Civil Appeal No 1597 of 1972
Appeal from the Judgment and Order dated 25th January 1972of the Allahabad High Court in Civil Misc
Writ No 378870
ST Desai Shri Narain J B Dadachanji Ravinder Narain S Swarup and Talat Ansari for the Appellant
G N Dikshit M V Goswami and O P Rana for RR 1 3 and 5
Girish Chandra for Respondent No 4
651 A B Dewan Ravinder Narain section Swarup and A N Haksar for the Intervener Ms Modi Rubber Ltd
The Judgment of the Court was delivered by BHAGWATI J
 This appeal by certificate raises a question of considerable importance in the field of public law
How far and to what extent is the State bound by the doctrine of promissory estoppel  It is a doctrine of comparatively recent origin but it is potentially so fruitful and pregnant with such vast possibilities for growth that traditional lawyers are alarmed lest it might upset existing doctrines which are looked upon almost reverentially and which have held the field for a long number of years
The law in regard to promissory estoppel is not yet well settled though it has been the subject of considerable debate in England as well as the United States of America and it has also received consideration in some recent decisions in India and we therefore propose to discuss it in some detail with a view to defining its contours and demarcating its parameters
We will first state briefly the facts giving rise to this appeal
This is necessary because it is only where certain fact situations exist that promissory estoppel can be invoked and applied
The appellant is a limited company which is primarily engaged in the business of manufacture and sale of sugar and it has also a cold storage plant and a steel foundry
On 10th October 1968 a news item appeared in the National Herald in which it was stated that the State of Uttar Pradesh had decided to give exemption from sales tax for a period of three years under section 4A of the UP Sales Tax Act to all new industrial units in the State with a view to enabling them to come on firm footing in developing stage
This news item was based upon a statement made by Shri M P Chatterjee the then Secretary in the Industries Department of the Government
The appellant on the basis of this announcement addressed a letter dated 11th October 1968 to the Director of Industries stating that in view of the sales tax holiday announced by the Government the appellant intended to set up a Hydro genation Plant for manufacture of Vanaspati and sought for confirmation that this industrial unit which it proposed to set up would be entitled to sales tax holiday for a period of three years from the date it commenced production
The Director of Industries replied by his letter dated 14th October 1968 confirming that there will be no sales tax for three years on the finished product of your proposed Vanaspati factory from the date it gets power connection for commencing production The appellant thereupon started taking steps to contact various financiers for financing the project and also initiated negotiations with manufacturers for purchase of machinery for setting 652 up the Vanaspati factory
On 12th December 1968 the appellant s representative met the 4th respondent who was at that time the Chief Secretary to the Government as also Advisor to the Governor and intimated to him that the appellant was setting up the Vanaspati factory solely on the basis of the assurance given on behalf of the Government that the appellant would be entitled to exemption from sales tax for a period of three years from the date of commencement of commercial production at the factory and the 4th respondent reiterated the assurance that the appellant would be entitled to sales tax holiday in case the Vanaspati factory was put up by it
The appellant by its letter dated 13th December 1968 placed on record what had transpired at the meeting on the previous day and requested the 4th respondent to please confirm that we shall be allowed sales tax holiday for a period of three years on the sale of Vanaspati from the date we start production On the same day the appellant entered into an agreement with Ms De Smith India Pvt Ltd Bombay for supply of plant and machinery for the Vanaspati factory providing clearly that the appellant would have the option to terminate the agreement if within 10 weeks exemption from sales tax was not granted by the State Government
The 4th respondent replied on 22nd December 1968 confirming that the State Government will be willing to consider your request for grant of exemption from UP Sales Tax for a period of three years from the date of production and asked the appellant to obtain the requisite application form and submit a formal application to the Secretary to the Government in the Industries Department and in the meanwhile to go ahead with the arrangements for setting up the factory
The appellant had in the meantime submitted an application dated 21st December 1968 for a formal order granting exemption from sales tax under section 4A of the Act
It appears that the letter of the 4th respondent dated 22nd December 1968 was not regarded as sufficient by the financial institutions which were approached by the appellant for financing the project since it merely stated that the State Government would be willing to consider the request for grant of exemption and did not convey any decision of the State Government that the exemption would be granted
The appellant therefore addressed a letter dated 22nd January 1969 to the 4th respondent pointing out that the financial institutions were of the view that the letter of the 4th respondent dated 22nd December 1968 did not purport to commit the Government for the concession mentioned and it was therefore necessary to obtain a formal order of exemption in terms of the application submitted by it
The 4th respondent however stated categorically in his letter in reply dated 23rd January 1969 that the proposed Vanaspati Factory of the appellant will be 653 entitled to exemption from UP Sales Tax for a period of three years from the date of going into production and that this will apply to all Vanaspati sold during that period in Uttar Pradesh itself and expressed his surprise that a letter from the Chief Secretary to the State Government stating this fact in clear and unambiguous words should not carry conviction with the financial institutions
 In view of this unequivocal assurance given by the 4th respondent who not only occupied the post of Chief Secretary to the Government but was also Advisor to the Governor functioning under the President s rule the appellant went ahead with the setting up of the Vanaspati Factory
The appellant by its letter dated 25th April 1969 advised the 4th respondent that the UP Finance Corporation being convinced by the clear and categorical assurance given by the 4th respondent that the Vanaspati Factory of the appellant would be entitled to exemption from sales tax for a period of three years from the date of commencement of production had sanctioned financial assistance to the appellant and the appellant was going ahead with the project in full speed to enable it to start production at the earliest
The appellant made considerable progress in the setting up of the Vanaspati Factory but it seems that by the middle of May 1969 the State Government started having second thoughts on the question of exemption and a letter dated 16 May 1969 was addressed by the 5th respondent who was Deputy Secretary to the Government in the Industries Department intimating that a meeting has been called by the Chief Minister on 23rd May 1969 to discuss the question of giving concession in Sales Tax on Vanaspati products and requesting the appellant to attend the meeting
The appellant immediately by its letter dated 19th May 1969 pointed out to the 5th respondent that so far as the appellant was concerned the State Government had already granted exemption from Sales Tax by the letter of the Chief Secretary dated 23rd January 1969 but still the appellant would be glad to send its representative to attend the meeting as desired by the 5th respondent
The proposed meeting was however postponed and the appellant was intimated by the 5th respondent by its letter dated 23rd May 1969 that the meeting would now be held on 3rd June 1969
The appellant s representative attended the meeting on that day and reiterated that so far as the appellant was concerned it had already been granted exemption from Sales Tax and the State Government stood committed to it
The appellant thereafter proceeded with the work of setting up the Vanaspati plant on the basis that in accordance with the assurance given by the 4th respondent on behalf of the State Government the appellant would be exempt from payment of Sales Tax for a period of three years from the date of commencement of production
654 The State Government however went back upon this assurance and a letter dated 20th January 1970 was addressed by the 5th respondent intimating that the Government had taken a policy decision that new Vanaspati Units in the State which go into commercial production by 30th September 1970 would be given partial concession in Sales Tax at the following rates for a period of three years First year of production 312 Second year of production 3 Third year of production 212 The appellant by its letter dated 25th June 1970 pointed out to the Secretary to the Government that the appellant proposed to start commercial production of Vanaspati with effect from 1st July 1970 and stated that as notified in the letter dated 20th January 1970 the appellant would be availing of the exemption granted by the State Government and would be charging sales tax at the rate of 312 instead of 7 on the sales of Vanaspati manufactured by it for a period of one year commencing from 1st July 1970
The factory of the appellant thereafter went into production from 2nd July 1970 and the appellant informed the Secretary to the Government about the same by its letter dated 3rd July 1970
The State Government however once again changed its decision and on 12th August 1970 a news item appeared in the Northern India Patricia stating that the Government had decided to rescind the earlier decision ie the decision set out in the letter dated 20th January 1970 to allow concession in the rates of Sales Tax to new Vanaspati Units
The appellant thereupon filed a writ petition in the High Court of Allahabad asking for a writ directing the State Government to exempt the sales of Vanaspati manufactured by the appellant from sales tax for a period of three years commencing from 2nd July 1970 by issuing a notification under section 4A and not to collect or charge sales tax from the appellant for the said period of three years
It appears that in the writ petition as originally filed there was no plea of promissory estoppel taken against the State Government and the writ petition was therefore amended by obtaining leave of the High Court with a view to introducing the plea of promissory estoppel
The appellant urged in the amended writ petition that the 4th respondent acting on behalf of the State Government had given an unequivocal assurance to the appellant that the appellant would be entitled to exemption from payment of sales tax for a period of three years from the date of commencement of the production and this assurance was given by the 4th respondent intending or knowing that it would be acted on by the appellant and in fact 655 the appellant acting in reliance on it established the Vanaspati factory by investing a large amount and the State Government was therefore bound to honour the assurance and exempt the Vanaspati manufactured and sold by the appellant from payment of sales tax for a period of three years from 2nd July 1970
This plea based on the doctrine of promissory estoppel was however rejected by the Division Bench of the High Court principally on the ground that the appellant had waived the exemption if any by accepting the concessional rates set out in the letter of the Deputy Secretary dated 20th January 1970
The appellant thereupon preferred the present appeal after obtaining a certificate of fitness from the High Court
The principal argument advanced on behalf of the appellant in support of the appeal was that the 4th respondent had given a categorical assurance on behalf of the State Government that the appellant would be exempt from payment of sales tax for a period of three years from the date of commencement of production and such assurance was given intending or knowing that it would be acted on by the appellant and in fact the appellant acting in reliance on it altered its position and the State Government was therefore bound on the principle of promissory estoppel to honour the assurance and exempt the appellant from sales tax for a period of three years from 2nd July 1970 being the date on which the factory of the appellant commenced production
The appellant assailed the view taken by the High Court that this claim of the appellant for exemption based on the doctrine of promissory estoppel was barred by waiver because the appellant had by its letter dated 25th June 1970 accepted that it would avail of the exemption granted under the letter of the 5th respondent dated 20th January 1970 and charged sales tax at the concessional rate of 312 instead of 7 during the first year of its production
The appellant urged that waiver was a question of fact which was required to be pleaded and since no plea of waiver was raised in the affidavit filed on behalf of the State Government in opposition to the writ petition it was not competent to the State Government to rely on the plea of waiver for the first time at the hearing of the writ petition
Even if the plea of waiver were allowed to be raised notwithstanding that it did not find place in the pleadings no waiver was made out said the appellant since there was nothing to show that were the circumstances in which the appellant had addressed the letter dated 25th June 1970 stating that it would avail of the exemption granted under the letter dated 20th January 1970 and it was not possible to say that the appellant with full knowledge of its right to claim total exemption from payment of sales tax waived that right and agreed to accept the concessional rates set out in the letter dated 20th January 1970
The 656 State Government on the other hand strongly pressed the plea of waiver and submitted that the appellant had clearly waived its right to complete exemption from payment of Sales Tax by addressing the letter dated 25th June 1970
The State Government also contended that in any event even if there was no waiver the appellant was not entitled to enforce the assurance given by the 4th respondent since such assurance was not binding on the State Government and more over in the absence of notification under section 4A the State Government could not be prevented from enforcing the liability to sales tax imposed on the appellant under the provisions of the Act
It was urged on behalf of the State Government that there could be no promissory estoppel against the State Government so as to inhibit it from formulating and implementing its policies in public interest
These were broadly the rival contentions urged on behalf of the parties and we shall now proceed to consider them
We shall first deal with the question of waiver since that can be disposed of in a few words
The High Court held that even if there was an assurance given by the 4th respondent on behalf of the State Government and such assurance was binding on the State Government on the principle of promissory estoppel the appellant had waived its right under it by accepting the concessional rates of sales tax set out in the letter of the 5th respondent dated 20th January 1970
We do not think this view taken by the High Court can be sustained
In the first place it is elementary that waiver is a question of fact and it must be properly pleaded and proved
No plea of waiver can be allowed to be raised unless it is pleaded and the factual foundation for it is laid in the pleadings
Here it was common ground that the plea of waiver was not taken by the State Government in the affidavit filed on its behalf in reply to the writ petition nor was it indicated even vaguely in such affidavit
It was raised for the first time at the hearing of the writ petition
That was clearly impermissible without an amendment of the affidavit in reply or a supplementary affidavit raising such plea
If waiver were properly pleaded in the affidavit in reply the appellant would have had an opportunity of placing on record facts showing why and in what circumstances the appellant came to address the letter dated 25th June 1970 and establishing that on these facts there was no waiver by the appellant of its right to exemption under the assurance given by the 4th respondent
But in the absence of such pleading in the affidavit in reply this opportunity was denied to the appellant
It was therefore not right for the High Court to have allowed the plea of waiver to be raised against the appellant and that plea should have been rejected in limine
657 Secondly it is difficult to see how on the facts the plea of waiver could be said to have been made out by the State Government
Waiver means abandonment of a right and it may be either express or implied from conduct but its basic requirement is that it must be an intentional act with knowledge
Per Lord Chelmsford LC in Earl of Darnley vs London Chatham and Dover Rly
Co There can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right he intentionally abandons it
It is pointed out in Halsbury s Laws of England 4 d Volume 16 in paragraph 1472 at page 994 that for a waiver to be effectual it is essential that the person granting it should be fully informed as to his rights and Isaacs J delivering the judgment of the High Court of Australia in Craine vs Colonial Mutual Fire Insurance Co Ltd has also emphasised that waiver must be with knowledge an essential supported by many authorities
Now in the present case there is nothing to show that at the date when the appellant addressed the letter dated 25th June 1970 it had full knowledge of its right to exemption under the assurance given by the 4th respondent and that it intentionally abandoned such right
It is difficult to speculate what was the reason why the appellant addressed the letter dated 25th June 1970 stating that it would avail of the concessional rates of sales tax granted under the letter dated 20th January 1970
It is possible that the appellant might have thought that since no notification exempting the appellant from sales tax had been issued by the State Government under section 4A the appellant was legally not entitled to exemption and that is why the appellant might have chosen to accept whatever concession was being granted by the State Government
The claim of the appellant to exemption could be sustained only on the doctrine of promissory estoppel and this doctrine could not be said to be so well defined in its scope and ambit and so free from uncertainty in its application that we should be compelled to hold that the appellant must have had knowledge of its right to exemption on the basis of promissory estoppel at the time when it addressed the letter dated 25th June 1970
In fact in the petition as originally filed the right to claim total exemption from sales tax was not based on the plea of promissory estoppel which was introduced only by way of amendment
Moreover it must be remembered that there is no presumption that every person knows the law
It is often said that every one is presumed to know the law but that is not a correct statement there is no such maxim known to the law
Over a hundred and thirty years ago Maule J pointed out in Martindala vs Faulkner3 There is no presumption in this country 658 that every person knows the law it would be contrary to common sense and reason if it were so
Scrutton also once said It is impossible to know all the statutory law and not very possible to know all the common law But it was Lord Atkin who as in so many other spheres put the point in its proper context when he said in Evans vs Bartlem1_____the fact is that there is not and never has been a presumption that every one knows the law
There is the rule that ignorance of the law does not excuse a maxim of very different scope and application
 It is therefore not possible to presume in the absence of any material placed before the Court that the appellant had full knowledge of its right to exemption so as to warrant an inference that the appellant waived such right by addressing the letter dated 25th June 1970
We accordingly reject the plea of waiver raised on behalf of the State Government
That takes us to the question whether the assurance given by the 4th respondent on behalf of the State Government that the appellant would be exempt from sales tax for a period of three years from the date of commencement of production could be enforced against the State Government by invoking the doctrine of promissory estoppel
Though the origin of the doctrine of promissory estoppel may be found in Hughes vs Metropolitan Railway Co2 and Birmingham  District Land Co vs London  North Western Rail Co3 authorities of old standing decided about a century ago by the House of Lords it was only recently in 1947 that it was rediscovered by Mr Justice Denning as he then was in his celebrated judgment in Central London Property Trust Ltd vs High Trees House Ltd4 This doctrine has been variously called promissory estoppel  equitable estoppel  quasi estoppel  and new estoppel 
It is a principle evolved by equity to avoid injustice and though commonly named promissory estoppel it is as we shall presently point out neither in the realm of contract nor in the realm of estoppel
It is interesting to trace the evolution of this doctrine in England and to refer to some of the English decisions in order to appreciate the true scope and ambit of the doctrine particularly because it has been the subject of considerable recent development and is steadily expanding
The basis of this doctrine is the inter position of equity
Equity has always true to form stepped into mitigate the rigours of strict law
The early cases did not speak of this doctrine as estoppel
They spoke of it as raising an equity 
Lord Cairns stated 659 the doctrine in its earliest form it has undergone considerable development since then in the following words in Hughes vs Metropolitan Railway Company supra It is the first principle upon which all Courts of Equity proceed that if parties who have entered into definite and distinct terms involving certain legal results afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced or will be kept in suspense or held in abeyance the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties
 This principle of equity laid down by Lord Cairns made sporadic appearances in stray cases now and then but it was only in 1947 that it was disinterred and restated as a recognised doctrine by Mr Justice Denning as he then was in the High Trees  case supra
The facts in that case were as follows The plaintiffs leased to the defendents a subsidiary of the plaintiffs in 1937 a block of flats for 99 years at a rent of  2500 a year
Early in 1940 and because of the war the defendants were unable to find sub tenants for the flats and unable in consequence to pay the rent
The plaintiffs agreed at the request of the defendants to reduce the rent to 
1250 from the beginning of the term
By the beginning of 1945 the conditions had improved and tenants had been found for all the flats and the plaintiffs therefore claimed the full rent of the premises from the middle of that year
The claim was allowed because the court took the view that the period for which the full rent was claimed fell out side the representation but Mr Justice Denning as he then was considered Obiter whether the plaintiffs could have recovered the covenanted rent for the whole period of the lease and observed that in equity the plaintiffs could not have been allowed to act inconsistently with their promise on which the defendants had acted
It was pressed upon the Court that according to the well settled law as laid down in Jorden y Money1 no estoppel could be raised against plaintiffs since the doctrine of estoppel by representation is applicable only to representations as to some state of facts alleged to be at the time actually in existence and not to promises de futuro which if binding at all must be binding only as contracts and here there was no representa 660 tion of an existing state of facts by the plaintiffs but it was merely a promise or representation of intention to act in a particular manner in the future
Mr Justice Denning however pointed out The law has not been standing still since Jorden vs Money
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
 The principle formulated by Mr Justice Denning was to quote his own words that a promise intended to be binding intended to be acted on and in fact acted on is binding so far as its terms properly apply
Now Hughes vs Metropolitan Railway Co supra and Birmingham and District Land Co vs London  North Western Rail Co supra the two decisions from which Mr Justice Denning drew inspiration for evolving this new equitable principle were clearly cases where the principle was applied as between parties who were already bound contractually one to the other
In Hughes vs Metropolitan Railway Co supra the plaintiff and the defendant were already bound in contract and the general principle stated by Lord Cairns LC was If parties who have entered into definite and distinct terms involving certain legal results afterwards enter upon a course of negotiations
Ten years later Bowen L J also used the same terminology in Birmingham and District Land Co vs London and North Western Rail Co supra that If persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe 
These two decisions might therefore seem to suggest that the doctrine of promissory estoppel is limited in its operation to cases where the parties are already contractually bound and one of the parties induces the other to believe that the strict rights under the contract would not be enforced
But we do not think any such limitation can justifiably be introduced to curtail the width and amplitude of this doctrine
We fail 661 to see why it should be necessary to the applicability of this doctrine that there should be some contractual relationship between the parties
In fact Donaldson J pointed out in Durham Fancy Goods Ltd vs Michael Jackson Fancy Goods Ltd 1  Lord Cairns in his enunciation of the principle assumed a pre existing contractual relationship between the parties but this does not seem to me to be essential provided that there is a pre existing legal relationship which could in certain circumstances give rise to liabilities and penalties But even this limitation suggested by Donaldson J that there should be a pre existing legal relationship which could in certain circumstances give rise to liabilities and penalties is not warranted and it is significant that the statement of the doctrine by Mr Justice Denning in the High Trees  case does not contain any such limitation
The learned Judge has consistently refused to introduce any such limitation in the doctrine and while sitting in the Court of Appeal he said in so many terms in Evenden vs Guildford City Association Football Club Ltd2 Counsel for the appellant referred us however to the second edition of Spencer Bower s book on Estoppel by Representation1966 pp
340 342 by Sir Alexander Turner a judge of the New Zealand Court of Appeal
He suggests the promissory estoppel is limited to cases where parties are already bound contractually one to the other
I do not think it is so limited  see Durham Fancy Goods Ltd vs Michael Jackson Fancy Goods Ltd It applies whenever a representation is made whether of fact or law present or future which is intended to be binding intended to induce a person to act on it and he does act on it
 This observation of Lord Denning clearly suggest that the parties need not be in any kind of legal relationship before the transaction from which the promissory estoppel takes its origin
The doctrine would seem to apply even where there is no pre existing legal relationship between the parties but the promise is intended to create legal relations or affect a legal relationship which will arise in future
Vide Halsbury s Laws of England 4th ed
16 p 1018 Note 2 para 1514
Of course it must be pointed out in fairness to Lord Denning that he made it clear 662 in the High Trees  case that the doctrine of promissory estoppel cannot found a cause of action in itself since it can never do away with the necessity of consideration in the formation of a contract but he totally repudiated in Evenden s case the necessity of a pre existing relationship between the parties and pointed out in Crabb vs Arun District Council1 that equity will in a given case where justice and fairness demand prevent a person from insisting on strict legal rights even where they arise not under any contract but on his own title deeds or under statue
The true principle of promissory estoppel therefore seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party the promise would be binding on the party making it and he would not be entitled to go back upon it if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties and this would be so irrespective whether there is any preexisting relationship between the parties or not
It may be pointed out that in England the law has been well settled for a long time though there is some indication of a contrary trend to be found in recent juristic thinking in that country that promissory estoppel cannot itself be the basis of an action
It cannot found a cause of action  it can only be a shield and not a sword
This narrow approach to a doctrine which is otherwise full of great potentialities is largely the result of an assumption encouraged by it rather misleading nomenclature that the doctrine is a branch of the law of estoppel
Since estoppel has always been traditionally a principle invoked by way of defence the doctrine of promissory estoppel has also come to be identified as a measure of defence
The ghost of traditional estoppel continues to haunt this new doctrine and that is why we find that while boldly formulating and applying this new equity in the High Trees  case Lord Denning added a qualification that though in the circumstances set out the promise would undoubtedly be held by the courts to be binding on the party making it notwithstanding that under the old common law it might be difficult to find any consideration for it the courts have not gone so far as to give a cause of action in damages for the breach of such a promise but they have refused to allow the party making it to act inconsistently with it
Lord Denning also pointed out in Combe vs 663 Combe2 that Much as I am inclined to favour the principles stated in the High Trees  case it is important that it should not be stretched too far lest it should be endangered
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  So also said Buckley J in the more recent case of Beesly vs Hallwood Estates Ltd1 The doctrine may afford a defence against the enforcement or otherwise of enforceable rights  it cannot create a cause of action
 It is however necessary to make it clear that though this doctrine has been called in various judgments and text books as promissory estoppel and it has been variously described as equitable estoppel  quasi estoppel  and new estoppel  it is not really based on the principle of estoppel but it is a doctrine evolved by equity in order to prevent injustice where a promise is made by a person knowing that it would be acted on by the person to whom it is made and in fact it is so acted on and it is inequitable to allow the party making the promise to go back upon it
Lord Denning himself observed in the High Trees  case expressly making a distinction between ordinary estoppel and promissory estoppel that cases like the one before him were not cases of estoppel in the strict sense
They are really promises promises intended to be binding intended to be acted upon and in fact acted upon
Jenkins CJ also pointed out in Municipal Corporation of Bombay vs Secretary of State 2 that the doctrine is often treated as one of estoppel but I doubt whether this is correct though it may be a convenient name to apply
The doctrine of promissory estoppel need not therefore be inhibited by the same limitation as estoppel in the strict sense of the term
It is an equitable principle evolved by the courts for doing justice and there is no reason why it should be given only a limited application by way of defence
It may be noted that even Lord Denning recognised in Crabb vs Arun Distric Council supra that there are estoppels and estoppels
Some do give rise to a cause of action
Some don t and added that in the species of estoppel called proprietary estoppel  it does give rise to a cause of action The learned Law Lord after quoting what he had said in Moorgate Mercantile Co Ltd vs Twitchings3 namely that the effect of estoppel on the true owner may be that  664 his own title to the property be it land or goods has been held to be limited or extinguished and new rights and interests have been created therein
And this operates by reason of his conduct what he has led the other to believe even though he never intended it
 Proceeded to observe that the new rights and interests so created by estoppel in or over land will be protected by the courts and in this way give rise to a cause of action
The Court of Appeal in this case allowed Crabb a declaration of a right of access at point over the verge on to Mill Park Road and a right of way along that road to Hook Lane on the basis of an equity arising out of the conduct of the Arun District Council
Of course Spencer Bower and Turner in their Treatise on The Law Relating to Estoppel by Representation  have explained this decision on the basis that it is an instance of the application of the doctrine of estoppel by encouragement or acquiescence or what has now come to be known as proprietary estoppel which according to the learned authors forms an exception to the rule that estoppel cannot found a cause of action
But if we look at the judgments of Lord Denning and Scarman LJ it is apparent that they did not base their decision on any distinctive feature of proprietary estoppel but proceeded on the assumption that there was no distinction between promissory and proprietary estoppel so far as the problem before them was concerned
Both the learned Law Lord and the learned Lord Justice applied the principle of promissory estoppel in giving relief to Crabb
Lord Denning referring to what Lord Cairns had said in Hughes vs Metropolitan Railway Co1 a decision from which inspiration was drawn by him for evolving the doctrine of promissory estoppel in the High Tree s case observed that  it is the first principle on which all courts of equity proceed that it will prevent person from insisting on his strict legal rights whether arising under a contract or on his title deeds or by statute when it would be inequitable for him to do so having regard to the dealings which have taken place between the parties
The decision in the High Trees  case was also referred to the learned Law Lord and so also other cases supporting the doctrine of promissory estoppel
Scarman LJ also observed that in pursuing the inquiry as to whether there was an equity in favour of Crabb he did not find helpful the distinction between promissory and proprietary estoppel
He added that this distinction may indeed be valuable to those who have to teach or expound the law but I do not think that in solving the particular problem raised by a particular case putting the law into categories is of the slightest assistance
It does appear to us that this was a case deci 665 ded on the principle of promissory estoppel
The representative of the Arun District Council clearly gave assurance to Crabb that they would give him access to the new road at point B to serve the southern portion of his land and the Arun District Council in fact constructed a gate at point B and in the belief induced by this representation that he would have right of access to the new road at point B Crabb agreed to sell the northern portion of his land without reserving for himself as owner of the southern portion any right of way over the northern portion for the purpose of access to the new road
This was the reason why the Court raised an equity in favour of Crabb and held that the equity would be satisfied by giving Crabb the right of access at point B free of charge without paying anything for it
Arun District Council was held bound by its promise to provide Crabb access to the new road at point B and this promise was enforced against Arun District Council at the instance of Crabb
The case was one which fell within the category of promissory estoppel and it may be regarded as supporting the view that promissory estoppel can be the basis of a cause of action
It is possible that the case also came within the rule of proprietary estoppel enunciated by Lord Kingsdown in Ramsden vs Dyson1  The rule of law applicable to the case appears to me to be this  If a man under a verbal agreement with a landlord for a certain interest in land or what amounts to the same thing under an expectation created or encouraged by the landlord that he shall have a certain interest takes possession of such land with the consent of the landlord and upon the faith of such promise or expectation with the knowledge of the land lord and without objection by him lays out money upon the land a Court of equity will compel the landlord to give effect to such promise or expectation and Spencer Bower and Turner may be right in observing that that was perhaps the reason why it was held that the promise made by Arun District Council gave rise to a cause of action in favour of Crabb
But on what principle one may ask is the distinction to be sustained between promissory estoppel and proprietary estoppel in the matter of enforcement by action
If proprietary estoppel can furnish a cause of action why should promissory estoppel not  There is no qualitative difference between the two
Both are the off springs of equity and if equity is flexible enough to permit proprietary estoppel to be used as a cause of action there is no reason in logic or principle why promissory estoppel should also not be available as a cause of action if necessary to satisfy the equity
666 But perhaps the main reason why the English Courts have been reluctant to allow promissory estoppel to found a cause of action seems to be the apprehension that the doctrine of consideration would other wise be completely displaced
There can be no doubt that the decision of Lord Denning in the High Trees  case represented a bold attempt to escape from the limitation imposed by the House of Lords in Jorden vs Money supra and it rediscovered an equity which was long embedded beneath the crust of the old decisions in Hughes vs Metropolitan Railway Co supra and Birmingham and District Land Co vs London and North Western Rail Co supra and brought about a remarkable development in the law with a view to ensuring its approximation with justice an ideal for which the law has been constantly striving
But it is interesting to note the Lord Denning was not prepared to go further as he thought that having regard to the doctrine of consideration which was so deeply entrenched in the jurisprudence of the country it might be unwise to extend promissory estoppel so as to found a cause of action and that is why he uttered a word of caution in Combe vs Combe supra that the principle of promissory estoppel should not be stretched too far lest it should be endangered
The learned Law Lord proceeded to add 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
 Spencer Bower and Turner also point out at page 384 of their Treatise 3rd ed that it is difficult to see how in a case of promissory estoppel a promise can be used to found a cause of action without according to it operative contractual force and it is for this reason that a contention that a promissory estoppel may be used to found a cause of action must be regarded as an attack on the doctrine of consideration The learned authors have also observed at page 387 that to give a plaintiff a cause of action on a promissory estoppel must be little less than to allow an action in contract where consideration is not shown and that cannot be done because consideration still remains a cardinal necessity of the formation of a contract
 It can hardly be disputed that over the last three or four centuries the doctrine of consideration has come to occupy such a predominant position in the law of contract that under the English law it is impossible to think of a contract without consideration and therefore it is understandable that the English courts should have hesitated to push the doctrine of promissory estoppel to its logical conclusion and stopped short at allowing it to be used merely as a weapon of defence though as we shall point out there are quite a few cases where this doctrine has been used 667 not as founding a cause of action in itself but as a part of a cause of a action
The modern attitude towards the doctrine of consideration is however changing fast and there is considerable body of juristic thought which believes that this doctrine is something of an anchronism
Prof Holdsworth pointed out long ago in his History of English Law that the requirements of consideration in its present shape prevent the enforcement of many contracts which ought to be enforced if the law really wishes to give effect to the lawful intentions of the parties to them and it would prevent the enforcement of many others if the judges had not used their ingenuity to invest considerations
But the invention of considerations by reasoning which is both devious and technical adds to the difficulties of the doctrine
Lord Wright remarked in an article published in that the doctrine of consideration in its present form serves no practical purpose and ought to be abolished
Sir Federick Pollock also said in his well known work of Ganius of Common Law  p 91 that the application of the doctrine of consideration to various unusual but not unknown cases has been made subtle and obscured by excessive dialectic refinement
Equally strong is the condemnation of this doctrine in judicial pronouncements
Lord Duned observed in the well known case of Dunlop Pneumatic Tyre Co vs Selfridge and Co Ltd1 I confess that this case is to my mind apt to nip any budding affection which one might have had for the doctrine of consideration
For the effect of that doctrine in the present case is to make it possible for a person to snap his fingers at a bargain deliberately made a bargain not in itself unfair and which the person seeking to enforce it has a legitimate interest to enforce
 The doctrine of consideration has also received severe criticism at the hands of Dean Roscoe Pound in the United States
The reason is that promise as a social and economic institution becomes of the first importance in a commercial and industrial society and it is an expression of the moral sentiment of a civilised society that a man s word should be as good as his bond  and his fellow men should be able to rely on the one equally with the other
That is why the Law Revision Committee in England in its Sixth Report made as far back as 1937 accepted Prof Holdsworth s view and advocated that a contract should exist if it was intended to create or affect legal relations and either consideration was present or the contract was reduced to writing
This recommendation however did not fructify into law with the result that the present position remains what it was
But having regard to the general opprobrium to which the doctrine of consideration has been subjected 668 by eminent jurists we need not be unduly anxious to project this doctrine against assault or erosion nor allow it to dwarf or stultify the full development of the equity of promissory estoppel or inhibit or curtail its operational efficacy as a justice device for preventing injustice
It may be pointed out that the Law Commission of India in its 13th Report adopted the same approach and recommended that by way of exception to section 25 of the Indian Contract Act 1925 a promise express or implied which the promisor knows or reasonably should know will be relied upon by the promisee should be enforceable if the promisee has altered his position to his detriment in reliance on the promise
We do not see any valid reason why promissory estoppel should not be allowed to found a cause of action where in order to satisfy the equity it is necessary to do so
We may point out that even in England where the judges apprehending that if a cause of action is allowed to be founded on promissory estoppel it would considerably erode if not completely overthrow the doctrine of consideration have been fearful to allow promissory estoppel to be used as a weapon of offence it is interesting to find that promissory estoppel has not been confined to a purely defensive role
Lord Denning himself said in Combe vs Combe supra that promissory estoppel may be a part of a cause of action though not a cause of action itself
In fact there have been several cases where promissory estoppel has been successfully invoked by a party to support his cause of action without actually founding his cause of action exclusively upon it
Two such cases are  Robertson vs Minister of Pensions1 and Evenden vs Guildford City Association Football Club Ltd2 The English courts have thus gone a step forward from the original position when promissory estoppel was regarded merely as a passive equity and allowed it to be used as a weapon of offence to a limited extent as a part of the cause of action but still the doctrine of consideration continues to inhibit the judicial mind and that has thwarted the full development of this new equitable principle and the realisation of its vast potential as a juristic technique for doing justice
It is true that to allow promissory estoppel to found a cause of action would seriously dilute the principle which requires consideration to support a contractual obligation but that is no reason why this new principle which is a child of equity brought into the world with a view to promoting honesty and good faith and bringing law closer to justice should be held in fetters and not allowed to operate in all the activist magnitude so that it may fulfil the purpose for which it was conceived and born
It must be remembered that law is not a mausoleum
It is not an antique to be taken 669 down dusted admired and put back on the shelf
It is rather like an old vigorous tree having its roots in history yet continuously taking new grafts and putting out new sprouts and occasionally dropping dead wood
It is essentially a social process the end product of which is justice and hence it must keep on growing and developing with changing social concepts and values
Otherwise there will be estrangement between law and justice and law will cease to have legitimacy
It is true as pointed out by Mr Justice Holmes that continuity with the past is a historical necessity but it must also be remembered at the same time as pointed out by Mr Justice Cardozo that conformity is not to be turned into a fetish
We would do well to recall the famous words uttered by Mr Justice Cardozo while closing his first lecture on Paradoxes of Legal Science The disparity between precedent and ethos may so lengthen with the years that only covin and chicenery would be disappointed if the separation were to end
There are many intermediate stages mores if inadequate to obliterate the past may fix direction for the future
The evil precedent may live but so sterilized and truncated as to have small capacity for harm
It will be prudently ignored when invoked as an apposite analogy in novel situations though the novel element be small
There will be brought forward other analogies less precise it may be but more apposite to the needs of morals
The weights are constantly shifted to restore the equilibrium between precedent and justice
 Was it not Lord Denning who exhorted judges not to be timorous sours but to be bold spirits ready to allow a new cause of action if justice so required
Candler vs Crane Christmas  Co1 We may profitably consider at this stage what the American law on the subject is because in the United States the law has always shown a greater capacity for adjustment and growth than elsewhere
The doctrine of promissory estoppel has displayed remarkable vigour and vitality in the hands of American Judges and it is still rapidly developing and expanding in the United States
It may be pointed out that this development does not derive its origin in any way from the decision of Lord Denning in the High Trees  case but ante dates this decision by a number of years perhaps it is possible that it may have helped to inspire that decision
It was long before the decision in the High Trees case that the American Law Institute s Restatement of the Law of Contract s came out with the following proposition in Article 90  670 A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise
 This proposition was explained and elucidated by several illustrations given in the article and one of such illustrations was as follows  A promises B to pay him an annuity during B s life
B thereupon resigns a profitable employment as A expected that he might
B receives the annuity for some years in the meantime becoming disqualified from again obtaining good employment
A s promise is binding
 It is true that the Restatement has not the same weight as a source of law as actual decisions of courts of high standing yet the principle set out in Article 90 has in fact formed the basis of a number of decisions in various states and it is now becoming increasingly clear that a promise may in the United States derive contractual enforceability if it has been made by the promisor intending that it would be acted on and the promisee has altered his position in reliance on it notwithstanding that there is no consideration in the sense in which that word is used in English and Commonwealth jurisprudence
Of course the basic requirement for invoking this principle must be present namely that the fact situation should be such that injustice can be avoided only by enforcement of the promise
There are numerous examples of the application of this principle to be found in recent American decisions
There is for instance the long line of cases in which a promise to give a charitable subscription has been consistently held to be enforceable at the suit of the charity
Though attempts have been made to justify these decisions by reasoning that the charity by commencing or continuing its charitable work after receiving promise has given good consideration for it we do not think that on closer scrutiny the enforceability of the promise in these cases can be supported by spelling out the presence of some form of consideration and the true principle on which they are really based is the principle of promissory estoppel
This is also the view expressed in the following statement at page 657 of vol
19 of American Jurisprudence  A number of courts have upheld the validity of charitable subscriptions on the theory of promissory estoppel holding that while a mere promise to contribute is unenforceable for want of consideration if money has been expended or liabilities have been incurred in reliance on the promise so 671 that non fulfillment will cause injury to the payee the donor is estopped to assert the lack of consideration and the promise will be enforced Chief Justice Cardozo presiding over the Court of Appeals of the State of New York explained the ratio of these decisions in the same terms in Alleghany College vs National Chauteuque County Bank1 The half truths of one generation tend at times to perpetuate themselves in the law as the whole truths of another when constant repetition brings it about that qualifications taken once for granted are disregarded or forgotten
The doctrine of consideration has not escaped the common lot
As far back as 1881 Judge Holmes in his lectures on the Common Law p 292 separated the detriment which is merely a consequence of the promise from the detriment which is in truth the motive or inducement and yet added that the courts have gone far in obliterating this distinction 
The tendency toward effacement has not lessened with the years
On the contrary there has grown up of recent days a doctrine that a substitute for consideration or an exception to its ordinary requirements can be found in what is styled a promissory estoppel 
Williston Contract Ss 139 116
Whether the exception has made its way in this State to such an extent as to permit us to say that the general law of consideration has been modified accordingly we do not now attempt to say
Cases such as and be signposts on the road
Certain at least it is that we have adopted the doctrine of promissory estoppel as the equivalent of consideration in connection with our law of charitable subscriptions
So long as those decisions stand the question is not merely whether the enforcement of a charitable subscription can be squared with the doctrine of consideration in all its ancient rigor
The question may also be whether it can be squared with the doctrine of consideration as qualified by the doctrine of promissory estoppel
We have said that the cases in this State have recognized this exception if exception it is thought to be
Thus in the subscription was made without request express or implied that the church do anything on the faith of it
Later the church did incur expense to the knowledge of the promisor and in the reasonable belief that the promise would be kept
We held the promise binding though 672 consideration there was none except upon the theory of a promissory estoppel
In a situation substantially the same became the basis for a like ruling
So in 103 NY 600 and the moulds of consideration as fixed by the old doctrine were subject to a like expansion
Very likely conceptions of public policy have shaped more or less subconsciously the rulings thus made
Judges have been affected by the thought that defences of that character  are breaches of faith towards the public and especially towards those engaged in the same enterprise and an unwarrantable disappointment of the reasonable expectations of those interested 
W F Allen J in 12 NY 18 and of and cases there cited
The result speaks for itself irrespective of the motive
Decisions which have stood so long and which are supported by so many considerations of public policy and reason will not be over ruled to save the symmetry of a concept which itself came into our law not so much from any reasoned conviction of its justice as from historical accidents of practice and procedure
8 Holdsworth History of English Law 7 et
The concept survives as one of the distinctive features of our legal system
We have no thought to suggest that it is obsolete or on the way to be abandoned
As in the case of other concepts however the pressure of exceptions has led to irregularities of form
 It is also interesting to note that the doctrine of promissory estoppel has been widely used in the United States in diverse other situations as founding a cause of action
The most notable instances are to be found in what may be called the sub contractor bid cases in which a contractor about to tender for a contract invites a sub contractor to submit a bid for a sub contract and after receiving his bid the contractor submits a tender
In such cases the sub contractor has been held unable to retract his bid and be liable in damages if he does so
It is not possible to say that any detriment which the contractor may be able to show in these cases would amount to consideration in its strict sense and these decisions have plainly been reached on an application of the doctrine of promissory estoppel
One of such cases was Drennan vs Star Paving Company1 where Traynor J explicitly adopted as good law the text of Article 90 of the Restatement of the law of Contracts quoted above and stated in so many words that the absence of consideration is not fatal to the enforcement of such a promise
There are also numerous cases where the doctrine of promissory estoppel has been applied against the Government where 673 the interest of justice morality and common fairness clearly dictated such a course
We shall refer to these cases when we discuss the applicability of the doctrine of equitable estoppel against the Government
Suffice it to state for the present that the doctrine of promissory estoppel has been taken much further in the United States than in English and Commonwealth jurisdictions and in some States at least it has been used to reduce if not to destroy the prestige of consideration as an essential of valid contract
Vide Spencer Bower and Turner s Estoppel by Representation 2d page 358
We now go on to consider whether and if so to what extent is the doctrine of promissory estoppel applicable against the Government
So far as the law in English is concerned the position cannot be said to be very clear
Rowlett J in an early decision in Rederiaktiebolaget Amphitrite vs The King1 held that an undertaking given by the British Government to certain neutral ship owners during the First World War that if the shipowners sent a particular ship to the United Kingdom with a specified cargo she shall not be detained was not enforceable against the British Government in a court of law and observed that his main reason for taking this view was that  it is not competent for the Government to fetter its future executive action which must necessarily be determined by the needs of the community when the question arises
It cannot by contract hamper its freedom of action in matters which concern the welfare of the State
 This observation has however not been regarded by jurists as laying down the correct law on the subject since it is very wide and it is difficult to determine its proper scope
Anson s English Law of Contract 22d
The doctrine of executive necessity propounded by Rowlatt J was in fact disapproved by Denning J as he then was in Roberston vs Minister of Pensions supra where the learned Judge said The Crown cannot escape by saying that estoppels do not bind the Crown for that doctrine has long been exploded
Nor can the Crown escape by praying in aid the doctrine of executive necessity that is the doctrine that the Crown cannot bind itself so as to fetter its future executive action
That doctrine was propounded by Rowlatt J in Rederiak tiebolaget Amphitrite vs The King but it was unnecessary for the decision because the statement there was not a promise which was intended to be binding but only an expression of intention
Rowlatt J seems to have been influenced by 674 the cases on the right of the Crown to dismiss its servants at pleasure but those cases must now all be read in the light of the judgment of Lord Atkin in Reily vs The King 1954 AC 176 176
In my opinion the defence of executive necessity is of limited scope
It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract
 It is true that the decision of Denning J in this case was overruled by the House of Lords in Howell vs Falmouth Boat Construction Co Ltd 1 but that was on the ground that the doctrine of promissory estoppel cannot be invoked to bar the Crown from enforcing a statutory prohibition or entitle the subject to maintain that there has been no breach of it
The decision of the House of Lords did not express any disapproval of the applicability of the doctrine of promissory estoppel against the Crown nor did it overrule the view taken by Denning J that the Crown cannot escape its obligation under the doctrine of promissory estoppel by praying in aid the doctrine of executive necessity
 The statement of the law by Denning J may therefore still be regarded as holding the field and it may be taken to be a judicially favoured view that the Crown is not immune from liability under the doctrine of promissory estoppel
The courts in America for a long time took the view that the doctrine of promissory estoppel does not apply to the Government but more recently the courts have started retreating from that position to a sounder one namely that the doctrine of promissory estoppel may apply to the Government when justice so requires
The second edition of American Jurisprudence brought out in 1966 in paragraph 123 points out that equitable estoppel will be invoked against the State when justified by the facts though it does warn that this doctrine should not be lightly invoked against the State
 Later in the same paragraph it is stated that as a general rule the doctrine of estoppel will not be applied against the State in its governmental public or sovereign capacity but a qualification is introduced that promissory estoppel may be applied against the State even in its governmental public or sovereign capacity if its application is necessary to prevent fraud or manifest injustice
Since 1966 there is an increasing trend towards applying the doctrine of promissory estoppel against the State and the old law that promissory estoppel does not apply against the government is definitely declining
There have been numerous cases in the State courts where it has been held that promissory estoppel may be applied even against the Govern 675 ment in its governmental capacity where the accommodation of the needs of justice to the needs of effective government so requires
The protagonists of the view that promissory estoppel cannot apply against the Government or a public authority seek to draw inspiration from the majority decision of the United States Supreme Court in Federal Crop Insurance Corporation vs Merrill1 But we do not think that decision can be read as laying down the proposition that the doctrine of promissory estoppel can never be invoked against the Government
There the County Committee acting as the agent of the Federal Crop Insurance Corporation which was a wholly Government owned corporation constituted under the Federal Crop Insurance Act advised the respondents that their entire 460 acres of spring wheat crop which included spring wheat reseeded
On winter wheat acreage was insurable and acting upon it the respondents made an application for insurance which was forwarded by the County Committee to the Denver office of the Corporation with a recommendation for acceptance
The application did not mention that any part of the insured crop was reseeded and it was accepted by the Denver office of the Corporation
There were at this time wheat crop insurance regulations framed by the Corporation and published in the Federal Register which prohibited insurance of spring wheat reseeded on winter wheat acreage but neither the respondents nor the County Committees which was acting as the agent of the Corporation was aware of them
A few months later most of the respondent s crop was destroyed by drought and on a claim being made by the respondents under the policy of insurance the Corporation refused to pay the loss on the ground that the wheat crop insurance regulations expressly prohibited insurance of reseeded wheat
The refusal was upheld by the Supreme Court by a majority of five to four
The majority observed 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 enterprises or engages in competitions 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 be 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 autho 676 rity Man 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
 It will be seen that the Corporation was held entitled to repudiate its liability because the wheat crop insurance regulations prohibited insurance of reseeded wheat and the assurance given by the County Committee as the agent of the Corporation that the reseeded wheat was insurable being contrary to the wheat crop insurance regulations could not be held binding on the Corporation
It was not within the authority of the County Committee to give such assurance contrary to the wheat crop insurance regulations and hence no promissory estoppel against the Corporation could be founded upon it
This decision did not say that even if an assurance given by an agent is within the scope of his authority and is not prohibited by law it could still not create promissory estoppel against the Government
But it may be pointed out even this limited holding has come in for considerable criticism at the hands of jurists in the United States
See Davis on Administrative Law 3rd d pages 344 345
Referring to the observation of the majority that Men must turn square corners when they deal with the Government Maguire and Zimet have poetically responded by saying It is hard to see why the Government should not be held to a like standard of rectangular rectitude when dealing with its citizens Maguire and Zimet Hobson s Choice and Similar Practices in Federal Taxation 48 Harv
L Rev 1287 at 1299
There has so far not been any decision of the Supreme Court of the United States taking the view that the doctrine of promissory estoppel cannot be invoked against the Government
The trend in the State courts of late has been strongly in favour of the application of the doctrine of promissory estoppel against the Government and public bodies where interests of justice morality and common fairness clearly dictate that course
 It is being increasingly felt that that the Government ought to set a high standard in its dealings and relationships with citizens and the word of a duly authorised Government agent acting within the scope of his authority ought to be as good as a Government bond
Of course as pointed out by the United States Court of Appeals Third Circuit in Valsonavich vs United States 1 the Government would not be estopped by the acts of its officers and agents who without authority enter into 677 agreements to do what the law does not sanction or permit and those dealing with an agent of the Government must be held to have notice of limitations of his authority as held in Merrill s case
This is precisely what the House of Lords also held in England in Howell vs Falmouth Boat Construction Co Ltd supra where Lord Simonds stated the law to be The illegality of an act is the same whether or not the actor has been misled by an assumption of authority on the part of a Government officer however high or low in the hierachy
The question is whether the character of an act done in face of a statutory prohibition is affected by the fact that it has been induced by a misleading assumption of authority
In my opinion the answer is clearly No But if the acts or omissions of the officers of the Government are within the scope of their authority and are not otherwise impermissible under the law they will work estoppel against the Government
 When we turn to the 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 recognized 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 Manufacturing Co vs Surajmuli and other1
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 vs The Secretary of State2 The facts of this last mentioned case in Municipal Corporation of Bombay vs The Secretary of State supra are a little interesting and it would be profitable to refer to them
The Government of Bombay with a view to constructing an arterial road requested the Municipal Commissioner to remove certain fish and vegetable 678 markets which obstructed the construction of the proposed road
The Municipal Commissioner replied that the markets were vested in the Corporation of Justices but that he was willing to vacate certain municipal stables which occupied a portion of the proposed site if the Government would rent other land mentioned in his letter to the Municipality at a nominal rent the Municipality undertaking to bear the expenses of levelling the same and permit the Municipality to erect on such land stables of wood and iron with nobble foundation to be removed at six months  notice on other suitable ground being provided by Government
The Government accepted the suggestion of the Municipal Commissioner and sanctioned the application of the Municipal Commissioner for a site for stabling on the terms set out above and the Municipal Commissioner thereafter entered into possession of the land and constructed stables workshops and chawls on the same at considerable expense
Twenty four years later the Government served a notice on the Municipal Commissioner determining the tenancy and requesting the Municipal Commissioner to deliver possession of the land within six months and in the mean time to pay rent at the rate of Rs12000 per month
The Municipal Corporation declined to hand over possession of the land or to pay the higher rent and the Secretary of State for India thereupon filed a suit against the Municipal Corporation for a declaration that the tenancy of the Municipality stood determined and for an order directing the municipality to pay rent at the rate of Rs 12000 per month
The suit was resisted by the Municipal Corporation on the ground then the events which had transpired had created an equity in favour of the Municipality which afforded an answer to the claim of the Government to eject the Municipality
This defence was upheld by a Division Bench of the High Court and Jenkins CJ speaking on behalf of the Division Bench pointed out that in view of the following facts namely  the Municipality gave up the old stables levelled the ground and erected the moveable staibles 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 referable 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 679 an equity was created in favour of the Municipality which entitled it to appeal to the Court for its aid in assisting them to resist the Secretary of State s claim that they shall be ejected from the ground
The learned Chief Justice pointed out that the doctrine which he was applying took its origin from the jurisdiction assumed by Courts of Equity to intervene in the case of or to prevent fraud and after referring to Ramsden vs Dyson1 observed that the Crown also came within the range of this equity
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 representation 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
That is how this decision has in fact been interpreted by this court in Union of India vs Indo Afghan Agencies2 We don t find any decision of importance thereafter on the subject of promissory estoppel until we come to the decision of this Court in Collector of Bombay vs Municipal Corporation of the City of Bombay  Ors3
The facts giving rise to this case were that in 1865 the Government of Bombay called upon the predecessor in title of the Municipal Corporation of Bombay to remove old markets from a certain site and vacate it and on the application of the Municipal Commissioner the Government passed a resolution approving and authorizing the grant of another site to the Municipality
The resolution stated further that the Government do not consider that any rent should be charged to the Municipality as the markets will be like other public buildings for the benefit of the whole community
The Municipal Corporation gave up the site on which the old markets were situated and spent a sum of Rs 17 lakhs in erecting and maintaining markets on the new site
In 1940 the Collector of Bombay assessed the new site to land revenue and the Municipal Corporation there upon filed a suit for a declaration that the order of assessment was ultra vires and it was entitled to hold the land for ever without payment of any assessment
The High Court of Bombay held that the Government had lost its right to assess the land in question by reason of the equity arising on the facts of the case in favour of the Municipal Corporation and there was thus a limitation on the right of the Government to assess under section 8 of the Bom 680 bay City Land Revenue Act
On appeal by the Collector to this Court the majority Judges held that the Government was not under the circumstances of the case entitled to assess land revenue on the land in question because the Municipal Corporation had taken possession of the land in terms of the Government resolution and had continued in such possession openly uninterruptedly and of right for over seventy years and thereby acquired the limited title it had been prescribing for during the period that is to say the right to hold the land in perpetuity free of rent
Chandrasekhra Aiyar J agreed with the conclusion reached by the majority but rested his decision on the doctrine of promissory estoppel
He pointed out that the Government could not be allowed to go back on the representation made by it and stressed the point in the form of an interrogation by asking if we do so would it not amount to our countenancing the perpetration of what can be compendiously described as legal fraud which a court of equity must prevent being committed He observed that even if the resolution of the Government amounted merely to the holding out of a promise that no rent will be charged in the future the Government must be deemed in the circumstances of this case to have bound themselves to fulfil it
Whether it is the equity recognised in Ramsden s case supra or it is some other form of equity is not of much importance
Courts must do justice by the promotion of honesty and good faith as far as it lies in their power
 This was of course the solitary view of Chandrasekhara Aiyer J but it was approved by this Court in no uncertain terms in Indo Afghan Agencies case supra
Then we come to the celebrated decision of this Court in the Indo Afghan Agencies case supra
It was in this case that the doctrine of promissory estoppel found its most eloquent exposition
We may briefly state the facts in order to appreciate the ratio of the decision
Indo Afghan Agencies Ltd who were the respondents before the Court acting in reliance on the Export Promotion Scheme issued by the Central Government exported woollen goods to Afghanistan and on the basis of their exports claimed to be entitled to obtain from the Textile Commissioner import entitlement certificate for the full FOB value of the goods exported as provided in the scheme
The Scheme was not a statutory Scheme having the force of law but it provided that an export of woollen goods would be entitled to import raw material of the total amount equal to 100 of the FOB value of his exports
The respondents contended that relying on the promise contained in the Scheme they had exported woollen goods to Afghanistan and were
therefore entitled to enforce the promise against the Government and to obtain import entitlement 681 certificate for the full FOB value of the goods exported on the principle of promissory estoppel
This contention was sought to be answered on behalf of the Government by pleading the doctrine of executive necessity and the argument of the Government based on this doctrine was that it is not competent for the Government to fetter its future executive action which must necessarily be determined by the needs of the community when the question arises and no promise or undertaking can be held to be binding on the Government so as to hamper its freedom of executive action
Certain observations of Rowlatt J in Rederiektiabolaget Amphitrite vs The King supra were sought to be pressed into service on behalf of the Government in support of this argument
We have already referred to these observations earlier and we need not reproduce them over again
These observation undoubtedly supported the contention of the Government but it was pointed out by this Court that these observations were disapproved by Denning J in Robertson vs Minister of Pensions supra where the learned Judge said that the Crown cannot escape by praying in aid the doctrine of executive necessity that is the doctrine that the Crown cannot bind itself so as to fetter its future executive action
The defence of executive necessity is of limited scope
It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract and this statement of Denning J was to be preferred as laying down the correct law of the subject
Shah J speaking on behalf of the Court observed at p 376 We are unable to accede to the contention that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment
Under our constitutional set up no person may be deprived of his right or liberty except in due course of and by authority of law of a member of the Executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law common or statute the Courts will be competent to and indeed would be bound to protect the rights of the aggrieved citizen
 The defence of executive necessity was thus clearly negatived by this Court and it was pointed out that it did not release the Government from its obligation to honour the promise made by it if the citizen acting in reliance on the promise had altered his position
The doctrine of promissory estoppel was in such a case applicable against the Government and it could not be deteated by invoking the defence of executive necessity
682 It was also contended on behalf of the Government that if the Government were held bound by every representation made by it regarding its intention when the exporters have acted in the manner they were invited to act the result would be that the Government would be bound by a contractual obligation even though no formal contract in the manner required by Article 299 was executed
But this contention was negatived and it was pointed out by this Court that the respondents are not seeking to enforce any contractual right they are seeking to enforce compliance with the obligation which is laid upon the Textile Commissioner by the terms of the Scheme and we are of the view that even if the Scheme is executive in character the respondents who were aggrieved because of the failure to carry out the terms of the Scheme were entitled to seek resort to the Court and claim that the obligation imposed upon the Textile Commissioner by the Scheme be ordered to be carried out
It was thus laid down that a party who has acting in reliance on a promise 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
This Court finally after referring to the decision in the Ganges Manufacturing Co vs Surujmull supra
The Municipal Corporation of the City of Bombay vs The Secretary of State for India supra and Collector of Bombay vs Municipal Corporation of the City of Bombay  Ors
supra summed up the position as follows Under our jurisprudence the Government is not exempt from liability to carry out the representation 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 The law may therefore now be taken to be settled as a result of this decision that where the Government makes a promise knowing or intending that it would be acted on by the promises and in fact the promisee acting in reliance on it alters his position the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promises notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract 683 as required by Article 299 of the Constitution
It is elementary that in a Republic governed by the rule of law no one howsoever high or low is above the law
Every one is subject to the law as fully and completely as any other and the Government is no exception
It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned the former is equally bound as the latter
It is indeed difficult to see on what principle can a Government committed to the rule of law claim immunity from the doctrine of promissory estoppel
Can the Government say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of honesty and good faith Why should the Government not be held to a high standard of rectangular rectitude while dealing with its citizens There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations but let it be said to the eternal glory of this Court this doctrine was emphatically negatived in the Indo Afghan Agencies case and the supremacy of the rule of law was established
It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action
If the Government does not want its freedom of executive action to be hampered or restricted the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it
But if the Government makes such a promise and the promises acts in reliance upon it and alters his position there is no reason why the Government should not be compelled to make good such promise like any other private individual
The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society and the constant endeavor of the Courts and the legislatures must therefore be to close the gap between law and morality and bring about as near an approximation between the two as possible
The doctrine of promissory estoppel is a significant judicial contribution in that direction
But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine it must yield when the equity so requires
If it can be shown by the Government that having regard to the facts as they have transpired it would be inequitable to hold the Government to the promise made by it the Court would not raise an equity in favour of the promisee and enforce the promise against the 684 Government
The doctrine of promissory estoppel would be displaced in such a case because on the facts equity would not require that the Government should be held bound by the promise made by it
When the Government is able to show that in view of the facts as have transpired public interest would be prejudiced if the Government were required to carry out the promise the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and after this position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies
It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it
The Government cannot as Shah J pointed out in the Indo Afghan Agencies case claim to be exempt from the liability to carry out the promise on some indefinite and undisclosed ground of necessity or expediency nor can the Government claim to be the sole judge of its liability and repudiate it on an ex parte appraisement of the circumstances
If the Government wants to resist the liability it will have to disclose to the Court what are the facts and circumstances on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether these facts and circumstances are such as to render it inequitable to enforce the liability against the Government
Mere claim of change of policy would not be sufficient to exonerate the Government from the liability the Government would have to show what precisely is the changed policy and also its reason and justification so that the Court can judge for itself which way the public interest lies and what the equity of the case demands
It is only if the Court is satisfied on proper and adequate material placed by the Government the over riding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it that the Court would refuse to enforce the promise against the Government
The Court would not act on the mere ipse dixit of the Government for it is the Court which has to decide and not the Government whether the Government should be held exempt from liability
This is the essence of the rule of law
The burden would be upon the Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the Court would insist on a highly rigorous standard of proof in the discharge of this burden
But even where there is no such over riding public interest it may still be competent to 685 the Government to resile from the promise on giving reasonable notice which need not be a formal notice giving the promisee a reasonable opportunity of resuming his position provided of course it is possible for the promisee to restore status quo ante
If however the promisee cannot resume his position the promise would become final and irrevocable
Vide Emmanuel Ayodeji Ajayi vs Briscoe1 The doctrine of promissory estoppel was also held applicable against a public authority like a Municipal Council in Century Spinning  Manufacturing Co Ltd  Anr
vs The Ulhasuagar Municipal Council  Anr2 The question which arose in this case was whether the Ulhas Nagar Municipal Council could be compelled to carry out a promise made by its predecessor municipality that the factories in the industrial area within its jurisdiction would be exempt from payment of octroi for seven years from the date of the levy
The appellant company in the belief induced by the assurance and undertaking given by the predecessor municipality that its factory would be exempt from octroi for a period of seven years expanded its activities but when the municipal council came into being and took over the administration of the former municipality it sight to levy octroi duty on appellant company
The appellant company thereupon filed a writ petition under Article 226 of the Constitution in the High Court of Bombay to restrain the municipal council from enforcing the levy of octroi duty in breach of the promise made by the predecessor municipality
The High Court dismissed the petition in limine but on appeal this Court took the view that this was a case which required consideration and should have been admitted by the High Court
Shah J speaking on behalf of the Court pointed out 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 amounting to a promise may be enforced ex contracted 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 from or be executed in the manner prescribed by statute the obligation may be if the contract be not in that form be enforced against it in appropriate cases in equity The learned Judge then referred to the decision in the Indo Afghan Agencies case and observed that in that case it was laid down by this 686 Court that the Government is not exempt from the equity arising out of the acts done by citizens to their prejudice relying upon the representations as to its future conduct made by the Government
It was also pointed out by the learned Judge that in the Indo Afghan Agencies case this Court approved of the observations made by Denning J in Robertson vs Minister of Pensions supra rejecting the doctrine of executive necessity and held them to be applicable in India
The learned Judge concluded by saying in words pregnant in the hope and meaning for democracy If our nascent democracy is to thrive different standards of conduct for the people and the public bodies cannot ordinarily be permitted
A public body is in our judgment not exempt from liability to carry out its obligation arising out of representations made by it relying upon which a citizen has altered his position to his prejudice This Court refused to make a distinction between a private individual and a public body so far as the doctrine of promissory estoppel is concerned
We then come to another important decision of this Court in Turner Morrison  Co Ltd vs Hungerford Investment Trust Ltd 1 where the doctrine of promissory estoppel was once again affirmed by this Court
Hegde J speaking on behalf of the Court pointed out Estoppel is a rule of equity
That rule has gained new dimensions in recent years
A new class of estoppel ie promissory estoppel has come to be recognised by the courts in this Country as well as in England
The full implication of promissory estoppel  is yet to be spelled out The learned Judge after referring to the decisions in High Trees case Robertson vs Minister of Pensions supra and the Indo Afghan Agencies case pointed out that the rule laid down in these decisions undoubtedly advanced the cause of justice and hence we have no hesitation in accepting it
We must also refer to the decision of this Court in M Ramanatha Pillai vs The State of Kerala  Anr1 because that was a decision strongly relied upon on behalf of the State for negativing the applicability of the doctrine of estoppel against the Government
This was a case where the appellant was appointed to a temporary post and on the post being abolished the service of the appellant was terminated
The appellant challenged the validity of termination of service inter alia on 687 the ground that the Government was precluded from abolishing the post and terminating the service on the principle of promissory estoppel
This ground based on the doctrine of promissory estoppel was negatived and it was pointed out by the Court that the appellant knew that the post was temporary suggesting clearly that the appellant could not possibly be led into the belief that the post would not be abolished
If the post was temporary to the knowledge of the appellant it is obvious that the appellant knew that the post would be liable to be abolished at any time and if that be so there could be no factual basis for invoking the doctrine of promissory estoppel for the purpose of precluding the Government from abolishing the post
This view taken by the Court was sufficient to dispose of the contention based on promissory estoppel and it was not necessary to say anything more about it but the Court proceeded to cite a passage from American Jurisprudence Vol 28 2d at 783 paragraph 123 and observed that the High Court rightly held that the courts exclude the operation of the doctrine of estoppel when it is found that the authority against whom estoppel is pleaded has owed a duty to the public against whom the estoppel cannot fairly operate
 It was this observation which was heavily relied upon on behalf of the State but we fail to see how it can assist the contention of the State
In the first place this observation was clearly obiter since as pointed out by us there was on the facts of the present case no scope for the applicability of the doctrine of promissory estoppel
Secondly this observation was based upon a quotation from the passage in paragraph 123 at page 783 of Volume 28 of American Jurisprudence 2 d but unfortunately this quotation was incomplete and it overlooked perhaps inadvertently the following two important sentences at the commencement of the paragraph which clearly show that even in the United States the doctrine of promissory estoppel is applied against the State when justified by the facts There is considerable dispute as to the application of estoppel with respect to the State
While it is said that equitable estoppel will be invoked against the State when justified by the facts clearly the doctrine of estoppel should not be lightly invoked against the State emphasis supplied
Even the truncated passage quoted by the Court recognised in the last sentence that though as a general rule the doctrine of promissory estoppel would not be applied against the State in its governmental public or sovereign capacity the Court would unhesitatingly allow the doctrine to be invoked in cases where it is necessary in order to prevent fraud or manifest injustice
This passage leaves no doubt that the 688 doctrine of promissory estoppel may be applied against the State even in its governmental public or sovereign capacity where it is necessary to prevent fraud or manifest injustice
It is difficult to imagine that the Court citing this passage with approval could have possibly intended to lay down that in no case can the doctrine of promissory estoppel be invoked against the Government
Lastly a proper reading of the observation of the Court clearly shows that what the Court intended to say was that where the Government owes a duty to the public to act differently promissory estoppel cannot be invoked to prevent the Government from doing so
This proposition is unexceptionable because where the Government owes a duty to the public to act in a particular manner and here obviously duty means a course of conduct enjoined by law the doctrine of promissory estoppel cannot be invoked for preventing the Government from acting in discharge of its duty under the law
The doctrine of promissory estoppel cannot be applied in teeth of an obligation or liability imposed by law
We may then refer to the decision of this Court in Assistant Custodian vs Brij Kishore Agarwala  Ors1 It is not necessary to reproduce the facts of this case because the only purpose for which this decision was relied upon on behalf of the State was to show that the view taken by the House of Lords in Howell vs Falmouth Boat Construction Co Ltd Supra was preferred by this Court to that taken by Lord Denning in Robertson vs Minister of Pension supra
It is true that in this case the Court expressed the opinion that the view taken by the House of Lords is the correct one and not the one taken by Lord Denning but we fail to see how that can possibly help the argument of the State
The House of Lords did not in Howell s case negative the applicability of the doctrine of promissory estoppel against the Government
What it laid down was merely this namely that no representation or promise made by an officer can preclude the Government from enforcing a statutory prohibition
The doctrine of promissory estoppel cannot be availed to permit or condone a breach of the law
The ratio of the decision was succinctly put by Lord Normand when he said neither a minister nor any subordinate officer of the Crown can by any conduct or representation bar the Crown from enforcing a statutory prohibition or entitle the subject to maintain that there has been no breach of it
It may also be noted that promissory estoppel cannot be invoked to compel the Government or even a private party to do an act prohibited by law
There can also be no promissory estoppel against the exercise of legislative power
The Legislature can never be precluded 689 from exercising its legislative function by resort to the doctrine of promissory estoppel
Vide State of Kerala vs Gwalior Rayon Silk Manufacturing Co Ltd1 The next decision to which we must refer is that in Excise Commissioner UP Allahabad vs Ram Kumar2 This was also a decision on which strong reliance was placed on behalf of the State
It is true that in this case the Court observed that it is now well settled by a catena of decisions that there can be no question of estoppel against the Government in the exercise of its legislative sovereign or executive powers but for reasons which we shall presently state we do not think this observation can persuade us to take a different view of the law than that enunciated in the Indo Afghan Agencies  case
In the first place it is clear that in this case there was factually no foundation for invoking the doctrine of promissory estoppel
When the State auctioned the licence for retail sale of country liquor and the respondents being the highest bidders were granted such licence there was in force a Notification dated 6th April 1959 issued under section 4 of the UP Sales Tax Act 1948 exempting sale of country liquor from payment of sales tax
No announcement was made at the time of the auction whether the exemption from sales tax under this Notification dated 6th April 1959 was or was not likely to be withdrawn
However on the day following the commencement of the licence granted to the respondents the Government of UP issued a Notification dated 2nd April 1969 superseding the earlier Notification dated 6th April 1959 and imposing sales tax on the turnover in respect of country spirit with immediate effect
This notification dated 2nd April 1969 was challenged by the respondents by filing a writ petition and amongst the several grounds of challenge taken in the writ petition one was that since the State Government did not announce at the time of the aforesaid auction that the Notification dated 6th April 1959 was likely to be withdrawn and the sales of country liquor were likely to be subjected to the levy of sales tax during the excise year and in reply to the query made by them at the time of the auction they were told by the authorities that there was no sales tax on the sale of country liquor the appellants herein were estopped from making the demand in respect of sales tax and recovering the same from them
It was in the context of this ground of challenge that the Court came to make the observation relied upon on behalf of the State
Now it is clear that even taking the case of the respondents at its highest there was no representation or promise made by the Government that they would continue the exemp 690 tion from sales tax granted under the Notification dated 6th April 1959 and would not withdraw it and the Notification dated 2nd April 1969 could not therefore be assailed as being in breach of any such representation or promise
There was accordingly no factual basis for making good the plea of promissory estoppel and the observation made by the court in regard to the applicability of the doctrine of promissory estoppel against the Government was clear obiter
That perhaps was the reason why the Court did not consider it necessary to refer to the earlier decisions in Century Spinning  manufacturing Co s case and Turner Morrison s case and particularly the decision in the Indo Afghan Agencies case where the court in so many terms applied the doctrine of promissory estoppel against the Government in the exercise of its executive power
It is not possible to believe that the Court was oblivious of these earlier decisions particularly when one of these decisions in the Indo Afghan Agencies case was an epoch making decision which marked a definite advance in the field of administrative law
Moreover it may be noted that though standing by itself the observation made by the Court that there can be no question of estoppel against the Government in exercise of its legislative sovereign or executive powers may appear to be wide and unqualified it is not so if read in its proper context
This observation was made on the basis of certain decisions which the Court proceeded to discuss in the succeeding paragraphs of the judgment
The Court first relied on the statement of the law contained in paragraph 123 at page 783 Volume 28 of the American Jurisprudence 2d but it omitted to mention the two important sentences at the commencement of the paragraph and the words unless its application is necessary to prevent fraud or manifest injustice at the end which clearly show that even according to the American Jurisprudence the doctrine of promissory estoppel is not wholly inapplicable against the Government in its governmental public or sovereign capacity but it can be invoked against the Government when justified by the facts as for example where it is necessary to prevent fraud or injustice
In fact as already pointed out above there are numerous cases in the United States where the doctrine of promissory estoppel has been applied against the Government in the exercise of its governmental public or executive powers
The Court then relied upon the decision in the Gwalior Rayon Silk Manufacturing Co s case but that decision was confined to a case where legislation was sought to be precluded by relying on the doctrine of promissory estoppel and it was held and in our opinion rightly that there can be no promissory estoppel against the legislature in the exercise of its legislative function
That decision does not negative the applicability of the 691 doctrine of promissory estoppel against the Government in the exercise of its governmental public or executive powers
The decision in Howell s case was thereafter relied upon by the Court but that decision merely says that the Government cannot be debarred by promissory estoppel from enforcing a statutory prohibition
It does not countenance an absolute proposition that promissory estoppel can never be invoked against the government
The Court also cited a passage from the judgment of the High Court of Jammu  Kashmir in Malhotra  Sons  Ors
vs Union of India  Ors
1 but this passage itself makes it clear that the courts will bind the Government by its promise where it is necessary to do so in order to prevent manifest injustice or fraud
The last decision on which the Court relied was Federal Crop Insurance Corporation vs Morrill supra but this decision also does not support the view contended for on behalf of the State
We have already referred to this decision earlier and pointed out that the Federal Crop Insurance Corporation in this case was held not liable on the policy of insurance because the regulations made by the Corporation prohibited insurance of reseeded wheat
The principle of this decision was that promissory estoppel cannot be invoked to compel the Government or a public authority to carry out a representation or promise which is contrary to law
It will thus be seen from the decisions relied upon in the judgment that the Court could not possibly have intended to lay down an absolute proposition that there can be no promissory estoppel against the Government in the exercise of its governmental public or executive powers
That would have been in complete contradiction of the decisions of this Court in the Indo Afghan Agencies Case Century Spinning and Manufacturing Co s case and Turner Morrison s case and we find it difficult to believe that the Court could have ever intended to lay down any such proposition without expressly referring to these earlier decisions and over ruling them
We are therefore of the opinion that the observation made by the Court in Ram Kumar s case does not militate against the view we are taking on the basis of the decisions in the Indo Afghan Agencies  case Century Spinning  Manufacturing Co s case and Turner Morrison s case in regard to the applicability of the doctrine of promissory estoppel against the Government
We may then refer to the decision of this Court in Bihar Eastern Gangetic Fishermen Co operative Society Ltd vs Sipahi Singh  Ors2 It was held in this case in paragraph 12 of the judgment that the respondent could not invoke the doctrine of promissory estoppel because he was unable to show that relying on the representation of the Govern 692 ment he had altered his position by investing moneys and the allegations made by him in that behalf were much too vague and general and there was accordingly no factual foundation for establishing the plea of promissory estoppel
On this view it was unnecessary to consider whether the doctrine of promissory estoppel was applicable against the Government but the Court proceeded to reiterate without any further discussion the observation in Ram Kumar s case that there cannot be any estoppel against the Government in the exercise of its sovereign legislative and executive functions
This was clearly in the nature of obiter and it cannot prevail as against the statement of law laid down in the Indo Afghan Agencies case
Moreover it is clear from paragraph 14 of the judgment that this Court did not intend to lay down any proposition of law different from that enunciated in the Indo Afghan Agencies case because it approved of the decision in the Indo Afghan Agencies case and distinguished it on the ground that in that case there was not enforcement of contractual right but the claim was founded upon equity arising from the Scheme while in the case before the Court a contractual right was sought to be enforced
There is therefore nothing in this decision which should compel us to take a view different from the one we are otherwise inclined to accept
We may point out that in the latest decision on the subject in Radha Krishna Agarwal vs State of Bihar  Ors1 this Court approved of the decisions in the Indo Afghan Agencies case and Century Spinning and Manufacturing Co s case and pointed out that these were cases where it could be held that public bodies or the State are as much bound as private individuals are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities
It would therefore be seen that there is no authoritative decision of the Supreme Court which has departed from the law laid down in the celebrated decisions in the Indo Afghan Agencies case and the Century Spinning  Manufacturing Co s case
The law laid down in these decisions as elaborated and expounded by us continues to hold the field
We may now turn to examine the facts in the light of the law discussed by us
It is clear from the letter of the 4th respondent dated 23rd January 1969 that a categorical representation was made by the 4th respondent on behalf of the Government that the proposed vanaspati factory of the appellant would be entitled to exemption from sales tax 693 in respect of sales of vanaspati effected in Uttar Pradesh for a period of three years from the date of commencement of production
This representation was made by way of clarification in view of the suggestion in the appellant s letter dated 22nd January 1969 that the financial institutions were not prepared to regard the earlier letter of the 4th respondent dated 22nd December 1968 as a definite commitment on the part of the Government to grant exemption from sales tax
Now the letter dated 23rd January 1969 clearly shows that the 4th respondent made this representation in his capacity as the Chief Secretary of the Government and it was therefore a representation on behalf of the government
It was faintly contended before us on behalf of the State that this representation was not binding on the Government but we cannot countenance this argument because in the first place the averment in the writ petition that the 4th respondent made this representation on behalf of the government was not denied by the State in the affidavit in reply filed on its behalf and secondly it is difficult to accept the contention that the 4th respondent who was at the material time the Chief Secretary to the government and also advisor to the Governor who was discharging the functions of the Government
We must therefore proceed on the basis that this representation made by the 4th respondent was a representation within the scope of his authority and was binding on the Government
Now there can be no doubt that this representation was made by the Government knowing or intending that it would be acted on by the appellant because the appellant had made it clear that it was only on account of the exemption from sales tax promised by the Government that the appellant had decided to set up the factory for manufacture of vanaspati at Kanpur
The appellant in fact relying on this representation of the Government borrowed moneys from various financial institutions purchased plant and machinery from Ms De Smith India Pvt Ltd Bombay and set up a vanaspati factory at Kanpur
The facts necessary for invoking the doctrine of promissory estoppel were therefore clearly present and the Government was bound to carry out the representation and exempt the appellant from sales tax in respect out the representation and exempt the appellant from sales tax in respect of sales of vanaspati effected by it in Uttar Pradesh for a period of three years from the date of commencement of the production
The State however contended that the doctrine of promissory estoppel had no application in the present case because the appellant did not suffer any detriment by acting on the representation made by the Government  the vanaspati factory set up by the appellant was quite a profitable concern and there was no prejudice caused to the 694 appellant
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 of the promise should suffer any detriment
What is necessary is only that the promisees should have altered his position in reliance on the promise
This position was implied accepted by Denning J in the High Trees  case when the learned Judge pointed out that the promise must be one 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 acted an emphasis supplied
If a promise is acted on such action in law as in physics must necessarily result in an alteration of position
 This was again reiterated by Lord Denning in WJ Alan  Co Ltd x El
Nasr Export and Import Co1 where the learned Law Lord made it clear that alteration of position only means that he the promise must have been led to act differently from what he would otherwise have done
And if you study the cases in which the doctrine has been applied you will see that all that is required is that the one should have acted on the belief induced by the other party Viscount Simonds also observed in Tool Metal Manufacturing Co Ltd vs Tungsten Electric Co Ltd 2 that the gist of the equity lies in the fact that one party has by his conduct led the other to alter his position
The judgment of Lord Tucker in the same case would be found to depend likewise on a fundamental finding of alteration of position and the same may be said of that of Lord Coheb
Then again in Emmanuel Avodeji vs Briscoe supra Lord Hodson said This equityis however subject to the qualification 1 that the other party has altered his position
The same requirement was also emphasised by Lord Diplock in Kaminins Ballrooms Ltd vs Zenith Investments Torquay Ltd 3 What is necessary therefore is no more than that there should be alteration of position on the part of the promisee
The alteration of position need not involve any detriment to the promises
If detriment were a necessary element there would be no need for the doctrine of promissory estoppel because in that event in quite a few cases the detriment would form the consideration and the promise could be binding as a contract
There is in fact not a single case in England where detriment is insisted upon as a necessary ingredient 695 of promissory estoppel
In fact in W J Alan  Co Ltd vs El Nasar Export and Import Co supra Lord Denning expressly rejected detriment as an essential ingredient of promissory estoppel saying A seller may accept a less sum for his goods than the contracted price thus inducing his buyer to believe that he will not enforce payment of the balance see Central London Property Trust Ltd vs High Trees House Ltd and D  C Builders Ltd vs Rees In none of these cases does the party who acts on the belief suffer any detriment
It is not a detriment but a benefit to him to have an extension of time or to pay less or as the case may be
Nevertheless he has conducted his affairs on the basis that he has had that benefit and it would not be equitable now to deprive him of it
 We do not think that in order to invoke the doctrine of promissory estoppel it is necessary for the promise 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 classic exposition of detriment in this sense is to be found in the following passage from the judgment of Dixon J in the Australian case of Grundt vs The Great Boulder Pty
Gold Mines Ltd 1  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 prevent 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 696 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 or source of prejudice
 If this is the kind of detriment contemplated it would necessarily be present in every case of promissory estoppel because it is on account of such detriment which the promisee would suffer if the promisor were to act differently from his promise that the Court would consider it inequitable to allow the promisor to go back upon his promise
It would therefore be correct to say that in order to invoke the doctrine of promissory estoppel it is enough to show that the promisee has acting in reliance of the promise altered his position and it is not necessary for him to further show that he has acted to his detriment
Here the appellant clearly altered its position by borrowing moneys from various financial institutions purchasing plant and machinery from Ms De Smet India Pvt Ltd Bombay and setting up a vanaspati plant in the belief induced by the representation of the Government that sales tax exemption would be granted for a period of three years from the date of commencement of the production
The Government was therefore bound on the principle of promissory estoppel to make good the representation made by it
Of course it may be pointed out that if the UP Sales Tax Act 1948 did not contain a provision enabling the Government to grant exemption it would not be possible to enforce the representation against the Government because the Government cannot be compelled to act contrary to the statute but since section 4 of the UPSales Tax Act 1948 confers power on the Government to grant exemption from sales tax the Government can legitimately be held bound by its promise to exempt the appellant from payment of sales tax
It is true that taxation is a sovereign or governmental function but for reasons which we have already discussed no distinction can be made between the exercise of a sovereign or governmental function and a trading or business activity of the Government so far as the doctrine of promissory estoppel is concerned
Whatever be the nature of the function which the Government is discharging the Government is subject to the rule of promissory estoppel and if the 697 essential ingredients of this rule are satisfied the Government can be compelled to carry out the promise made by it
We are therefore of the view that in the present case the Government was bound to exempt the appellant from payment of sales tax in respect of sales of vanaspati effected by it in the State of Uttar Pradesh for a period of three years from the date of commencement of the production and was not entitled to recover such sales tax from the appellant
Now for the assessment year 1970 71 that is 2nd July 1970 to 31st March 1971 the appellant collected from its customers sales tax amounting to Rs 68117895 calculated at the rate of 3 12 on the sale price
But when the assessment was made by the Sales Tax Authorities sales tax was levied on the appellant at the rate of 7 and the appellant was required to pay up a further sum of Rs 68096942
The appellant had prayed for an interim order in the present appeal staying further proceedings but this Court by an order dated 3rd April 1974 granted interim stay only on the appellant paying up the amount of sales tax due for the assessment year 1970 71 before 31st July 1974 and so far as the assessment years 1971 72 1972 73 and 1973 74 were concerned the Court directed that the assessments for those years may proceed but only the final order shall not be passed
The result was that the appellant had to pay up the further sum of Rs 68094942 for the assessment year 1970 71
The appellant collected from the customers for the assessment year 1971 72 an aggregate sum of Rs 99120617 by way of sales tax at the rate of 3 12 for the period 1st April 1971 to 1st July 1971 4 for the period 2nd July 1971 to 24th January 1972 and 7 for the period 25th January 1972 to 31st March 1972 and deposited this amount in the Treasury
Similarly for the assessment year 1972 73 the appellant collected from its customers an aggregate sum of Rs 193659723 as and by way of sales tax at the rate of 7 of the sale price and this amount was deposited by the appellant in the Treasury and so also for the first quarter of the assessment year 1973 74 upto the end of which the exemption from sales tax was to continue the appellant collected and paid an aggregate sum of Rs 48488405 at the rate of 7 of the sale price
It appears that surcharge amounting to Rs 28300809 for the period of the exemption was also paid by the appellant into the Treasury
The assessments for the assessment years 1971 72 1972 73 and 1973 74 were however not completed in view of the stay order granted by this Court
Now obviously since the Government is bound to exempt the appellant from payment of sales tax for a period of three years from 2nd July 1970 being the date of commencement of the production the appellant would not be liable to 698 pay any sales tax to the State in respect of sales of vanaspati effected during that period and hence the State would have to refund to the appellant the amount of sales tax paid for the period 2nd July 1970 to 31st March 1971 subject to any claim which the State may have to retain any part of such amount under any provision of law
If the State has any such claim it must be intimated to the appellant within one month from today and it must be adjudicated upon within a further period of one month after giving proper opportunity to be heard to the appellant
If no such claim is made or if made not adjudicated upon within the time specified the State will refund the amount of sales tax to the appellant with interest thereon at the rate of 6 per annum from the date when such refund becomes due and if such claim is made and adjudicated upon within the specified time and it is found that a part of this amount is liable to be retained by the State under some provision of law the State will refund the balance to the appellant with interest at the like rate
So far as the assessment years 1971 72 1972 73 and 1973 74 are concerned the Sales Tax Authorities will proceed to complete the Assessments for those assessment years in the light of the law laid down in this judgment and the amounts of sales tax deposited by the appellant will be refunded to the appellant to the extent to which they are not found due and payable as a result of the assessments subject to any claim which the State may have to retain those amounts under any provision of law
We accordingly allow the appeal set aside the judgment of the High Court and issue a writ order or direction to the above effect against the respondents
The State will pay the costs of the appellant throughout
SR Appeal allowed


Summary:
The appellant is a limited company which is primarily engaged in the business of manufacture and sale of sugar and it has a cold storage plant and a steel foundry
With reference to a news item dated 10th October 1968 in the National Herald in which it was stated that the State of Uttar Pradesh had decided to give exemption from sales tax for a period of three years under section 4A of the UP Sales Tax Act to all new industrial units in the State with a view to enabling them to come on firm footing in developing stage the appellant addressed a letter dated 11th October 1968 to the Director of Industries stating that in view of the sales tax holiday announced by the Government the appellant intended to set up a Hydrogenation plant for manufacture of Vanaspati and sought for confirmation that this industrial unit which it proposed to set up would be entitled to sales tax holiday  for a period of three years from the date it commenced production
The Director of Industries by his letter dated 14th October 1968 confirmed that there will be no sales tax for three years on the finished product of your proposed Vanaspati factory from the date it gets power connection for commencing production
Thereafter when the appellant s representative met the 4th respondent who was at that time the Chief Secretary to the Government as also Advisor to the Governor and apprised the latter that the appellant was setting up the Vanaspati factory solely on the basis of the assurance given on behalf of the Government that the appellant would be entitled to exemption from sales tax for a period of three years from the date of commencement of commercial production at the factory the 4th respondent reiterated the assurance made
Again the appellant by its letter dated 13th December 1968 requested the 4th respondent to please confirm that we shall be allowed sales tax holiday for a period of three years on the sale of Vanaspati from the date we start production
The 4th respondent replied on 22nd December 1968 that the State Government will be willing to consider your request for grant of exemption from UP Sales Tax for a period of three years from the date of 642 production and asked the appellant to obtain the requisite application form and submit a formal application to the Secretary to the Government in the Industries department and in the meanwhile to go ahead with the arrangements for setting up the factory
The appellant in the meantime had submitted an application dated 21st December 1968 for a formal order granting exemption from sales tax under section 4A of the UP Sales Tax Act
The appellant was also subsequently informed by the letter dated 23rd January 1969 of the 4th respondent categorically that the proposed Vanaspati factory of the appellant will be entitled to exemption from UP Sales Tax for a period of three years from the date of going into production and that this will apply to all Vanaspati sold during that period in Uttar Pradesh itself
The appellant on the basis of these unequivocal assurances went ahead with the setting of the Vanaspati factory and made much progress
By the middle of May 1969 the State Government started having second thoughts on the question of exemption and the appellant was requested to attend a meeting to discuss the question of giving concession in Sales Tax on Vanaspati products
The appellant immediately by its letter dated 19th May 1969 pointed out to the 5th respondent that so far as the appellant was concerned the State Government had already granted exemption from sales tax by the letter of the Chief Secretary dated 23rd January 1969 but still the appellant would be glad to send its representative to attend the meeting
The appellant s representative did attend the meeting held on 3rd June 69 and reiterated that so far as the appellant was concerned it had already been granted exemption from sales tax and the State Government stood committed to it The State Government however went back upon the assurance and a letter dated 20th January 1970 was addressed by the 5th respondent intimating that the Government had taken a policy decision that new Vanaspati units in the State which go into commercial production by 30th September 1970 would be given only partial concession in Sales Tax at different rates on each year of production
The appellant by its letter dated 25th June 1970 pointed out to the Secretary to the Government that the appellant proposed to start commercial production of Vanaspati with effect from 1st July 1970 and stated that as notified in the letter of 20th January 1970 the appellant would be availing of the exemption granted by the State Government and would be charging Sales Tax at the rate of 3 12 instead of 7 on the sales of Vanaspati manufactured by it for the period of one year commencing from 1st July 1970
The factory of the appellant thereafter went into production from 2nd July 1970 and the appellant informed the Secretary to the Government about the same by its letter dated 3rd July 1970
The State Government however once again changed its decision and on 12th August 1970 a news item appeared in the Northern Indian Patrika  stating that the Government had decided to rescind the earlier decision ie the decision set out in the letter dated 20th January 1970 to allow concession in the rates of Sales Tax to new Vanaspati Units
The appellant thereupon filed a writ petition in the High Court of Allahabad asking for a writ directing the State Government to exempt the sales of Vanaspati manufactured by the appellant from Sales Tax for a period of three years commencing from 2nd January 1970 by issuing a notification under section 4A of the UP Sales Tax Act from the appellant for the said period of three years
The plea based on the 643 doctrine of promissory estoppel was however rejected by the Division Bench of the High Court principally on the ground that the appellant had waived the exemption if any by accepting the concessional rates set out in the letter of the respondent dated 20th January 1970
Allowing the appeal by certificate the Court  HELD 1
The view taken by the High Court namely that even if there was an assurance given by the 4th respondent on behalf of the State Government and such assurance was binding on the State Government on the principle of promissory estoppel the appellant had waived its right under it by a accepting the concessional rates of sales tax set out in the letter of the 5th respondent dated 20th January 1970 is not correct
656 D E 2
Waiver is a question of fact and it must be properly pleaded and proved
No plea of waiver can be allowed to be raised unless it is pleaded and the factual foundation for it is laid in the pleadings
656 E F In the instant case a the plea of waiver was not taken by the State Government in the affidavit filed on its behalf in reply to the writ petition nor was it indicated even vaguely in such affidavit
It was raised for the first time at the hearing of the writ petition
That was clearly impermissible without an amendment of the affidavit in reply or a supplementary affidavit raising such plea
656 F b It was not right for the High Court to have allowed the plea of waiver to be raised against the appellant and that plea should have been rejected in limine
If waiver were properly pleaded in the affidavit in reply the appellant would have had an opportunity of placing on record facts showing why and in what circumstances the appellant came to address the letter dated 25th June 1970 and establishing that on those facts there was no waiver by the appellant of its right to exemption under the assurance given by the 4th respondent
But in the absence of such pleading in the affidavit in reply this opportunity was denied to the appellant 656F H 3
Waiver means abandonment of a right and it may be either express or implied from conduct but its basic requirement is that it must be an intentional act with knowledge
There can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right he intentionally abandons it
657A B In the instant case on the facts the plea of waiver could not be said to have been made out by the State Government There was nothing to state that at the date when the appellant addressed the letter dated 25th June 1970 it had full knowledge of its right to exemption under the assurance given by the 4th respondent and that it intentionally abandoned such right
It is not possible to presume in the absence of any material placed before the Court that the appellant had full knowledge of its right to exemption so as to warrant an inference that the appellant waived such right by addressing the letter dated 25th June 1970
It is difficult to speculate what was the reason why the appellant addressed the letter 25th June 1970 stating that it would avail of the concessional rates of sales tax granted under the letter dated 20th January 1970
657 D E 644 Earl of Darnley vs London Chathan and Dover Rly
Co Proprietors etc  57 Craine vs Colonial Mutual Fire Insurance Co Ltd   Martindala vs Faulkner  quoted with approval
The doctrine called promissory estoppel  equitable estoppel  quasi estoppel  and new estoppel  is a principle evolved by equity to avoid injustice where a promise is made by a person knowing that it would be acted on and it is person to whom it is made and in fact it is so acted on and it is inequitable to allow the party making the promise to go back upon it
Though commonly named promissory estoppel it is neither in the realm of contract nor in the realm of estoppel
The basis of the doctrine is the inter position of equity which has always true to its form stepped in to mitigate the rigours of strict law
658 E G 5
The true principle of promissory estoppel is that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relationship effect a legal relationship to arise in the future knowing or intending that it would be acted upon by the other party to whom the promise is made and it is infact so acted upon by the other party the promise would be binding on the party making it and he would not be entitled to go back upon it if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties and this would be so irrespective whether there is any pre existing relationship between the parties or not
Equity will in a given case where justice and fairness demand prevent a person from insisting on strict legal rights even where they arise not under any contract but on his own title deeds or under statute
662 B D To the applicability of the doctrine of promissory estoppel it is not necessary that there should be some contractual relationship between the parties
Nor can any such limitation namely that the doctrine of promissory estoppel is limited in its operation to cases where the parties are already contractually bound and one of the parties induces the other to believe that the strict rights under the contract would not be enforced be justifiably introduced to curtail the width and amplitude of the doctrine
The parties need not be in any kind of legal relationship before the transaction from which the promissory estoppel take its origin
The doctrine would apply even where there is no pre existing legal relationship between the parties but the promise is intended to create legal relations or affect a legal relationship whish will arise in future
660 G H 661 A F G
Jorden V Money  Hughes vs Metropolitan Railway Co  Birmingam  District Land Co vs London and North Western Rail Co 1888  discussed and questioned
Central London Property Trust Ltd vs High Trees House Ltd 1947 KB p 130  explained
Evenden vs Guildford City Association Football Club Ltd  272   255 Crabb vs Arun District Council
 875  858 CA quoted with approval
645 6
The doctrine of promissory estoppel cannot be inhibited by the same limitation estoppel in the strict sense of the term
It is an equitable principle evolved by the Courts for doing justice and there is no reason why it should be given only a limited application by way of defence and it should only be a shield and not a sword to found a cause of action
It can be the basis of a cause of action
662 D E 663 E F
There is no qualitative difference between proprietary estoppel  and promissory estoppel 
Both are the off springs of equity and if equity is flexible enough to permit proprietary estoppel to be used as a cause of action there is no reason in logic or principle why promissory estoppel should also not be available as cause of action if necessary to satisfy the equity
665 G H Central London Property Trust Ltd vs High Trees House Ltd 
19471 KBP 130  Combe vs Combe   Beesly vs Hallwood Estate Ltd  Municipal Corporation of Bombayv Secty
of State ILR  607 Mooregate Mercantile Co Ltd vs Twichingss  referred to
Crabb vs Arun District Council  875 explained
Ramsden vs Dysen1866 LR HL 129 Dunlop Pneuntafic Tyre Co vs Saifridge  Co Ltd  discussed
Law is not a mausoleum
It is not an antique to be taken down dusted admired and put back on the shelf
It is rather like an old but vigorous tree having its roots in history yet continuously taking new grafts and putting out new sprouts and occasionally dropping dead wood
It is essentially a social process the end product of which is justice and hence it must keep on growing and developing with changing social concepts and values
Otherwise there will be estrangement between law and justice and law will cease to have legitimacy Though continuity with the past is a historical necessity  conformity is not to be turned into a fetish 
668 H 669 A B
Therefore despite the fact that allowing promissory estoppel to found a cause of action would seriously dilute the principle which requires consideration to support a contractual obligation this new principle which is a child of equity brought into the world with a view to promoting honesty and good faith and bringing law closer to justice should not be held in fetters but allowed to operate in all its activist magnitude
so that it may fulfil the purpose for which was conceived and born
668 F G
Robertson v Minister of Pensions
Evenden Guldford city Association Football Club Ltd 1975 3 All
ER p 269
Candler vs Crane Christmas  Co  178 quoted with approval
A promise may in the United States derive contractual enforceability if it has been made by the promisor knowing or intending that it would be acted on and the promisee has altered his position in reliance on it notwithstanding that there is no consideration in the sense in which that word is used in English 646 and Commonwealth jurisprudence
However the basic requirement for invoking this principle must be present namely that the fact situation should be such that injustice can be avoided only by enforcement of the promise
The doctrine of promissory estoppel has been used in the United States to reduce if not to destroy the prestige of consideration as an essential of valid contract and also used in diverse other situations as founding a cause of action 670 D E 673 B
Alleghany College vs National Chauteaque Country Bank 57 Am L R 980 Drennan vs Stat Paving Company 1958 31 California 2nd 409 referred
Under the English law the judicially formed view is that the crown is not immune from liability under the doctrine of promissory estoppel and the view taken by Denning J in that the crown cannot escape its obligation under the doctrine of promissory estoppel by praying in aid the doctrine of executive necessity still holds the field
674 D
Robretson vs Minister of Pensions 1949 1 K B 227 quoted with approval Rederiaktiebolaget Amphitrities
vs The King  referred to
Howell vs Falmouth Boat Construction Co Ltd  explained 10
Even in the United States the trend in the State Courts of late has been strongly in favour of the application of the doctrine of promissory estoppel against the Government and public bodies where interests of justice morality and common fairness clearly dictate that course
It is being increasingly felt that the Government ought to set a high standard in its dealings and relationships with citizens and the word of a duly authorised Government agent acting within the scope of his authority ought to be as good as a Government bond
The Government would not be estopped by the acts of its officers and agents who without authority enter into agreements to do what the law does not sanction or permit and these dealing with an agent of the Government must be held to have notice of limitations of his authority
But if the acts of omissions of officers of the Government are within the scope of their authority and are not otherwise impermissible under the law they will work estoppel against Government
676 F H 677 A D Federal Crop Insurance Corporarion vs Maroill  92 L ed
discussed and explained
Valsonavich vs United States p 96 quoted With approval
Where the Government makes a promise knowing or intending that it would be acted on by the promisee and in fact the promisee acting in reliance on it alters his position the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution
682 G H 683 A
647 It is elementary that in a Republic governed by the rule of law no one a however high or low is above the law
Every one is subject to the law as fully and completely as any other and the Government is no exception
It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned the former is equally bound as the latter
On no principle can a Government committed to the rule of law claim immunity from the doctrine of promissory estoppel
The Government cannot be heard to say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of honesty and good faith 
In fact the Government should be held to a high standard of rectangular rectitude while dealing with its citizens
683 A C
Gangaes Manufacturing co vs Surajmull and Ors ILR  Municipal Corporation of Bombay vs The Secretary of State ILR 29 Bomb
588 approved
Collector of Bombay vs Municipal Corporoaton of rlle City of Bombay and Ors
  Union of India vs Indo Afghan Agencies   followed
Ransden vs Dyson1866 LR 1HL 170 referred to
Robertson vs Minister of Pensions 1949 1 K B 227 quoted with approval as the correct law
The doctrine of executive necessity regarded as sufficient Justification for the Government to repudiate even its contractual obligations was emphatically negatived in the Indo Afghan Agencies case and the supremacy of the laws was established 683 C D
Therefore it is not open to Government to claim immunity from the applicability of the rule of promissory estopped and thereby repudiate a promise made by it on the ground that such promise may fetter its future executive action
If the Government wants to preserve its freedom of executive action from being hampered or restricted the Government should not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it
But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position the Government would be compelled to make good such promise like any other private individual
683 D F
The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society
It should be the constant endeavor of the Courts and the legislatures to close the gap between law and morality and bring about as near an approximation between the two as possible
The doctrine of promissory estopped is a significant judicial contribution in that direction683 F G
Since the doctrine of promissory estoppel is an equitable doctrine it must yield when the equity so requires
If it could be shown the by Government that having regard to the facts as they have transpired it would be inequitable to hold the Government to the promise made by it the Court would not raise an equity in favour of the promisee and enforce the promise against the Government
648 The doctrine of promissory estoppel would be displaced in such a case because on the facts equity would not require that the Government should be held bound by the promise made by it
683 G H 684 A When the Government is able to show that in view of the facts as they have transpired public interest would be prejudiced if the Government were required to carry out the promise the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies
It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it
The Government cannot claim to be exempt from the liability to carry out the promise on some indefinite and undisclosed ground of necessity or expediency  nor can the Government claim to be the sole judge of its liability and repudiate it on an exparte appraisement of the circumstances
684 A D In order to resist its liability the Government should disclose to the Court the various events necessitating its claim to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government
684 D E
Mere claim of change of policy would not be sufficient to exonerate the Government from the liability the Government would have to show precisely the changed policy with the reason and justification therefor to enable the Court to judge for itself which way the public interest lies and what equity of the case demands
It is only if the Court is satisfied on proper and adequate material placed by the Government that over riding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it that the Court would refuse to enforce the promise against the Government
684 E F The essence of the rule of law is that the Court would not act on the mere ipse dixit of the Government for it is the Court which has to decide and not the Government whether the Government should be held exempt from liability684 F G The burden would be upon the Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the Court would insist on a highly rigorous standard of proof in the discharge of this burden
But even where there is no such over riding public interest it may still be competent to the Government to resile from the promise on giving reasonable notice which need not be a formal notice giving the promisee a reasonable opportunity of resuming his position  provided of course it is possible for the promisee to restore status quo ante
If however the promisee cannot resume his position the promise would become final and irrevocable
684 G H 685 A
Emmanuel Ayodeji Ajayi vs R T Briscoe 1964 3 All
ER 556 referred to 649 14
So far as the doctrine of promissory estoppel is concerned no distinction can be made between a private individual and a public body
This doctrine is also applicable against a public body like a municipal council
However this doctrine cannot be applied in teeth of an obligation or liability imposed by law
It cannot be invoked to compel the Government or even a private party to do an act prohibited by law
There can also be no promissory estoppel against the exercise of legislative power
The Legislature can never be precluded from exercising its legislative function by resort to the doctrine of pro missory estoppel
688C G H 689 A
Century Spinng and Manufacturing Co Ltd  Anr
vs The Ulhasnagr Municipal Council and Anr
1970 3 SCR 854 Turner Mossison and Co Ltd vs Hunngerfard Investmetn Trust Ltd1972 3 SCR 711 discussed  followed
M Ramanatha Pillai vs The Stare of Kerala  Anr
5  526 Assistant Cusrodian vs Brij Kishore Agarwala  Ors   explained and held inapplicable
Sate of Kerala vs Gwalior Rayon Silk Manufacturing Co Ltd   688 reiterated
Malhortra and Sons  Ors
vs Union of India and Ors
AIR 1976 J  K p 41 approved
Excise Commissioner UP Allahabad vs Ram Kumar  Bihar Eastern Gangetic Fishermen Cooperative Society Ltd vs Sipali Sangil and Ors
1978 1 S R 375   Radha Krishan Agarwal vs State of Bihar and Ors     explained
In order to attract the applicability of the doctrine of promissory estoppel it is not necessary that the promisee acting in reliance on the promise should suffer any deteriment
What is necessary is no more than that there should be alteration of his position in reliance on the promise
If detriment were a necessary element there would be no need for the doctrine of promissory estoppel because in that event in quite a few cases the detriment would form the consideration and the promise would be binding as a contract
If by deteriment is meant injustice to the promisee which would result if the promisor were to resile from his promisee then detriment would certainly come in as a necessary ingredient
The detriment in such a case is not some prejudice sneered by the promisee acting on the promise put the prejudice which would be caused to the promisee if the promisor were allowed to back on the promise
It is not necessary for the promisee to show that he has acted to his detriment
All that he has to show is that he has acted to reliance on the promise and altered his position
694 A B F G 695 E 694 D
Central London Property Trust Ltd V High Trees House 1947 KB p 130 1956 1 All
ER 256 W J Alan  Co Ltd vs El Nasar Export and Import Co 1972 2 All
ER p 127  p 140 Tool Metal Manufacturing Co Ltd vs Tunosten Electric Co Ltd 1955 All
E R 657 1975 1 W L R 761 Emmaulel Ayodeji 650 Ajya V R T Briscoe Karnmins Ballrooms Ltd vs Zenith Investments Torquay Ltd  Grurldt vs the Boulder Pty
Gold Mines Ltd   quoted with approval
In the instant case
The facts necessary for involving the doctrine of promissory estoppel were clearly resent and the Government was bound to carry out the representation and exempt the appellant from sales tax in respect of sales of Vanaspati effected by it in Uttar Pradesh for a period of three years from the date of commencement of the production
693 F G a The letter dated 23rd January 1969 was a representation on behalf of the Government the representation having been made by the 4th respondent in his capacity as the Chief Secretary of the Government categorically to the effect that the appellant would be entitled to exemption from sales tax in respect of the sale of vanaspati effected in Uttar Pradesh for a period of three years from the date of commencement of production
This representation was made by way of clarification in view of the suggestion in the appellant letter dated 2 nd January 1969 that the financial institutions were not prep ed to regard the earlier letter of the 4th respondent dated 22nd December 1968 as a definite commitment on the part of the Government to grant exemption from sales tax
692 H 693 A B b The representation made by the 4th respondent was a representation within the scope of his authority and was binding on the Government in as much as the 4th respondent who was at the material time the Chief Secretary to the Government and also Adviser to the Governor discharging the functions of the Government during the President s Rule had authority to bind the Governor
Moreover the averment to this effect in the Writ Petition was not denied by the State in the affidavit in reply filed on its behalf 693 C D
c This representation was made by the Government knowing or intending that it would be acted on by the appellant because the appellant made it clear that it was only on account of the exemption from sales tax promised by the Government that the appellant had decided to set up the factory for manufacture of Vanaspati
In fact the appellant relying on this representation of the Government borrowed moneys from various financial institutions purchased plant and machinery from Ms De Smith India Pvt Ltd Bombay and set up a Vanaspati factory at Kanpur
693 E F