedure or promise in question is enforceable against the body that has adopted or made it. To what extent can the private law principle that persons could be held to representations made by them and acted upon by others to their detriment, be applied against such bodies? As we shall presently see two views have been expressed oh the question. One is that a public body entrusted with powers and duties for public purposes cannot divest themselves of these powers and duties by entering into contracts or making representations incompatible with the discharge of the powers and duties. If a departmental official makes a representation whis is relied on by a private party to his injury, the department can still go back on the representation because that may be necessary in the public interest, according to this view. Another view is that the department can be held to the representation, unless it is shown to the satisfaction of the Court that a departure will be justified by overriding considerations of public interest. The first gives a great degree of latitude to the public agency, while the second seeks to strictly control it. The former tries to protect public interest from the vagaries of officials; the latter tries to ensure fair dealings and eliminate arbitrariness.

12. In the interests of fair dealings, the United States Supreme Court compelled the State, in Vitarelli v. Seaton, [359 U.S 535 (1959)], to follow the procedures set out in a departmental “Order” without even considering whether the order was issued is exercise of rower conferred by the Congress In Queen v. Criminal Injuries Compensation Board [(1967) 2 Q.B 864], the Divisional Court held that certiorari would go to quash a decision arrived at contrary to prescribed procedures, though the prescriptions of the Board had no statutory backing. The “due process” clause of the Fourteenth Amendment was relied on in Goldberg v. Kelly, [397 U.S 254(1970)], to hold that before stopping payment under an aid programme, it was not enough to issue notice to the person likely to be affected and consider his objections, but it was necessary to give him a hearing. “Fair procedure,” again, was the earner-stone of the Court of Appeal's decision in Reg v. Liverpool Corporation, [(1972) 2 Q.B 299], where taxi owners of Liverpool Corporation complained that the concerned officials were going back on their promises. In 1970 the Corporation proposed to increase the number of licenced taxicabs, but an assurance was held out to existing taxi owners that they would be “consulted” or given an opportunity to make representations before the proposal was finalised. But a decision was later taken without affording a proper opportunity to the owners, and they moved for certiorari to quash the decision. The Court granted prohibition against issue of further licenc s without hearing their representations, because that was necessary in the interests of fair dealings. It was also held that the Corporation was not at liberty to disregard their undertaking, so long as it was not in conflict with their statutory duty. The argument that the Corporation could not contract out of its statutory duties was repelled by holding that a solemn undertaking could be departed from only when it was shown that public interest would be better served thereby. The question of estoppel was dealt with in a more direct fashion, in Laker Airways, Ltd. v. Department of Trade, [(1977) 2 All E.R 1821, when Lord Denning, M.R, said:

“The underlying principle is that the Crown cannot be estopped from exercising its powers, whether given in a statute or by common law, when it is doing so in the proper exercise of its duty to act for the public good, even though this may work some injustice or unfairness to a private individual … It can, however, be estopped when it is not properly exercising its powers, but is misusing them; and it does misuse them if it exercises them in circumstances which work injustice or unfairness to the individual without any countervailing benefit for the public”.

Going by the above decisions and others of a similar nature, it could probably be suggested that in respect of representations made by public bodies, the latest judicial trend is not to speah of estoppel, but of fair dealings, of eliminating arbitrary action or of not blasting legitimate expectations in an illegitimate manner.

13. The question as to when a citizen is entitled to hold a public authority to its word is mixed up with the question whether the “word” of the authority is within its powers. If a public authority makes a representation which is beyond its powers can a citizen complain that he has acted to his detriment on the strength of the promise or representation? Promissory estoppel v. ultra vires seems to have ended in decisions falling on either side of the line. It has been Sai in some cases that the obligation of a public authority to obey the law is more compelling than the duty to be fair to an individual citizen. Governmental agencies cannot ignore legislative restrictions simply because its officials ignore them in making promises; and the officials cannot, on the basis of promises held out by them, barter away the powers and duties conferred or imposed on them.

14. In Redcriaktiebbloget Amphitheatre v. R., [(1921) 3 K.B 500], Rowlatt, J., had held that a Government could not fetter its freedom as to future executive action which was, to be determined by the needs of the community when it arose. Where the charges to be collected by an electric company were prescribed by the statute, with an obligation not to discriminate between consumers, the Privy Council held, in Maritime Electric Company v. General Dairies, [1937 A.C 610], that no estoppel could arise in favour of a consumer who was being charged at a lower rate for a long period; the company could recover the full amount despite its conduct. Similarly, when a local authority granted a lease without the consent of the Minister as required by the statute, the long course of conduct was held insufficient to raise an equity, in Rhvl U.D.C v. Rhyl Amusomeuts, Ltd., [(1959) I All E.R 2V7]. The Court held the lease to be ab initio void, and observed that equitable estoppel could not destory the doctrine of ultra vires. In Southend-on-Sea Corporation v. Hodgson, [(1962) 1 Q.B 416], a builder relied on a letter from the Corporation engineer that no planning permission was required, bought the land, and started using it without such permission. The planning authority, however, took a contrary view, and this was upheld by the Court on the ground that the statutory discretion conferred on the authority to act against unauthorised development could not be fettered by the estoppel created by the engineer's letter. In Western Fish Products v. Penwith District Council, (1978) 38 P.&G.R 7], the Court of Appeal rejected the view that an estoppel could arise from a planning officer's letter, so as to letter the council's discretion. Even proprietory estoppel could not arise n a situation where the planning officials stood by, knowing that the developers were incuring expenses, because planning applications had to be decided by elected planning authorities and not by unauthorised delegates. And in Newbury District Council v. Secretory of State, [(1980) 1 All E.R 73], the House of Lords went so far as to indicate that the doctrine of equitable estoppel could not be introduced into the administration of planning law. Lord Scarman spoke of equitable estoppels as “aids to the doing of Justice in private law”.

15. The supremacy of ultra vires was, however, not so ???edily conceded in Robertson v. Minister of Pensions, [(1949) I K.B 227]. Robertson was told by the Director of Personnel Services at the War Office that his disability had been accepted as a tributable to military service. But after he relied on this assurance to his detriment, he was informed that the appropriate ministry was the Ministry of Pensions and that that ministry was not agreeing with the view expressed on behalf of the War Ministry. It appears that administration of injuries occurring after the out-break of war had in the meanwhile been transferred to the Ministry of Pensions. Denning, J., held that the War Office letter was binding on the Ministry of Pensions, observing that:

“If a Government Department in its dealings with a subject takes it on itself to assume authority on a matter with which he is concerned, he is entitled to rely on it having the authority which it assumes”.

The principle was extended to the sphere of planning, in Wells v. Minister of Homing, [(1967) 2 All E.R 1041], when the Court of Appeal (Lord Denning) said that though a public authority could not be e topped from doing its public duty, it could be estopped from r lying on technicalities, There, a company had applied for planning permission to expand its business of nuking concrete blocks and was told that no fresh permission was required; and the Court held by a majority that it am anted to valid determination by the planning authority on the question whether permission was needed or not. Lever (Finance), Ltd. v. Westminister Corporation, [(1971) 1 Q.B 222], was an instance of extending the principle to more difficult regions. A developer obtained planning permission and his acrhitect subsequently wanted to alter the lay-out A letter was written, and ultimately the Council's planning officer stated in a telephone conversation that the proposed alteration was not material. But when building commenced, neighbours objected and the authority took enforcement action. Lord Denning held that the officer's representation over the telephone was within his ostensible authority and that the council could not exercise enforcement powers after the developer had acted on it.

16. Evenden v. Guildford C.A.F Club, [(1975) 3 All E.R 269], was a simple case where a football club bad taken over the services of an employee from a “supporters” “club” with continuity of service and on the same terms. When the employee claimed redundancy payment, however, the club contended that only service after take-over could be recognised for the purpose and not service under the supporters' club. The Court of Appeal held that the club was precluded from denying the employee's claim on the basis of continuous service, as he had entered its services on the strength of a representation that continuity would be honoured. The doctrine of proprietary estoppel was applied in Moorgate Mercentile v. Twitchings, [(1975) 3 All E.R 314]. where it was held that a person permitting another to deal with his goods by creating a belief that he was not their own, could not afterwards assert that they were his. The doctrine was also applied in Crabh v. Arun District Council, (975) 3 All E.R 865]. The plaintiff there wanted access from the back of his plot, and he met officers of the local authority. Some kind of arrangement was contemplated, but further formalities were to be completed. Nothing, however, was done in this direction and the council provided gates in the boundary fence at the back. The plaintiff then sold his front plot; and the Court held that the local authority was estopped from denying that he was entitled to have access to the new road from his back plot, since the conduct of the officials had led him to act to his detriment.

17. Inaction and lapse of time may also under certain circumstances raise the question of equitable estoppel, as happened in Simoson Motor Sals v. Hendon Corporation ((1964) A.C 1088]. A compulsory purchase order was made and notice to treat was also issued, but nothing was done for over ten years thereafter. The owners sought a declaration that by reason of excessive delay and abandonment, the order had ceased to be enforceable, but the House of Lords declined to interfere on the facts. It was, however, noticed that equitable rights could be created by reason of long inaction, in cases where owners alter their position and questions of good conscience arise for determination.

18. Equitable estoppel, akin to the rule of res judicata, was found in Re 56 Denton Road, Twickenham, [1953 Ch. 51], where an administrative body with duty to decide specific questions affecting rights of individuals attempted to altar or withdraw a decision once given and conmunicated, without the consent of the individual concerned. The position may be different when the scheme itself provides for a provisional determination, though no statutory power of review is available; but it has been said that in the absence of some such power, the decision once given would operate as a binding representation.

19. The development of the doctrine in English case law was mostly at the bands of Lord Denning, and Robertson case was the real foundation. But the House of Lords had its own reservation about the broad statement of law in Robertson. In Howell v. Falmouth Beat Construction Company, [1951 A.C 837], Lord Simonds observed that the illegality of an act would be the same, whether or not the actor had been misled by an assumption of authority on the part of a Government officer. Lord Norm and stated that neither a minister for a subordinate officer of the Crown could, by conduct or representation, bar the Crown from enforcing a statutory prohibition. How far the equity in Robertson and similar lines of cases could survive the aforesaid observations of the House of Lords, is itself a matter of some doubt. And what is more interesting is that Lord Scarman, who was a party to Crabb v. Arm D.C (vide supra), had later expressed doubts about extending proprietary estoppel to public law justice, in Newbury case.

20. Equitable estoppels are of infinite varieties and many of them are recognised as statutory rules in our country. Res judicata which is estoppel by judgment is part of the Civil Procedure Code. Sections 63 and 65 to 70 of the Contract Act recognise equities in the context of promises unsupported by consideration the Evidence Act also embodies some of the well-known rules of equity. The Specific Relief Act, the transfer of Property Act and many other enactments contain elements of the doctrine. Adverse possession or limitation, which rests on conduct amounting to long acquiescence on the part of the rightful claimant, is the basis of the Limitation Act. The question has, therefore, been raised, whether the moulding of other equities should’ not be left to the Legislature which has chosen partly at least to deal with the problem. Obviously, exclusion of estoppel from public law situations may create an unwholesome immunity in favour of Government and public agencies, and justice requires that such a situation is not allowed to develop; in fact, English and American Courts have consistently refused to hold that the Crown and the Government are exempt from the application of the doctrine. But is not Art, 14 of our Constitution, supported by the power of judicial review, potent enough to hold public bodies and Governments to fair procedure and fair dealings? Should an alternative be found in public law estoppels, an area already torn with dissension? As will presently be seen, the question has at least been mooted in some of the decisions of our Supreme Court.

21. The first attempt to raise the question of public law estoppel before the Supreme Court was in collector of Bombay v. Bombay Corporation, [A.I.R 1951 S.C 469]. The predecessors of the Corporation had erected the Crawford Market in about eight acres of land granted rent-free by the Provincial Government of Bombay in 1865. In 1938. the Collector of Bombay informed the Municipal Commissioner that it was proposed to assess the land under S. 8 of the Bombay City Land Revenue Act and the question was raised Whether the Government was estopped from doing so by reason of its conduct. The majority of the Supreme Court (Kania, C.J, Das and Bose, JJ.) did not tackle the question in that form but were content to hold that the Corporation was holding the land as of right, openly and uninterruptedly for over 70 years so as to create interests adverse to Government. Patanjah Sastri, J., took the view hat the 1865 resolution of the Government did not amount to “a valid disposition of property or an enforceable contract not to charge revenue on the laud,” as the required statutory formalities had not been completed. His Lordship was not prepared to apply the equity in Ramson v. Dyson (vide supra), or to hold that a limited kind of adverse possession could be prescribed. Chandrasekhara Iyer, J., thought that justice should be done by relying on equity, and observed that:

“the accident that the grant was invalid does not wipe out the existence of the representation or the fact that it was acted upon by the Corporation”.

Sastri, J., was thus for discovering the rock of ultra vires submerged in equity, but Chandrasekhara Iyer, J., was for ignoring it.

22. The approach of Chandras khara Iyer, J., was, however, approved in Union of India v. Anglo Afghan Agencies, [A.I.R 1968 S.C 718], which was the first occasion when Promissory estoppel was fully recognised and applied in all its vigour, by the Supreme Court. The Textile Commissioner published an “Export Promotion Scheme” providing incentives to exporters of woollen goods. Under the scheme, exporters were entitled to get import certificate equal to 100 per cent, of the F.O.B value of the goods exported. But in the case before Court, the authorities had granted such certificates only for a part of the value. The ex-or er claimed that he should get the full 100 per cent, while the department contended that the matter was one of discretion for the executive authorities, and that there was no statutory obligation or right to be enforced in proceedings under Act 726 of the Constitution. The Court (Shah, Sikri and Shelat, JJ.), rejected the department's contention and held that the exporter was entitled to succeed. Two strands of reasoning were discernible:

(i) The authorities could not ignore their promise at their mere whim; and

(ii) a party who had acted on a representation made by Government was entitled to bold the Government to such representation.

The first could be understood as an attempt to control whimsical action, but read with the second, there was no doubt that the doctrine of estoppel was being invoked. Shah, J., said:

“Under our Jurisprudence the Government is not exempt from liability to carry out the representations made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen”.

It was at least implied in the above formulation that where the Government could disclose its reasons and satisfy the Courts about the existence of some over-riding public interest, it might be excused for going back on its promise. But in the subsequent decision in Century Spinning and Manufacturing Company v. Ulhasnagar Municipality, [(1970) 1 SCC 582 : A.I.R 1971 S.C 1021], the proposition was stated in wider terms:

“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. The obligation arising against an individual out of his representation announcing to a promise may be enforced ex contractu by a person who acts upon the promise; when the law requires that a contract enforceable at law against a public body shall be in certain form or be executed in the manner prescribed by statute, the obligation if the contract be not in that form may be enforced against it in appropriate cases in equity”.

The reference to “cut nascent democracy” and “standard of conduct” was probably echoes of Art. 14, but the implication was clear that the mere absence of “form” Under Art. 299 would not deter the Court from enforcing a promise.

23. In Turner Morrison v. Hungerford Investment, [(1972) 1 SCC 857 : A.I.R 1972 S.C 1311], Hegde and Mathew, JJ., approvingly referred to the principle developed by Shah, J., in the above decisions; but in Ramanatha Pillai v. State of Kerala, [(1973) 2 SCC 650 : A.I.R 1973 S.C 2641], a Constitution Bench of the Court held that except in those rare cases where it was necessary to prevent fraud, “the doctrine of estoppel will not be applied against the state in its governmental, public or sovereign capacity”. And in State of Kerala v. G.R Silk Manufacturing, [(1973) 2 SCC 713 : A.I.R 1973 S.C 2734], another Constitution Bench observed that “surrender by the Government of its legislative powers to be used for public good cannot avail… against the Government equitable estoppel”. These two cases limited the broad sweep the statement in Afghan Agencies and Century, and made a conscious attempt to draw a distinction between private law situations and public law situations.

24. In Excise Commissioner v. Ram Kumar, [(1976) 3 SCC 540 : A.I.R 1976 S.C 2237] a Bench of four Judges again said that Government could not divest itself of the right incidental to its office by conduct which in the case of a private parson, would amount to estoppel. Jaswant Singh, J., who spoke for the Court extracted’ with approval, the following passage from Federal Crop Insurance Corporation v. Merril, [1947—332 U.S 380].

“It is too late in the day to urge that the Government is just another private litigant, for purposes of charging it with liability, whenever it takes over a business theretofore conducted by private enterprise or engages in competition with private ventures … Whatever the form in which the Government functions anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority … And this is so even though, as here, the agent himself may have been unaware of the limitations upon his authority…. ‘Men must turn square corners when they deal with the Government,’ does not reflect a callous outlook. It merely expresses the duty of all Courts to observe the conditions defined by Congress for charging the public treasury”.

His Lordship also noticed that Lord Denning's view in Robertson case, [(1949) 1 K.B 227]. has been “unequivocally disapproved” by the House of Lords in Howell case (vide supra).

25. To what extent could Courts control the executive or constitutional functions of a Government in the realm of contracts? That question was considered by the Court in Radhakrishna Agarwal v. State of Bihar, [(1977) 3 SCC 457 : A.I.R 1977 S.C 1496], when Beg, C.J, outlined the following principles:

(i) In deciding as to the choice of persons with whom it should enter into con tracts, the State may not be as free as any other private citizen; in that area, it may be exercising its executive functions as a State and its powers may, therefore, be circumscribed by provisions like Art. 14 of the Constitution;

(ii) but once a contract is made, the relationship between the parties would be governed by the terms of the contract only, and none other, unless tin provisions of some statute having a particular bearing on the contract step in to control them. After a contract is completed, the private citizen can thereafter look only to the terms of the contract;

(iii) the power of the Court under Art. 226 cannot be exercised to compel the State to remedy a breach of contract pure and simple; the aggrieved citizen should be left to the ordinary remedies relating to performance or non-performance of such a contract.

Reference was also made to promises falling short of contracts; but the question whether such equitable promises could be enforced in proceedings under Art. 226 was left open Bihar E.G.F Co-operative Society v. Sipahi Singh, [(1977) 4 SCC 145 : A.I.R 1977 S.C 2149], want a step futher and laid down that a contract not complying with the requirements of Art 229 of the Constitution would be “void and unenforceable”; no question of estoppel could arise in the teeth of these provisions.

26. But a bolder line was taken, after an exhaustive examination of the case law on the subject by Bhegnath, J., in Madhya Pradesh sugar Mills v. State of Uttar Pradesh, [A.I.R 1979 S.C 620]. where the following points ware developed;

(i) The doctrine of promissory estoppel will apply even when there is no pre-existing legal relationship between the parties, it is enough if a promise is intended to create such relationship for the future.

(ii) equitable estoppel is not strictly estoppel; it is a rule evolved by equity for doing justice. All the inhibitions relating to estoppels is need not circumscribe such a doctrine. In an appropriate case, promissory estoppel can even operate as a cause of action. The distinction between proprietary and promissory estoppels in this regard is unreal;

(iii) the doctrine of consideration cannot be too strictly enforced to defeat lawful intentions; that doctrine can be qualified by the doctrine of estoppel;

(iv) Government cannot retreat from its obligation under a promise on the theory of executive necessity; it should alto be held to its promise like other citizens, notwithstanding its responsibilities as the executive arm of the State;

(v) absence of consideration, or failure to embody the terms of a promise to conform to the requirements of Art. 299, would be no justification to exonerate the State from such obligations: it could and should be treated just as any other citizen in such matters;

(vi) the doctrine of promissory estoppel became finally entrenched in India with the decision in Afghan Agencies case, [A.I.R 1968 S.C 768 and the cases that followed. Ramanatha Pillai, [(1973) 2 SCC 650 : A.I.R 1973 S.C 2641], only meant that it cannot be applied against obligations or liabilities imposed by law;

(vii) for applying the doctrine, the promisor need not show that he has suffered a detriment; it is enough to show that he has altered his position, relying on the promise;

(viii) for promoting honesty and good faith and bringing law closer to justice, it is necessary that the doctrine of estoppel is not held in fetters; it should be “allowed to operate in all the activist magnitude”.

In other words, a courageous attempt was made, if I may say so with respect, to subject doctrines of ultra vires, executive necessity, consideration and the like to the doctrine of promissory estoppel which itself was liberally construed by holding that it could operate as a cause of action and even in cases where no “detriment” could be established. It was as if the doctrine of estoppel, based on morality and ethics, was forged into a powerful weapon to be used by the Courts in every case where a person, whether private citizen or governmental agency, thought of going back on his plighted word, to the prejudice of another.

27. This powerful appeal to fairplay in the business of life was, however, toned down in Jit Ram Shiv Kumar v. State of Haryana, [(1981) 1 SCC 11], where another Bench of the Court, again after another exhaustive study of the case law, held that:

(i) promissory estoppel is not available against exercise of legislative functions of the State 3

(ii) the doctrine cannot be invoked for preventing the Government from discharging its functions under the law;

(iii) where an officer of the Government acts outside the scope of his authority, the doctrine of ultra vires will operate and the Government cannot be held to his unauthorised acts;

(iv) where the officer acts within his authority, the Court will ordinarily compel him to act according to the representation; and

(v) but special considerations having a bearing on the general interests of the State may enable an officer to go back on promises made within the scope of his authority.

Kailasam, J, who spoke for the Bench was not for approving the broad formulations of Bhagnath, J., as regards items (iv) to (vi) and (viii) of the preceding paragraph. Dealing with the need to hold every person to his word, Kailasam, J., observed:

“The law should as far as possible accord with the moral values of society, and efforts should be made to bring the law in conformity with moral values What are the moral values of the society? This is a very complex question because the concept of moral values amongst different persons and classes is not always the same The concept of moral values is not a static one. It differs from time to time and from society to society. It is hazardous for a Court to attempt to enforce what according to it is the moral value…”.

It was also observed that the attempt to identify law and moral principles was one for the Legislature to make and not for Courts which function with certain limitations:

“The Courts by its very nature are most ill-suited to undertake the task of legislating. There is no machinery for the Court to ascertain the conditions of the people and their requirements to make laws that would be most appropriate. Further two Judges may think that a particular law would be desirable to meet the requirements whereas another two Judges may most profoundly differ from the conclusions arrived at by two Judges”.

28. There has always been a conflict between those who think that Judges should be activist in their task to use the law as an instrument of social change and advancement, and those who think that change of law is a matter for the chosen representative of the people. In the opinion of the latter, a result-oriented adjudication is a negation of the judicial process, a disguised attempt to give individual opinions the prestige, sanction and sanctity of law. They would say that the Court should be a student of law and not a crusader for philosophies. “Due process they point out, was once used by the American Courts to transform laissez faire into a constitutional dogma, just as it is now used to dispense libertarian convictions. The others contend, with equal relevance, that law cannot be static, that the present generation can learn from the m stakes of the past, and that a conscious attempt to close the gap between social opinion and law is no evil. Professor Wade says. H.W.R Wade— Constitutional Fundamentals:

“Twenty or thirty years ago Judges questioned about administrative law were prone, to say that their function merely to give effect to the will of Parliament and that they were not concerned with policy. —In the period of their backsliding they declined to apply the principles of natural justice, allowed ministers unfettered discretion where blank cheque powers were granted by statute, declined to control the patent legal errors of Tribunals, permitted free abuse of Crown privilege, and so forth. Then in the sixties, when the public action against administrative justice hard become too strong to be ignored, the Judges executed a series of U- turns which out the law back on course and responded to ethe public mood”.

The uneasy balance in the realm of ideas, attitudes and law has been shifting, revealing a quaint dichotomy of strict law and liberal construction. Some refuse to listen to voices from the tomb, others hesitate to convert populism into legal dogma. May be, there is no universal wisdom in the dialectics of law.

29. The question still remains where the petitioners case stands in the scheme of things. I shall assume everything in his favour, i.e his employer made an unequivocal promise about his lien, that he acted on its faith and altered his position, that it will be inequitable to allow the employer to go back on the promise, and that the company is a State, amenable to the writ jurisdiction of this Court. Even so, can the promise be enforced in the present proceedings? Had there been a full-fledged contract between the petitioner and the company, this Court could not have issued a writ, because on the authority of Radhakrishna Agarwal, [(1977) 3 SCC 457 : A.I.R 1977 S.C 1496] (vide supra), the writ jurisdiction cannot be exercised to compel the State to remedy a breach of contract. Is the petitioner in a better position when there is no such contract, but only a mere promise? As the question has been left open by the Supreme Court in the aforesaid decision, I will make another assumption in his favour and proceed on the basis that 1 can enforce the promise. Still, what is the relief the petitioner seeks? The result of quashing exhibit R-3 and holding the company to its promise will be to direct it to re-entertain the petitioner in its service, on the footing that his lien is still secure. And if there is one rule in equity which is beyond doubt, it is that a contract for service cannot be specifically enforced. Can a Court invoke an equitable doctrine to grant a remedy equity has consistly istently refused the grant? Is it possible to enforce the equity in question against the clear provisions of the Specific Rlief Act? The policy of that Act, as laid down be Parliament, is that no employer shall be compelled to entertain an employee against his wish. And it seems to me that even in the plentitude of its powers under Art. 26, this Court cannot enforce an equity against such statutory prescription.

30. Sri Mohan Kumar for the petitioner refers to the decisions of the Supreme Court in S. R. Tewari v. District Board. Agra, [A.I.R 1964 S.C 1680] and Sukadev Singh v. Bhagatram, [1975 - I L.L.N 356], to argue that where a statutory authority dispenses with the services of an employee in violation of the rules governing his conditions of service, the termination can be declared null and void even if the consequence will be to impose an employee on an unwilling employer. If I understand the principle correctly, those are cases where the Courts intervene to declare that the statutory status of an employee remains unimpaired by an illegal act of the employer amounting to violation of mandatory provisions of law. The petitioner's service conditions are not governed by any such rules or regulations having the force of law; and no violation of any such rule is alleged. Even if the Cochin Shipyard is a “State” for the purposes of Art. 14, its employees have no statutory status; they are not Government servants or persons appointed to public services or posts. An employee of a company does not stand on a better footing than an employee of a co-operative society whose case was considered by the Supreme Court in Sabhajit Tewary v. Union of India, [1975 — I L.L.N 362].

31. That a prat, ft is also difficult to find an unequivocal representation or promise on the facts of the case. The petitioner had sought employment abroad on the basis of exhibit P-1 of 1977, and not on the basis of the earlier circulars issued in 1973 and 1974 and evidenced by exhibits P-6, P-7 and P-7(a). That is the specific case in the original petition and that position is seen reiterated in the last paragraph of exhibit P-12 also. Now, exhibit P-1 does not contain any representation or promise about retention of lien. (According to the company, exhibit P-1 was issued when the Chairman of the company made enquiries about possibilities of finding alternate employment for Civil Engineers who were likely to be retrenched on completion; of construction work; the enquiry had nothing to do with deputing experts for foreign service, under exchange schemes with liens retained. The promise or representation relied on is the one contained in exhibit P-3, reading as follows:

“If there is no objection, the candidates should be treated as on deputation to the foreign Government in the public interest with lien retained on the post held by him”.

When the shipyard management circulated exhibit P-3 with the above term, it is inconceivable that they were making an unequivocal representation that all employees would be deputed with their liens intact. The discretion of the management to “object” to the proposed term was part of exhibit P-3; the representation was at least equivocal. The averment in Para. (6) of the original petition that the officers of the company had given certain assurances to the petitioner is denied in Para. 6 of the counter-affidavit. An unequivocal representation or promise was absent, and that is another ground for not applying principles of estoppel.

32. In the result, the original petition is dismissed, but with no order as to costs.