Civil Appeal No 223 of 1974
From the Judgment and order dated 1371973 of the Railways Rates Tribunal Madras in Complaint No 2 of 1969
KK Jain Bishamber Lal Pramod Dayal and AD Sanger for the Appellant
Bed Brat Barua Ms A Subhashini
CV Subba Rao Mrs section Suri P Parmeswaran and Anil Katiyar for the Respondent
The Judgment of the Court was delivered by JAGANNATHA SHETTY J
This appeal with Special Leave is against the order and judgment dated July 13 1973 of the Railways Rates Tribunal Madras in complaint filed by the appellant under Section 411 of the Indian Railways Act No 9 of 1890
The background facts are these The appellant is a Company
It has set up a fertilizer factory at 387 Kota in Rajasthan
It is said to be an industrially backward area
The factory manufactures Urea for which the main raw material is Naptha
Naptha has to be transported from Koyali Refinery of Indian oil Corporation
The nearest railway station is Bajuva near Baroda
The nearest railway station serving Company s factory is Dadhevi in Rajasthan
The distance between Bajuva and Dadhevi is about 520 kms
For transportation the Naptha has been classified by the Railway under Clause 110 B of the tariff
Before the actual setting up of the factory the Company by its letter dated September 5 1966 requested the Railway Board for a concessional frieght rate for the carriage of Naptha
It requested the Railway Board for fixed Station to Station rate equivalent to classification 625 B
That would have meant reduction of about 43 in the normal tariff under clause 110 B
In that letter it was pointed out that if such concessional rate was not fixed the Company would be put to disadvantageous position as against the other factories located at ports or near the refineries
The Railway Board by its letter exhibit C5 dated November 5 1966 agreed to quote station to station rate equal to 85 B Special
In the said letter it was also stated that as the special rate was being quoted ahead of the actual setting up of the factory the freight rate need to be reviewed when the traffic actually begins to move
When the factory was almost ready for operation the company wrote a letter dated June 5 1967 requesting the Railway Board for charging the rate under classification 625 B instead of 85 BSpecial
The Railway Board did not accede to the request
On May 31 1968 the company wrote another letter informing the Railway Board that the movement of Naptha would commence from JuneJuly 1968 and pending decision of the company s earlier request the Railway Board may permit charging the rate equivalent to 85 B Special already offered in terms of the letter exhibit 5
The Railway Board refused to grant that request also
The Railway Board however informed the Company in the letter dated July 11 1968 as follows However if on the basis of facts and figures your cost of production date to be furnished for at least one complete year vis a vis the sale price of fertilizers it can be established that production of fertilizers at Kota is uneconomical until freight concession on the movement of Naptha from BajuvaTrombay to Kota is granted the Railway Board would be prepared to reconsider the question
 388 on April 19 1969 the company filed a complaint under Section 411a and b of the Railways Act 1890 before the Railway Rates Tribunal Madras
The principal contentions raised in the complaint are as follows i The Railway Board was estopped andor precluded from going back on the assurance Of quoting station to station concessional rate 85 B when the company had in vested a large amount of capital in setting up the factory at a place away from the refinery or port ii The rate charges by the Railway for the carriage of Naptha between two stations Bajuva and Dadhevi was unreasonable under Section 411b of the Indian Railways Act 1980 and iii The Railways were showing undue preference or advantage in respect of other traffic and contravening the provisions of Section 28 of the Indian Railway Act 1890
 With these and other contentions the company requested the tribunal to declare the rate charged for the carriage of Naptha as unreasonable and to fix a reasonable rate for such carriage
The Railway Board in its reply maintained that while quoting the concessional rate equal to 85 B Special it was made clear to the company that the rate was subject to review when the traffic starts moving and that concessional rate was provisional in character
The company did not construct the factory relying solely on the concessional rate offered by the Railway Board
There was no scope for any such understanding since the Railway reserved its right to determine the correct rate when the traffic started moving
It was later found that the chemicals have been advisedly given low class rate with a view to encourage fertilizer industry and no further concession was necessary to the company
It was further stated that the question of any undue prejudice of undue favour to any party does not arise when charging the respective class rates for specified commodities
On these pleadings the Tribunal considered among others the following issues 1
Whether freight charges now charged for the carriage of a Company s traffic in Neptha from Bajuva to Dadhevi station are unreasonable under Section 411 of the Indian Railways Act 1890 389 2
Whether the Railways are contravening Section 28 of the Indian Railways Act in charging the respective class rates for commodities naptha chemical manures divisions A  B Urea and Gypsum 3
Whether the Railways are estopped by the doctrine of promissory estoppel in view of the assurance given in the letter exhibit C The Tribunal determined all these questions against the company
It was held that there was no unreasonableness in the rate charged for the carriage of Naptha from Bajuva to Dadhevi
The Railways are not contravening Section 28 of the Railways Act
The rate charged has not caused any prejudice to the company
On the question of promissory estoppel the Tribunal held that the assurance given by the Railway Board in the letter exhibit C5 was not mainly responsible for setting up of fertilizer factory at Kota
It was further held that even if exhibit CS was an assurance to the Company the withdrawal of that assurance has not adversely affected the interests of the company
Upon the submissions made by learned counsel on both sides the following questions arise for our consideration 1 Whether the Railway Board was bound to give the concessional rate offered to the company under exhibit C5 dated November 5 1966 2 Whether the rate charged for the carriage of Naptha between Bajuva and Dadhevi is unreasonable 3 Whether the Railways are showing undue preference or advantage in respect of other traffic and contravening the provisions of Section 28 of the Railways Act We may conveniently take up third question first for consideration
The relevant provisions of the Railways Act 1890 which have a material bearing on the question are these Section 41 provides for filing complaints against Railway Administration
The Section provides as follows so far as it is material 390 41I Any complaint that a railway administration a is contravening the provisions of Section 28 or b is charging for the carriage of any commodity between two stations a rate which is unreasonable or c x x x x x may be made to the Tribunal and the Tribunal shall hear and decide any such complaint in accordance with the provisions of this chapter
Section 28 provides 28
A Railway administration shall not make or give any undue or unreasonable preference or advantage to or in favour of any particular person or railway administration or any particular description of traffic in any respect what soever or subject any particular person or railway administration or any particular description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever
 The third question formulated by us relates to the contravention of Section 28 of the Railways Act
The scope of this Section has been considered by this Court in Rajgarh Jute Mills Ltd v Eastern Railway and another   at 241
There it was observed that a party who complains against the railway administration that the provisions of Section 28 have been contravened must establish that there has been preference between himself and his goods on the one hand and his competitor and his goods on the other
Gajendragadkar J as he then was observed Section 28 is obviously based on the principle that the power derived from the monopoly of railway carriage must be used in a fair and just manner in respect of all persons and all descriptions of traffic passing over the railway area
In other words equal charges should normally be levied against persons or goods of the same or similar kinds pas sing over the same or similar area of the railway lines and under the same or similar circumstances but this rule does not mean that if the railway administration charges un 391 equal rates in respect of the same or similar class of goods travelling over the same or similar areas the inequality of rates necessarily attract the provisions of section 28
All cases of unequal rates cannot necessarily be treated as cases of preference because the very concept of preference postulates competition between the person of traffic receiving preference and the person or traffic suffering prejudice in consequence
It is only as between competitors in the same trade that a complaint of preference can be made by one in reference to the other In the light of these principles the Tribunal considering the material on record held that there is no evidence produced by the Company to justify any grievance under Section 28
We see no reason to disagree with this conclusion
It is in our opinion perfectly justified
In fact Mr KK Jain learned counsel for the appellant also did not seriously dispute the correctness of that finding recorded by the Tribunal
We may now turn to the second question
KK Jain urged that the rate charged by the Railway Administration is per se unreasonable
Here again the onus to prove the alleged unreasonableness of the freight rests on the company
It is for the company to establish that the rate charged by the Railway Administration for the carriage of Naptha is unreasonable
Of course this onus could be discharged by relying upon the material produced by the Railways
Mr Jain therefore relied upon a statement exhibit C46 in support of his case
exhibit C46 is a statement of surplus working cost in respect of carriage of Naptha from Bajuva to Dadhevi
It is in our opinion not necessary to analyse the statement
Even assuming that the railways are earning some surplus income after deducting the operation cost that by itself is no ground to hold that the freight charged is per se unreasonable
It must be born in mind that the railways are run as commercial undertaking and at the same time it being an instrumentality of the State should serve the national interest as well
There is however no obligation on the railways to pass on the extra amount realised by the carriage of goods to customers
Nor it is necessary to share the profit with the commuters
As Mr Barua learned counsel for the Railways said that in the case of commodities of national needs such a foodgrains crude oil etc it may be necessary for the Railways to charge below the operation cost
To off set such a loss the Railways may charge higher freight for certain other classified commodities
Therefore it seems to us that the cost of operation cannot by itself be the basis for judging the reasonableness of the rate changed
392 It was next urged by Mr KK Jain that the crude oil and Naptha are considered as comparable commodities for the purpose of carriage
The crude oil carries the rate equal to class 85 Bold 85new while Naptha carries rate 110 Bold 105 Bnew
In terms of amounts it works out at Rs5945 for crude oil as against Rs7313 for Naptha
The counsel urged that there is no justification shown for this wide disparity in the first place
Secondly the freight rate of crude oil was the rate offered to the company under exhibit CS and the denial of that rate without any good reason is arbitrary
This argument though attractive does not carry conviction if one analyses the evidence on record
Crude oil has been clubbed with Glycerine fruit juices and syrups fibres flax etc
Naptha has been clubbed with Aviation Spirit Petrol Petroleum Ether and solvent oil
From the evidence produced by the Railways Naptha has been classified as a dangerous commodity with the flash point below 244 xf8C spontaneously
The crude oil has no such dangerous characteristics
It is also on record that Naptha requires special type of tank wagons and the Railways have to take special precautions for transportation
These and other relevant factors have been taken into account by the Tribunal for rejecting the demand of the company for parity in freights
This Court cannot interfere with such a finding in this appeal under Article 136 of the Constitution
On the merits also we see no justification to demand that Neptha should take the same freight rate as that of crude oil
We may now revert to the first question
It relates to the correctness of the view taken by the Tribunal on the doctrine of promissory estoppel resulting by the letter exhibit CS of the Railway Board
The Tribunal has rejected this claim of the company by summarising its conclusion in the following terms We must therefore hold that the assurance contained in 
CS was not mainly responsible for the setting up of the Fertilizer Factory at Kota
Even if it was held that exhibit CS was a definite encouragement to the complainant to set up the Kota factory there is no evidence on record to show that the withdrawal of the concession by exhibit 12 has adversely affected the complainant
We will show in the i succeeding paragraphs that the complainant has suffered no material injury by virtue of the withdrawal of the concessional rate and the charging of the normal rate
It is well settled that the principle of estoppel cannot be applied unless the person pleading estoppel can show that he has been prejudiced by the conduct of the party on whose assurance l l he has acted
 393 Here the Railways Rates Tribunal apparently appears to have gone off the track
The doctrine of promissory estoppel has not been correctly understood by the Tribunal
It is true that is the formative period it was generally said that the doctrine of promissory estoppel cannot be invoked by the promisee unless he has suffered detriment  or prejudice 
It was often said simply that the party asserting the estoppel must have been induced to act to his detriment
But this has now been explained in so many decisions all over
All that is now required is that the party asserting the estoppel must have acted upon the assurance given to him
Must have relied upon the representation made to him
It means the party has changed or altered the position by relying on the assurance or the representation
Thealteration of position by the party is the only indispensable requirement of the doctrine
It is not necessary to prove further any damage detriment or prejudice to the party asserting the estoppel
The Court however would compel the opposite party to adhere to the representation acted upon or abstained from acting
The entire doctrine proceeds on the promise that it is reliance based and nothing more
This principle would be clear if we study the cases in which the doctrine has been applied even since it was burst out into sudden blaze in 1946
Lord Denning in Central London Properties Ltd v High Trees House Ltd 11947 KB 130 sitting as a trial judge asserted A promise intended to be binding intended to be acted upon and in fact acted upon is binding  
The history of the High Trees principle is too well known to bear repetition
It will be enough to make the following points
The promisor is bound because he led the promisee to commit himself to change the position
If the promisee has acted upon the promise the promisor is
precluded from receding his promise
No further detriment to the promisee upon his temporal interests need be established
This position has been made clear by Lord Denning himself in his article Recent Developments in the Doctrine of Consideration Modern Law Review Vol 15 at p 5
A man should keep his word
All the more so when the promise is not a bare promise but is made with the intention that the other party should act upon it
Just a contract is different from tort and from estoppel so also in the sphere now under discussion promises may give rise to a different equity from other conduct
394 The difference may lie in the necessity of showing detriment where one party deliberately promises to waive modify or discharge his strict legal rights intending the other party to act on the faith of promise and the other party actually does act on it then it is contrary not only to equity but also to good faith to allow the promisor to go back on his promise
It should not be necessary for the other party to show that he acted to his detriment in reliance on the promise
It should be sufficient that he acted on it
The principle governing this branch of the subject cannot be better put then in the wolds of a great Australian jurist DIXON J in Grundt v The Great Boulder Pty Gold Mines Ltd  There he said It is often said simply that the party asserting the estoppel must have been induced to act to his detriment
Although substantially such a statement is correct and leads to no misunderstanding it does not bring out clearly the basal purpose of the doctrine
That purpose is to avoid or pre vent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting
This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it
So long as the assumption is adhered to the party who altered his situation upon the faith of it cannot complain
His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then if it is allowed his own original change of position will operate as a detriment
His action or inaction must be such that if the assumption upon which he proceeded were shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party the consequence would be to make his original act or failure to act a source of prejudice
 This passage was referred to with approval by Lord Denning in Central Newbury Car Auction Ltd v Unity Finance Ltd at 909
The said passage has also been quoted with approval 395 by Bhagwati J as he then was in Motilal Padampat Sugar Mills Co A Ltd v state of UP  Ors 19792 SCR 641 at p 695 19792SCC 409
The learned Judge then said We do not think that in order to invoke the doctrine of promissory estoppel it is necessary for the promisee 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 could result if the promisor were to recede from his promise then detriment would certainly come in as a necessary ingredient
The detriment in 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
 The view taken in Motilal Padmapat Sugar Mills case supra has been reiterated in Union of India  Ors
vs Godfrey Philips India Ltd  1985  4 SCC 369   1985  Supp 3 SCR 123 
The concept of detriment as we know understand is whether it appears unjust unreasonable or inequitable that the promisor should be allowed to resile from his assurance or representation having regard to what the promisee has done or refrained from doing in reliance on the assurance or representation
It is however quite fundamental that the doctrine of promissory estoppel cannot be used to compel the public bodies or the Government to carry out the representation or promise which is contrary to law or which is outside their authority or power
Secondly the estoppel stems from equitable doctrine
It therefore requires that he who seeks equity must do equity
The doctrine therefore cannot also be invoked if it is found to be inequitable or unjust in its enforcement
We may also state that for the purpose of invoking the doctrine it is not necessary for the company to show that the assurance contained in exhibit
C5 was mainly responsible for establishing the factory at Kota
There may be several representations to one party from different authorities in regard to different matters
Or there may be several representations from the same party in regard to different matters
As in the instant case there was one representation by the Rajasthan Government to supply power to the company at concessional rate
There was another representation from the same Govern 396 ment to exempt the company from payment of tax for certain period
There may be other representations from the same or some other authorities
If those representations have been relied upon by the company the Court would compel those parties to adhere to their respective representations
It is immaterial whether each of the representations was wholly responsible or partly responsible for locating the factory at Kota
It is sufficient if the company was induced to act on that representation
The last and final aspect of the matter to which attention should be drawn is that for the purpose of finding whether an estoppel arises in favour of the person acting on the representation it is necessary to look into the whole of the representation made
It is also necessary to state that the representation must be clear and unambiguous and not tentative or uncertain
In this context we may usefully refer to the following passage from Halsbury s Laws of England Halsbury s Laws of England 4th Edn
16 p 1071 para 1595 1595
Representation must be unambiguous To found an estoppel a representation must be clear and unambiguous not necessarily susceptible of only one interpretation but such as will reasonably be understood by the person to whom it is made in the sense contended for and for this purpose the whole of the representation must be looked at
This is merely an application of the old maxim applicable to all estoppels that they must be certain to every intent The question now is whether the assurance given by the Railway Board in the letter exhibit
C5 was clear and unqualified
But unfortunately it is not so
It was subject to review to be undertaken when the company starts moving the raw material
exhibit C5 reads New Delhi I Dated S Nov 1966 Dear Sir Sub Integrated Fertilizer PVC project at Kota Rajasthan Rail movement of Naptha
397 Ref Your letter No SFCGen 72 dated 591966 I am directed to state that the Railway Board agree to quote a special rate equal o class 85 B Special CC K for transport of Naptha in train loads from Bombay or Koyali to Kota for manufacture of fertilizers
The proposed special rate will apply at owner s risk
Since the special rate is being quoted ahead of the actual setting up of the factory the rate may need to be reviewed when the traffic actually begins to move
The Railway may accordingly be approached before the traffic actually starts moving
Yours faithfully Sd RL Sharma for Secretary Railway Board What does this letter mean The first part of the letter offering the concessional rate equal to class 85 B Special has been completely watered down in the second part of the letter
It has been expressly stated that the rate may need be reviewed when the traffic actually begins to move
The company was put to notice that it has to again approach the Railway Administration
The Railway authorities now states that they have reviewed the whole matter and found no justification to offer a concessional freight rate for Naptha since fertilizers are deliberately given a low classification in the tariff
From the tenor of exhibit S the Railways are entitled to state so and it does not amount to resiling from the earlier assurance
No question of estoppel arises in favour of appellant out of the representation made in exhibit CS
We therefore agree with the conclusion of the Tribunal but not for all the reasons stated
In the result the appeal fails and is dismissed
In the circumstances
however we make no order as to costs
SL Appeal dismissed


Summary:
The appellant a company set up a fertilizer factory at Kota in Rajasthan
The factory manufactures urea for which the main raw material is Naptha which has to be transported from the Koyali Refinery of the Indian oil Corporation
Before the actual setting up of the factory the appellant requested the Railway Board by letter for a concessional frieght rate for the carriage of Naptha to the factory
The Railway Board by its letter EX 5 dated November 5 1966 quoted station to station rate equal to 85 B special as against the rate equivalent to classification 625 B requested for by the appellant and also stated that as the special rate was being quoted ahead of the actual setting up of the factory the frieght rate would be reviewed when the traffic actually began to move
When the factory was almost ready for operation the appellant again requested the Railway Board by letter for charging the rate under classification 62 5 B instead of 85 B special quoted by it
The Railway Board refused to oblige
The appellant wrote another letter to the Board requesting it to permit charging the rate equivalent to 85 B special pending its final decision as the movement of naptha was to commence from JuneJuly 1968
The Railway Board refused to grant that request also saying that it could reconsider the question if on the basis of the facts and figures of the cost of production vis a vis the sale price of the fertilizers it could be established that the production of the fertilisers at Kota was uneconomical unless freight concession on the movement of naptha was granted
The appellant filed a complaint under section 411a and b of the Railways Act 1890 before the Railway Rates Tribunal
The Tri 384 bunal decided against the appellant
Aggrieved the appellant appealed to this Court by special leave for relief against the order and judgment of the Tribunal
Dismissing the appeal the Court  HELD Three questions arise for consideration of the Court 1 whether the Railway Board was bound to allow the concessional rate offered to the appellant that is 85 B special quoted in its letter exhibit C 5 dt
November 5 1966 to the appellant 2 whether the rate charged for the carriage of the naptha between the stations concerned was unreasonable and 3 whether the Railways were showing undue preference or advantage in respect of other traffic in contravention of the provisions of section 28 of the Railways Act
389E F  Dealing with the third question first which relates to the contravention of section 28 of the Railways Act the scope of the section was considered by this Court in Rajgarh Jute Mills Ltd vs Eastern Railway and another  at 241 and the Railway Rates Tribunal considering the material on record in the light of the decision of the Court in case held that there was no evidence produced by the appellant to justify any grievance under section 28
This conclusions is perfectly justified
390E 391C The second question above said relates to the rate charged by the Railway Administration being per se unreasonable
Even assuming as argued by appellant s counsel that the Railways are earning some surplus income that by itself is no ground to hold that the frieght charged is per se unreasonable
In the case of commodities of national needs such as foodgrains crude oil etc it may be necessary for the Railways to charge below the operation cost and to offset the loss the Railways may charge higher freight for some other classified commodities
The cost of operation cannot by itself be the basis for judging the reasonableness of the rate charged
Counsel for the appellant also argued that crude oil and naptha were comparable commodities for the purpose of carriage but there was disparity in the rates charged in respect of the two naptha being charged at a much higher rate
The Tribunal rejected the demand of the appellant for parity in frieghts and the Court cannot interfere with the finding to the Tribunal in this appeal under Article 136 of the Constitution
On merits also there is no justification to demand that neptha should take the same freight rate as that of the crude oil
391D F H 392B D E 385 Lastly the first question It relates to the correctness of the view taken by the Tribunal on doctrine of promissory estoppel consequent upon the letter exhibit 5 of the Railway Board
The Tribunal rejected this claim of the appellant
Considering the conclusion of the Tribunal on this question it appears the Tribunal has not correctly understood the doctrine of promissory estoppel The party asserting the estoppel must have relied and acted upon the assurance given to him
It means the party has changed or altered the position by relying on the assurance or representation
The alteration of position by the party is the only indispensable requirement of the doctrine
It is not necessary to prove further any damage detriment or prejudice to the party asserting the estoppel A promise intended to be binding intended to be acted upon and in fact acted upon is binding said Lord Denning sitting as a trial judge in Central London Properties Ltd vs High trees House Ltd If the promisee has acted upon the promise the promisor is precluded from receding from his promise
The concept of detriment as it is understood now is whether it appears unjust unreasonable or inequitable that the promisor should be allowed to resile from his assurance or representation having regard to what the promisee has done or refrained from doing in reliance on the assurance or representation
It is however quite fundamental that the doctrine of promissory estoppel cannot be used to compel the public bodies or The Government to carry out the representation or promise which is contrary to law or which is outside their authority or power
Secondly the estoppel stems from equitable doctrine
it requires that he who seeks equity must do equity
The doctrine therefore cannot also be invoked if it is found to be inequitable or unjust in its enforcement
or the purpose of invoking the doctrine it is not necessary for the appellant to show that the insurance contained in exhibit I S was mainly responsible for the establishing of the factory at Kota
There may be several representation to one party from different authorities in regard to different matters
Or there may be several representations from the same party in regard to different matters In the instant case there was one representation by the Rajasthan government to supply power to the appellant s factory at concessional rate
There is another representation from the same government to exempt the appellant from payment of tax for a certain period
If those representations have been relied upon by the appellant the Court would compel the authorities to adhere to their representations
What is required is the fact that the appellant was induced to act on the representations
The assurance given by the Railway Board in the letter exhibit S was not clear and unqualified
it was subject to review to be undertaken 386 when the appellant started moving the raw material
Accordingly A appellant was put to notice that it has to approach the Railway administration again when it would review the whole matter
From the tenor of exhibit 5 the railways are entitled to say that they have reviewed the matter and found no justification for a concessional frieght rate for naptha that does not amount to resiling from the earlier assurance
No question of estoppel arises in favour of the appellant in the case out of the representation made in Ex 5
The Court agreed with the conclusion of the Tribunal but not for all the reasons stated
Rajgarh Jute Mills Ltd vs Eastern Railway  Anr at 241 Central London Properties Ltd vs High Trees House Ltd  Central Newbury Car Auctions Ltd vs Unity Finance Ltd at 909 Article Recent Development in the Doctrine of Consideration Modern Law Review Vol  Grundt vs The Great Boulder Ptv Gold Mines Ltd   Mohlal Padampet Sugar Mills Co Ltd vs State of UP and ors  at 695   Union of India and ors vs Godfrey Philips Ltd  1985 Supp 3 SCR 123 and Halsbury s Laws of England 4th Edn Vol  para 1595 referred to