Madras High Court
K.M.L. Narasimhan, Larsen And Tourbo ... vs Union Of India And Another on 8 June, 1993
Equivalent citations: AIR1994MAD83, 1994(46)ECC72, AIR 1994 MADRAS 83, 1994 (1) MADLW 113, (1994) WRITLR 387, (1994) 46 ECC 72
ORDER
1. Uarson & Toubro Limited, ECC Construction Group (for short 'company') is having its Principal Office at Manapakkam, Madras-600089 while its Registered Office is at 'I., and T House'. Ballard Estate Bombay. The Principal Office of the Company, it is said, looks after the construction work, such as bridges, stadia, airports etc., in India and abroad. The company, amoung other workshops and units, is stated to have an approved workshop within KFTZ (viz. Kandla Free Trade Zone) in Gujarat State, functioning under the control of the Madras Office.
2. The Indian Engineering Industry, in recent times, it is said, has made rapid progress and has been in a position to secure valuable foreign contracts. The Principal raw material required by the industry is steel. Although Steel Industry is a key industry in Indian economy, the price of indigenous steel is much higher than the price of steel in the international market. The JPC (viz. Joint Plan Committee). It is said, announced a substantial increase in the price of pig iron and steel on 9-2-1981. As a result the domestic price of steel became much higher than the international price of steel, at which competitors of Indian products secured their raw material. The EEPC (viz.. Engineering Export Promotion Council) therefore represented to the Government that unless such vital raw material as steel is made available to Engineering Exporters at international prices, they would be totally priced out in the Overseas Markets and export of Engineering goods fail considerably. The Government accepted the council's plea and accordingly IPRS 81 (viz. International Price Reimbursement Scheme 1981) came into force on 9-2-1981
3. The Ministry of commerce of Government of India in fact, issued a Circular dated 23-7-1981 incorporating various details of the Scheme to be effective from 9-2-1981. The said scheme had been extended to the subsisting as well as executory contracts as on 8-2-1981 and thereafter, but not to the "deemed exports". The prime aspects of the scheme are:
1. Global tenders entered into by Indian Manufacturer or exporter relating to executory contracts must have to be registered with EEPC within 45 days from the date of entering into such contract.
2. Such an exporter or manufacturer was given option to use either the steel procured at the International Market or Indigenous steel; and in case he procured indigenous steel reimbursement of the difference in domestic price and international price is permissible.
3. The application for reimbursement in triplicate will have to be made in the prescribed format together with the statement giving details of exports to the Regional Office of EEPC with whom the exporter or manufacturer is registered.
4. After scrutiny of such claims, EEPC will record on the statement of exports furnished by the exporter, an entitlement certificate.
5. Thereafter, the Council will send two sets of application to the concerned Licensing Authority. The Licensing Authority after checking will issue a payment authority to EEPC, EEPC would then issue a cheque for the amount as authorised by the Licensing Authority.
6. In order to enable EEPC to make payments, necessary funds would be placed at the disposal of EEPC. The funds so made available would be kept in separate bank accounts at the places where EEPC has its Regional Offices and will be operated by its Designated Officers.
7. The accounts will be operated only for the purpose of reimbursement of claims arising out of the Scheme.
4. The company was stated to have received an order in 1985 for fabrication and delivery of 314 Nos of Steel Gates to the Government of Nepal under Contract for U-S-S 65,462/- Structural Steel required in the execution of the said contract was purchased in India and fabrication was done at the Company's Unit at KFTZ and exported to Nepal. After execution of the said contract, the Company, after complying with the requisite formalities, claimed for reimbursement of the differences in prices under PRS. The claim made therefor had been duly honoured any demur.
5. The company obtained another order in 1986 from Government of Malasia for fabrication and erection of two steel bridges in Malasia to the value of Rs. 24 crores on Turn key basis, The said contract, as per the claim, had been registered within the specified time with EEPC. The execution of the said contract was monitered by the Working Group consisting of the representatives from various institutions, such as Ministry of Commerce, EXIM Bank, RBI-ECD, RBI-1CCD ECGC and bankers, viz.. Hongkong and Shanghai Banking Corporation, besides the company. The Working Group tendered an advice to the company to encourage the use of locally produced raw materials, obviously with a view to save the precious foreign exchange. The advice so tendered had been actually given effect to by the company and indigenous steel had been utilised in the fruition of the said project in KFTZ.
6. The company after complying with the requisite formalities, laid four claims for reimbursement of the difference in prices under IPRS between July, 1988 and June 1989, with the Ministry of Commerce for Rs. 1.60 crores againsi the report of two Steel Bridge components to Malaysia during 1988-89. The claims so made appeared to have been pending for quite long in the Ministry of Commerce and consequently, the company entered into a line of correspondence on the subject, ending with its letter dated 20-1-1992. Eventually, the Ministry of Commerce, by its letter No, 12 (18-19-EP (Engg. 1) dated 12-2-1992 informed the company of the decision of regret to accede to the request for grant of IPRS. It is to quash the said decision by way of writ of certiorarified mandamus one of the shareholders as well as Manager of the company, namely K.M.L. Narasimhan filed the earlier writ petition while the company filed the letter writ petition, impleading Union of India represented by its Secretary, Ministry of Commerce, New Delhi-110001 EEPC 25 Netaji Subbas Raod, Calcutta-700001 and Chief Controller of Imports and Exports, Udyog Bhawan, New Delhi 110001 as respondents 1 to 3 and to direct the respondents to allow the company's claim for reimbursement as requested.
7. Mrs. Malini Ganesh, learned counsel appearing for the petitioner (in each of the writ petitions) would press into service the following points for consideration.
(1) IPRS is distinct and independent scheme by itself, not having any sort of a connection with any other scheme and such being the case, the terms and tenor of the scheme themselves will determine its applicability or otherwise to the facts of a given situation.
(2) No ex facie material is traceable in IPRS announced by the first respondent rendering the export in question made by the company ineligible to get the benefit of reimbursement of the amount representing the difference between the domestic and international prices of steel.
(3) In the implementation of IPRS, there had been categorical commitment by way of representation by the first respondent through the Working Group and EEPC for the free usage of indigenous steel, in fabrication of the components of the bridges to be exported to Malaysia and installed therein, promising to make good the loss incurred by the company in the sense of making reimbursement of the difference in prices of steel prevailing between domestic and international markets and on such representation and commitment made, the company acted in utilising the indigenous steel by incurring expenditure more than what they would have incurred in case they used the steel imported for such purpose from international market and in such a situation the first respondent is estopped from contending that the company is not entitled to reimbursement as claimed, on the equitable plea of promissory estoppel.
(4) Denial of reimbursement claims of the company by the first respondent, without assigning any reason whatever, as revealed by the impugned letter is nothing but sheer arbitrary exercise of power, offending Article 14 of the Constitution of India.
8. Mr. P. Narasimhan, learned Senior Central Government Standing Counsel appearing for respondents 1 and 3 would repel those submissions and would further submit as follows:
(1) Export of goods fabricated or manufactured in Free Trade Zone like the company's Unit at KFTZ is not entitled to the benefit of reimbursement, in as much as conferring of such benefits to such an unit tantamounts to double benefit.
(2) Supply of raw materials, namely, steel required for fabrication of bridge components by Sail and Tisco to KFTZ amounts to 'deemed export' rendering the company ineligible for reimbursmcnt under IPRS.
(3) Neither the Working Group, nor EEPC can be stated to be the official organs of the first respondent and, therefore, neither of them can be construed to be the instru-menlality of the State and the company therefore cannot claim the benefit of reimbursement, even if it had acted on the representations, if any, made by any of them, on the equitable plea of estoppel.
9. Mr. V. Ravi, learned counsel Appearing for the second respondent would choose to tread on the same path chosen by learned " Senior Central Government Standing Counsel.
10. The tenability or otherwise of the rival submissions as noticed above may now fall for consideration in the arena of discussion.
11. The Government of India through its ministry of Commerce, in order to give a fillip to Indian Industry, formulated various schemes and programmes, thereby a conducive industrial climate had been created to make rapid strides and progress in the Indian economy by the growth of Indian Industrial sector and also to see that the Indian Industrial sector is viable and competent enough to enter into the competitive global market transaction thereby making it possible to earn and conserve foreign exchange reserve of this country with the laudable objective of putting the country in the Industrial map of the world. It is with this objective Free Trade Zones. Export Processing Zones and Export Oriented Units had been allowed to function in various centres of this country, by giving all sorts of conscessions in tax, excise duty and exemption from import resirictions and duties.
12. 1PRS is one such scheme introduced by the Government of India in the year 1981. The scheme as such came into force by the issuance of a circular by the Government of India on 23-7-1981. Accepting the recommendations made by JPC. The laudable objective of the scheme, as gelling revealed from the recommendations of JPC was to sec that the Indian Engineering Exporters were not 10 be put at disadvantage in entering into the competitive market at international level by the usage of indigenous steel, which even if supplied at the ex-stock price, dehors excise duties and other taxes, was steeply higher than the price of steel at the international market. No doubt true it is such manufacturers/exporters were given the option to procure steel from the internalional market where the price is comparatively cheaper than the domestic price of steel. If they procure steel from international market, there is no question of any reimbursement to them.
13. On the other hand if indigenous steel is used by such manufacturers/exporters in the fabrication of projects relatable to global tenders, they have to be necessarily compensated for the price difference of steel between demostic and international market subject to certain conditions. If they required the steel for the execution of such contract to be imported, it goes without saying that such a course would result in depletion of foreign exchange resources of the coulnry. Further, it would have created an inclement weather in the Indian industrial secior, in the sense of retarding the progress, besides making it not viable, thereby tilting the economy of the country. If indigenous steel is used, despite its higher cost, the industrial growth of such sector would get accelarated in geomatric proportion without in the least affecting Indian economy, besides foreign exchange resources would not get depleted by import of steel for such projects and on the other hand, the possibility of conserving and earning more foreign exchange cannot at all be ruled out of consideration.
14. JPC perhaps, having all the aforesaid relevant criteria in the backdrop appeared to have made a recommendation for the formulation of 1PRS and the Government of India, in turn, also accepted the same, taking into consideration the sleep increase in price of steel in the domestic market. For the benevolence of the scheme to be extended to manufacturers/exporters, various terms and conditions had been prescribed and only on fulfilment of such terms and conditions, such manufacturers/exporters would be given the benefit of reimbursement.
15. The essential pre-requisites to be fulfilled by such manufacturer/exporters en titling them to the benefit of reimbursement had been extracted in paragraph 3 supra. The company in the instant case cannot at all be stated to have not fulfilled the essential prerequisites entitling it to make a claim of reimbursement under IPRS. To emphasise the point by way of reiteration, it may be stated that the company entered into a contract with Malaysian Government for fabrication of two steel bridges therein subsequent to the announcement of 1PRS and the same also had been registered within the prescribed time with the second respondent. Though the company is entitled to import the required steel for the completion of the project, yet it did not do so. But it had ulilised the indigenous steel by procuring the same from Sail or Tisco. The reason for utilisation of such indigenous steel was not borne out of their own volition and the plain fact was that the working Group, in which the Ministry of Commerce of Government of India is having its member, took a decision in the process of monitoring the project by the company to advise or permit it to utilise indigenous steel and accordingly, the company utilised such steel in the completion of the said project.
16. For the price difference, the company submitted four bills, as stated supra, to the second respondent claiming reimbursement. The second respondent also according to the procedure prescribed, checked and verified those hills and satisfied that the indigenous steel had been used by the company and the reimbursement claim therefor represented actually the difference in price of steel used in the said project by the company between the domestic and international market. On getting such solidified satisfaction the second respondent gave also an entitlement certificate, on the application of the company. The Licensing Authority namely, the third respondent, after checking the application sent by the second respondent, issued payment authority to the second respondent. It is at this stage, the first respondent rejected the claims of the company for extent ion of IPRS on indigenous steel used for the manufacture or fabrication of the components for the two bridges installed in Malaysia. While making rejection of the request for extent ion of IPRS to the company, no apparent reason is found traceable to the letter impugned.
17. No doubt true it is that it is not as if as and when any claim is made for extension of IPRS by any exporter like tbe company, it has to be complied with, without any exception whatever and there may be a situation, wherein the manufacturer exporter may be found ineligible for such grant. In the instant case, it is the consistent case of tbe company that it is entitled to the extension of the benefit of IPRS and consequently, the company made four claims for reimbursement of the difference in prices. In such a situation, it is but proper for an authority like ihe first respondent to inform the company in a clear cut fashion the reason as to why the request in this respect made by the company had been rejected. If no reason had been ascribed for such a request or claim, it is nothing but sheer arbitrary exercise of power, in the sense of grant or rejection of the claims by the authority concerned solely depending upon the whims and fancies of the authority clothed with such power.
18. It is well established that Article 14 requires that State action must not be arbitrary and must be based on some rational and relevant principle which is non-discriminatory. It must not be guided by extraneous or irrelevant considerations. The State cannot act arbitrarily in entering into relationship, contractual or otherwise, with a third party. Its action must conform to some standard'or norm which is rational and non-discriminatory.
19. Judged by such well established principles of law, the impugned letter, bereft of any reason for rejection of the request of the company, as rightly contended by learned counsel for the petitioner (in both writ petitions) cannot be any one other than the sheer arbitrary exercise of power by the first respondent, offending Article 14 of the Constitution of India.
20. The letter impugned, even though does not contain ex-facie any reason for rejection of the claims of the company, the reasons now trotted out to be made in these proceedings are three in number as submitted by Mr. P. Narasimhan, learned Senior Central Government Standing Counsel and as detailed in paragraph 8 supra. No doubt true it is that the component parts of the two steel bridges installed in Malaysia had been fabricated or manufactured in a Free Trade Zone like the company's unit at KFTZ. The question is whether the fabrication or manufacture of such component parts at KFTZ is a bar for claiming the benefit of reimbursement. The answer to such a question cannot be anyone other than an emphatic 'no' in the facts and circumstances of the case.
21. No doubt all industrial units situated in a Free Trade Zone are entitled to certain benefits and privileges by the situs or location of such units in such zones. The faet that such units got certain privileges under the scheme framed therefor cannot at all be put against the company for claiming the benefit of reimbursement of difference in prices under IPRS, which by itself is an independent scheme, not having any sort of a connection with any other scheme, when especially the said scheme does not contain any provision restricting the application of the extension of the said scheme only to those manufacturers exporters whose industrial units are not located in Free Trade Zones. In such a situation the situs or location of the company's unit at KFTZ, where the component parts of the steel bridges had been fabricated or manufactured, is of no consequences, in the sense of such a factor cannot stand in the way of depriving the company of the benevolence of reimbursement of difference in prices available under the said scheme.
22. The scheme, of course, is not extended to 'deemed exports'. It is the bone of conlention of the first respondent, as stated earlier, that the supply of raw materials, namely steel required for fabrication of the bridge components by Sail and Tisco to KFTZ amounts to 'deemed exports and consequently, the company is ineligible for reimbursement under IPRS. Admittedly the scheme does not contain any provision either explaining or defining 'deemed exports. Obviously for the reason of deemed exports' having been defined or explained in the Import and Export Policy announced by the first respondent during April 1988--March 1991.
In paragraph 189 under Chapter XVI thereto 'deemed exports' had been defined and it reads as follows:
"189. Certain supplies made indigenously are an effective form of import substitution. Such supplies made subject to certain specified conditions mentioned hereafter in this chapter, are termed 'deemed exports'.
23. Twelve categories of supplies listed under sub-para (a) to (1) (sic) of paragraph 190 therein are to be treated as 'deemed exports' for the purpose of benefits under the import replenishment scheme. Of them, sub-para(g) is relevant for the present purpose and it is couched in the following terms.
"(g). Supplies made in India to units in free trade zones/export processing zones or 100% export oriented units according to the policy laid down under the respective schemes."
24. Paragraph 194 dealing with 'entitlement as respects' 'deemed exports' reads as follows:
"194 (1) The 'Deemed Exports', as referred to above, will qualify for.(i) grant of import replenishment licences, except in the case of sub-para 190(h) above; (ii) the discharge of export obligation, if any, imposed on the indigenous producer under the Capital Goods'' Industrial Licence or approval of foreign collaboration or under Foreign Exchange Regulations Act.
(2) The 'Deemed Exports' however, shall not be counted towards other benefits such as grant of (i) Export Performance Certificate (ii) Export/Trading House Certificate; and (iii) Additional Licences to Export/Trading Houses, etc.
25. Chapter XXII pertains to import policy for registered exporters in Free Trade Zones/Export Processing Zones. Paragraph .324 therein prescribes that the industrial units, undertaking to export 100 per cent of their entire production can be set up in the Export Processing Zones (EPZs) and Free Trade Zones (FTZs).
26. The consequences flowing as a result of supplies from the Domestic Tariff Areas to units in the Zones are dealt with in paragraph 329 the relevant portion of which is couched in the following terms.
"329. Supplies from the Domestic Tariff Area to units in the Zones Bill be eligible for import replenishment licences in accordance with the import policy for Registered Exporters, provided:
(a).....
(b) the supplies have been made at international prices.
27. Chapter XX1I1 is relatable to import policy for 100% export oriented units. Supplies made by Domestic Tariff Area Units 100% Export Oriented Units are dealt with in paragraph 338 therein and the relevant portion for our present purpose reads thus:
338. Supplies of capital goods, raw materials components, material handling equipment such as fork lifts, overhead cranes, building construction materials, consumables and spares to 100 per cent Export Oriented Units shall be treated as 'Deemed Exports' and will be eligible for import replenishment licences in accordance with the Import Policy for Registered Exporters, provided :
(i) ........
(ii) the supplies have been made at Internationa) price.
28. From what has been extracted, as above, it is rather crystal clear that supplies from Domestic Tariff Area to Units in the Export Processing Zones, Free Trade Zones and 100 per cent Export Oriented Zones would come under 'deemed exports' only when such supplies had been effected at international prices, apart from satisfying the other conditions prescribed therefor. In the case on hand, admittedly as referred to earlier, supplies of steel had been effected either by Sail or Tisco to the Unit of the company at KFTZ at domestic price. In such a situation, to say that the supplies effected from the Domestic Tariff Area, namely, Sail and Tisco at domestic prices can by no stretch of imagination be stated to be 'deemed exports' so as to deprive the company of the benefit of reimbursement of the difference in prices by extension of IPRS cannot be contenanced.
29. Before dealing with the question as to whether equitable plea of promissory estoppel is capable of being invoked to the facts situation in the instant case, better it is, I think to state the taw on the subject, as propounded by the suprior Courts of jurisdiction. The pioneering decision on this subject is treace-able to the case of Central London Property Trust Limited v. High Trees House Limited (1947) 1 King's Bench Division 130 rendered by Denning J. Crisp facts of that case, if referred to, would enable one to understand the principle deduced therein, in the best of fashion possible and with that in view, the short facts therein may be stated thus:
(a) By a lease under seal dated September 24 1937, the plaintiff company let to the defendant company (a subsidiary of the plaintiffs) a block of flats for a term of ninety-nine years from September 29, 1937, at a ground rent of 2500 a year. In the early part of 1940, owing to war conditions then prevailing, only a few of the flats in the block were let to tenants and it became apparent that the defendants would be unable to pay the rent reserved by the lease out of the rents of the flats. Discussions took place between the directors of the two companies, which were closely connected and as a result on January 3, 1940, a letter was written by the plaintiffs to the defendants confirming that the ground rent of the premises would be reduced from 2,500' to 1,250', as from the beginning of the term. The defendants thereafter paid the reduced rent. By the beginning of 1945 all the flats were let out but the defendants continued to pay only the reduced rent. In September 1945 plaintiffs wrote to the defendants claiming that rent was payable at the rate of 2500' a year and, subsequently, in order to determine the legal position, they intiated friendly proceedings in which they claimed the difference between rent at the rates of 2500 and 1,250' for the quarters ending September 29 and December 25,1945. By their defence the defendants pleaded that the agreement for the reduction of the ground rent operated during the whole terms of the lease and, as alternatives, that the plaintiffs were estopped from demanding rent at the higher rate or had waived their right to do so down to the date of their letter of September 21, 1945.
(b) The King's Division Bench, in such circumstances, held.
(1) that where parties enter into an arrangement which is intended to create legal relations between and in pursuance of such arrangement, one party makes a promise to the other which he knows will be acted on and which is in fact acted on by the promises, the court will treat the promise as binding on the promisor to the extent that it will not allow him to act inconsistently with it even although the promise may not be supported by consideration in the strict sense and the effect of the arrangement made is to vary the terms of a contract under seal by one of less value; and (2) that the arrangement made between the plaintiffs and the defendants in January 1940, was one which fell within the above category and, accordingly, that the agreement for the reduction of the ground rent was binding on the plaintiff company, but that it only remained operative so long as the conditions giving rise to it continued to exist and that on their ceasing to do so in 1945 the plaintiffs were entitled to recover the ground rent claimed at the rate reserved by the lease.
30. A Bench of the Supreme Court consisting of P. N. Bhagwati, C.J. and R,S. Pathak and Amarendra Nath Sen, JJ. considered in a scintilating fashion the doctrine of of promissory estoppel, by review of earlier cases, in the case of Union of India v. Godfrey Philips India Ltd., and said thus in paragraphs 12 to 14.
"12...... the doctrine of promissory estoppel s applicable against the Government in the exercise of its governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel. We must concede that the subsequent decision of this Court in Jeet Ram v. State of Haryana takes a slightly different view and holds that the doctrine of promissory estoppel is not available against the exercise of executive functions of the State and the State cannot be prevented from exercising its functions under the law. This decision also expresses its disagreement with the observations made in Motilal Sugar Mills case that the doctrine of promissory estoppel cannot be defeated by invoking the defence of executive necessity, suggesting by necessary implication that the doctrine of executive necessity is available to the Government to escape its obligation under the doctrine of promissory estoppel. We find it difficult to understand how a Bench of two Judges in Jeet Ram's case could possibly overturn or disagree with what was said by another Bench of two Judges in Motilal Sugar Mills case. If the Bench of t wo Judges in Jeet Ram's case found themselves unable to agree with 'law laid down in Motilal Sugar Mills case', they could have referred Jeet Ram's case to a larger Bench, but we do not think it was right on their part to express their disagreement with the enunciation of the law by a co-ordinate Bench of the same Court in Motilal Sugar Mills.
13. We have carefully considered both the decisions in Motilal Sugar Mills case and Jeet' Rarn's case and we are clearly of the view that what has been laid down in Motilal Sugar Mills case represents the correct law in regard to the doctrine of promissory estoppel and we express our disagreement with the observations in Jeet Ram's case to the extent that they conflict with the statement of the law in Motilal Sugar Mills case and introduce reservations curring down the full width and amplitude of the propositions of law laid down in that case.
14. Of course we must make it clear, and that is also laid down in Motilal Sugar Mills case AIR 1978 SC 621 (supra), that there can be no promissory estoppel against the legislature in the exercise of the legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally-true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or premise which is contrary to law or which was outside the authority or power of the officer of, the Government or of the" public authority to make. We may also point out that the doctrine of promissory estoppel being un equitable doctrine, it must yield "when the equity so requires, if it can be shown by the government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the Court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it. This aspect has been dealt with fully in Motilal Sugar Mills case (supra) and we find ourselves wholly in agreement with what has. been said in that decision on this point.
31. The question whether in order to invoke the doctrine of promissory estoppel, it is necessary for the promisee to show that he suffered detriment as a result of acting in reliance on the promise came up for consideration in the case of Motilal Sugar Mills v. U. P. as upheld by the decisions referred to in the previous paragraphs, wherein a Bench consisting of P. N. Bhagwati, J. (as he then was) and V. D. Tulzapurkar, J. said thus (at page 695).
"......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 than 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 v. Great Builder Pty. Gold Mines Ltd.
"......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 acling. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the charge of position of the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion or 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, the party proceed 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 the original act or' failure to act a course of prejudice."
32. I may now turn to examine the facts of the instant case, in, the light of the exposition of the principle of promissory estoppel, as extracted above. There is no manner of doubt whatever that in the implementation of IPRS, there had been categorical commitment by way of representation by the first respondent, through the Working Group as well as the second respondent, to make good the loss incurred by the company by the free usage of indigenous steel, in fabrication of the components of the two bridges to be exported to Malaysia and installed therein. The company also acted an such representation, in the sense of the usage of indigenous steel, despite its higher price, than the price of such steel prevailing in the international market. As a consequence, the company incurred more expenditure than what they would have incurred by the use of imported steel for such purpose.
33. It is not as if the company acted on such representation for the first time. On an earlier occasion, such representation or promise, as made by the first respondent, through the Working Group and the second respondent, had been acted upon by the company, in compliance of a project undertaken at Nepal and the first respondent also duly honoured such commitment in reitnbursng the company under IPRS without any demur whatever. By such action of the first respondent on the previous occasion, the company was emboldened to act again on similar representation having been made, when it entered into fabrication of the components in indigenous steel for installation of two bridges in Malaysia, By acling on such representation, the company in fact incurred an expenditure to the tune of 1.60 crores more than what they would have incurred by the use of imported steel. The first respondent, in such a situation cannot be expected to resile from his earlier promise, in the facts and circumstations of the case.
34. There is nothing available in the records to point out that the representation so made by the first respondent is contrary to law. Further nothing transpires from the records pointing out that it would be inequitable to hold the first or second respondent to the promise or representation made by it, so that the Court would not raise an equity in favour of the company to "whom the promise or representation was made and enforce the promise or representation against first or second respondents. In elaboration, it may be stated that public interest did not at all suffer to any extent whatever by holding the first respondent to the promise or representation made by it, in the sense of honouring its commitment of reimbursement of the price difference to the company. As adverted to earlier, the usage of indigenous steel in the project undertaken by the company resulted in multifarious benefit to the economy of this country, not only by fostering and developing industrial growth, but also conserving and earning foreign exchange to such an extent, which could not be achieved, if the company had been permitted to freely import steel for the completion of the project. Therefore the first respondent has to be held liable to reimburse the company on the principle of acquitable promissory estoppel, provided the claims are in order and the Working Group and the second respondent, which were said to have made representation or promise to the company are, in the eye of law, to be construed as instrumentality of the State,
35. The next question that crops up for consideration therefore is whether the Working Group and the second respondent (EEPC) could be construed, in the eye of law, as instrumentality of the State, being the official organs of the first respondent. The project of the company as already indicated, had been monitored by the Working Group, in which a representative of the first respondent is also a member. It is only as per the advice tendered by the Working Group, indigernous steel had been utilised in his fabrication or manufacture of the components in execution of the foreign project undertaken by the company. The second respondent (EEPC) also expressed its approval for such usage of indigenous steel in such a project. The second respondent (EEPC) is admittedly controlled out and out by the first respondent. Funds at the disposal of the second respondent at for reimbursement purposes under the scheme has been made available by the first respondent. The funds so made available are subject to audit undertaken, at the instance of the agency of the first respondent. Thus the functioning of the second respondent (EEPC) as well as Working Group is directly under the control of the first respondent. In such circumstances, to say that those organs cannot at all be classified as an instrumentality or agency of the first respondent cannot at all be countenanced, in the circumstances of the case.
36. The view of mine thus expressed gets the sotified support from a decision of the Division Bench of this Court dated 1-3-1989 in W.A. Nos. 1570 to 1573 of 1988 and 191 to 196 of 1989 (EEPC and Asian Wire Ropes Etd.) and learned Judges constituting the Bench said in paragraph 29 thus:
"29. The last question which remains to be dealt with in W.A. Nos. 1570 to 1575 of 1982 is whether the appellants are authorities with-in the meaning of Art. 12 of the Constitution. Here we find no difficulty in holding that they are authorities within the meaning of Art. 12 for the following reasons:
The entire funds for the appellants in W.A. Nos. 1570to 1575 of 1989 are provided by the Union Government. The Union Government has power to nominate members to the working committee, which manages the affairs of the Council and even in the committee of administration, the Government has a power to nominate members. The accounts and books of the Council should be made available for inspection by officer duly authorised in this behalf by the Union Government. The budget prepared by the Committee for each year shall be supplied to the Working Committee and td the Union Government and no expenditure shall be incurred until the budget/ is sahetioned By the Working Committee after obtaining approved from the Government and the Government shall have power to give directions to the Council as to the performance of its functions in matters involving national security or substantial public interest and the Council will be bound to give effect to the same and the Government shall have power to call for such reports, return and other activities of the Council as may be required from time to time. Further the Engineering Export Promotion Council is nothing more than a disbursingauthority and the funds required for payment under the scheme are to be provided only by the Union of India. Therefore, the appellants in W.A. Nos. 1570 to 1575 of 1988 are clearly agencies or instrumentalities of the Central Government and are amenable to writ jurisdiction.
37. There can therefore be no doubt that the impugned letter is not sustainable in law and deserves to be quashed. As a consequence, the first respondent has to necessarily honour its commitment in reimbursing the company of its claims, duly supported by the entitlement certificate issued by the second respondent as required, for the difference in prices of steel between the domestic and international market.
38. Both the writ petitions are ordered accordingly. Rule Nisis issued shall be made absolute. There shall however, be no order as to costs, in the facts and circumstances of the case.
39. Order accordingly.