Madras High Court
P. Arunodhayam And K. Kanniammal vs Secretary To Government, Revenue ... on 9 April, 2008
Author: N. Paul Vasanthakumar
Bench: N. Paul Vasanthakumar
ORDER N. Paul Vasanthakumar, J.
1. By consent of both parties, the writ petition is taken up for final disposal.
2. Prayer in the writ petition is to quash the resolution of the second respondent dated 21.7.2004 and the consequential order dated 30.5.2005 with a further direction to the second respondent to convey the land measuring 9 grounds and 1062 sq.ft. in S. No. 56/2, 57/2, 60/1 and 59/2, Villivakkam Village, Purasawalkam-Perambur Taluk to and in favour of the petitioners by receiving consideration at the rate of Rs. 6.11 lakhs per ground as per the assurance given by the respondents 1 to 4 and confirmed in resolution No. 4.04 dated 1.3.2001 passed by the second respondent and G.O.Ms. No. 49, dated 10.2.2004 issued by the first respondent within the stipulated time.
3. The facts necessary for disposal of the writ petition are as follows:
(a) The petitioners are owners of the lands comprised in S.Nos.57/1B and 58/2, Villivakkam Village, Purasawalkam-Perambur Taluk, Block No. 32, presently T.S.O.91/2. The adjoining lands comprised in S.Nos.56/2, 57/2, 60/1 and 59/2 of the said village is owned by the Tamil Nadu Housing Board and 'Otteri-Nulla Canal' is running on the southern side of the petitioner's land. The boundaries of the petitioner's land on all the three sides viz., east, south and west are occupied by the said canal. The said canal is a very narow canal running in a curved manner through the Tamil Nadu Housing Board residential colony, adjoining Villivakkam village, Purasawalkam-Perambur Taluk in Annanagar West, Chennai.
(b) Since the canal is running in a curved manner, water flow would be blocked very often and the entire Vasantham residential colony, Annanagar, gets inundated during rainy season, which causes serious health hazards and inconvenience to the residents. In view of the above, the residential welfare association of the Annanagar west, who is the 5th respondent herein submitted representation to the first respondent and to the Tamil Nadu Housing Board and sought for to straighten the said Otteri-Nullur Canal.
(c) When the said proposal was considered the authorities of the respondents took a decision to dig the Otteri-Nulla canal through the lands of the petitioner for straightening the same with condition that if the petitioners hand over their lands of 5 grounds and 213 sq.ft. in favour of the respondent authorities to dig the canal, in lieu of the same the Tamil Nadu Housing Board is prepared to transfer the lands owned by it, now occupied by the canal to and in favour of the petitioners.
(d) Several rounds of negotiations were conducted by the authorities of the respondents with the office bearers of the 5th respondent association and consequently on the basis of the request, the petitioners agreed for the proposal taking note of the interest of the general public, subject to the condition that they are willing to hand over the petitioners' lands measuring 5 grounds 213 sq.ft. in favour of the respondents, the respondents would transfer the land owned by the second respondent now occupied by the Otteri-Nulla Canal in favour of the petitioners.
(e) Petitioners were under the impression that since they are handing over well developed 5 grounds and 213 sq.ft of patta land free of cost, they would be getting more than 9 grounds of land in exchange on payment of costs. Since the said lands are low lying ditch, the petitioners agreed for the said proposal as it would be beneficial to the petitioners as well as to the residents of the said locality as well as the second respondent. The respondent authorities required the petitioners to pay the cost of the alternative land to be transferred by the TNHB at the rate of Rs. 6.11 lakhs per ground.
(f) The said proposal was agreed by the Tamil Nadu Housing Board and the petitioners. The Housing Board took the consent of the petitioners in writing in Rs. 10/- Stamp Papers, agreeing to pay the cost at the rate of Rs. 6.11 lakhs per ground and accept for transfer of land owned by it, now occupied by the canal, in favour of the petitioners on handing over of 5 grounds and 213 sq.ft of their lands, free of cost. The said facts are confirmed by the communication dated 14.8.2000 sent by the respondents 2, 3 and 4. According to the petitioners in view of the clear understanding reached, respondents took possession of 5 grounds and 213 sq.ft. of patta lands belonging to the petitioners on 25.9.2001 free of cost and letter for handing over possession was also obtained from the petitioners by the respondents 2 to 4.
(g) Petitioner further states that the respondents 2 to 4 should have taken immediate steps to transfer the lands now occupied by the canal, to the petitioners on receiving the cost of Rs. 6.11 lakhs per ground and it is contended in the affidavit that the petitioners have also agreed to straighten the canal by digging the canal through their land at their cost estimated at Rs. 7 lakhs, on the premise that the soil to be excavated can be used to fill up the present canal. The authorities of the second respondent delayed the issue by stating that Government Order has to be issued by the first respondent approving the handing over of 5 grounds and 213 sq.ft of land by the petitioners to the Government and thereafter only they could proceed with the formalities of transferring alternative land of 9 grounds and 1062 sq.ft.
(h) The matter was placed before the TNHB in its meeting and a resolution was passed bearing resolution No. 4.04 on 1.3.2001. In the said meeting it was resolved to collect Rs. 6.11 lakhs per ground from the petitioners and transfer 9 grounds and 1062 sq.ft of land in consideration of the petitioners handing over of their patta lands measuring 5 grounds and 213 sq.ft. free of cost for public cause. After passing the said resolution only petitioner's land was taken possession by the respondents 1 to 4 on 25.9.2001.
(i) Petitioner's were waiting with a hope that the second respondent will receive the consideration of Rs. 6.11 lakhs per ground and transfer the alternative land measuring 9 grounds and 1062 sq.ft in their favour as agreed. However, the matter was delayed by the respondents by one way or the other. Government issued G.O.Ms. No. 49, Revenue Department, dated 10.2.2004, approving the handing over of lands and all revenue records were also changed to the effect that 5 grounds and 213 sq.ft. are Government lands.
(j) The petitioners made representation on 3.3.2004 and requested the respondents to transfer the land of 9 grounds and 1062 st.ft. by receiving the cost of Rs. 6.11 lakhs per ground as per resolution of the TNHB dated 1.3.2001. However, no order was passed. Hence the petitioner filed w.P. No. 11428 of 2005 before this Court and prayed for issuing a writ of mandamus directing respondents to transfer the land as per the resolution 4.04 dated 1.3.2001 at the rate offered by the second respondent as it existed in 2001. On 6.4.2005 the said writ petition was disposed of by this Court by giving a direction to the second respondent authorities to consider the representation of the petitioners in the light of the earlier proceedings and even after disposal of the writ petition, petitioner approached the second respondent and requested for transfer of alternate lands by receiving the cost at the rate of Rs. 6.11 lakhs per ground. However, second respondent passed the impugned order rejecting the representation of the petitioners on the ground that the cost of the alternate land would be Rs. 31.44 lakhs per ground.
(k) It is further stated in the order that the Housing Board by its resolution No. 6.03 dated 21.7.2004 approved the price fixed by the Pricing Committee at Rs. 31.44 lakhs for the alternate land to be conveyed to the petitioners and therefore the request of the petitioners cannot be considered. It is further stated in the order that the handing over of 5 grounds and 213 sq.ft. of land of the petitioners to the Government has to be treated as relinquishment.
(l) Petitioner submitted an appeal to the first respondent on 21.6.2005 and requested the first respondent to pass necessary orders for conveying alternative land of 9 grounds 1062 sq.ft as per the earlier agreed rate of Rs. 6.11 lakhs per ground. However, no action has been taken by the first respondent. Hence the petitioners have filed this writ petition challenging the order of second respondent dated 30.5.2005 on the ground that the Housing Board having passed resolution agreeing to transfer 9 grounds 1062 sq.ft. at the rate of 6.11 lakhs per ground through resolution No. 4.04 dated 1.3.2001 and the respondents having agreed for the said conveyance, cancellation of the said resolution on 21.4.2004 through resolution No. 6.03 and enhancing the cost at the rate of Rs. 31.44 lakhs per ground is arbitrary and illegal.
(m) According to the petitioners, the said cancellation is in contravention of the specific agreement between the petitioners and second respondent and therefore the second respondent is estopped from passing the impugned order. The second respondent being party to the proceeding, cannot ignore the promise made to the petitioners and on the basis of the assurance given to the petitioners, petitioners have parted with their lands measuring 5 grounds and 213 sq.ft. free of cost and treating the said parting of the land as relinquishment shows arbitrariness and unreasonable attitude shown in this matter by the respondents 1 to 4. The Government also issued G.O.Ms. No. 49 Revenue Department dated 10.2.2004 on the basis of the resolution passed by the Housing Board and the said resolution having been acted upon and approved by the Government, the Housing Board is not entitled to cancel the same and consequently fixing Rs. 31.44 lakhs towards cost per ground and the impugned action of the respondents 1 to 4 is unreasonable and it is hit by the principles of promissory estoppel and violative of the legitimate expectation of the petitioners apart from estoppel by conduct. The readiness and willingness of the petitioners were already informed and therefore any delay in not transferring the land in favour of the petitioner's cannot be put against the petitioners and the respondents having taken away petitioner's land on the basis of the promise and now the promise having been breached, petitioner's right guaranteed under Article 300A of the Constitution is violated.
4. The second and third respondents filed counter affidavit, wherein passing of resolution No. 4.04 dated 1.3.2001 is admitted. The handing over of the petitioners' land for an extent of 5 grounds and 213 sq.ft in favour of the Housing Board and subsequently in favour of the Public Works Department and the change of revenue records are also admitted. The only contention in the counter affidavit is that after issuance of G.O.Ms. No. 49 dated 10.2.2004, the Pricing Committee of the Tamil Nadu Housing Board based on the guideline value of the land as on 31.3.2004 fixed the price of the said land at Rs. 31.44 lakhs per ground and therefore for 9.44 grounds, the petitioners have to pay approximately Rs. 2.96 crore and the said price fixation by the Pricing Committee was confirmed by the Housing Board in its resolution dated 21.7.2004. The delay in not transferring the land in favour of the petitioners have been narrated by stating administrative reasons. Ultimately it is stated in the counter affidavit that the Tamil Nadu Housing Board has not given any written assurance to convey alternate lands earlier and if the petitioners are willing to pay the guideline value as fixed by the Pricing Committee, they can get the 9.44 grounds transferred in their name.
5. The 5th respondent, which is the Residents Association, at whose instance the proposal was mooted to straighten the canal has filed counter affidavit. Supporting the contention of the petitioners. It is further stated that the 5th respondent Association is ready and willing to bear the expenses for straightening the canal and the respondent department only delayed the project and even now the 5th respondent is willing and ready to pay the actual cost for straightening the canal, but till date no steps are taken by the respondents 1 to 4 to straighten the canal, which shows their indifferent attitude and the residents association are put to great hardships during every rainy season. It is further stated that the said residents are residing in their premises allotted by the TNHB and therefore the Housing Board is duty bound to safeguard the interest of the allotees from the hardships due to the floods and the Housing Board cannot go back from the proposal. In paragraph 7 it is further reiterated that the association is always ready and willing to meet the expenses that may be required for straightening the Otteri-Nulla Canal through lands handed over by the writ petitioners and meet the actual expenses or even executing work by engaging independent contractor at their cost.
6. The learned Counsel for the petitioners submitted that the respondents having made a promise, passed resolution, invited the consent of the petitioners, and the petitioners having given their consent and the resolution having been acted upon by transferring the land free of cost to the Housing Board and revenue records were also changed in the name of Public Works Department, the respondents 1 to 4 are not justified in breaching the said promise. The learned Counsel further added that in the year 2001, the market value was assessed at Rs. 6.11 lakhs per ground and the petitioners gave their readiness and willingness to pay the said amount. Merely because the respondents delayed conveyance, they are not entitled to demand the market rate as of 2004 and even assuming that the respondents have got any right, they can demand only simple interest for the sum of Rs. 6.11 lakhs per ground from October, 2001. The learned Counsel further submitted that the action of the second respondent in unilaterally cancelling the earlier value fixed at the rate of Rs. 6.11 lakhs per ground and revising the rate at Rs. 31.44 lakhs per ground is arbitrary and unreasonable and the respondents 1 to 4 are estopped from changing their stand as the petitioners have believed the solemn assurance given by them, handed over their 5 grounds and 213 sq.ft. of lands free of cost and as such the petitioners have altered their position to their disadvantage on the basis of the promise and it is clear case of promissory estoppel.
7. The learned Counsel further submitted that the matter was again reviewed by the second respondent during the pendency of this writ petition in July, 2006, by placing the entire matter before the Pricing Committee to consider the whole issue. After an elaborate deliberation, the Committee felt that the amount per ground may be fixed at Rs. 11,80,000/- per ground for the year 2006-2007 and when the matter was placed before the second respondent Board by resolution No. 6.09 dated 20.7.2007, it was resolved to get legal opinion and place the matter before the next meeting and legal opinion was also granted in favour of the petitioners in March, 2007 stating that the claim of the petitioners is to be accepted as the delay is due to administrative reasons and usually contract goes on the date of contract and not on the concluding date, however the second respondent, without giving any reason, has rejected the suggestions made by the Pricing Committee as well as the legal opinion given and reiterated its earlier resolution by resolution No. 6.10, dated 10.3.2007. The learned Counsel relying on the subsequent development also prayed for allowing the writ petition.
8. The learned Additional Advocate General as well as the learned Counsel for respondents 2 to 4 on the other hand submitted that the petitioners have no vested right to demand the transfer of 9 grounds and 1062 sq.ft of Housing Board land at the rate of Rs. 6.11 lakhs and the petitioners are bound to pay the market rate as fixed by the Pricing Committee at Rs. 31.44 lakhs per ground and the subsequent Pricing Committee recommendations as well as the Legal opinion will not give any right to the petitioners as the Board is the ultimate authority to decide the issue.
9. The learned Counsel for the 5th respondent submitted that the respondents 2 to 4 cannot go back from their promise of straightening the canal and they are willing to pay the actual cost, if the work is executed. The delay in not conveying 9 grounds 1062 sq.ft. in favour of the petitioners cannot be a reason to delay the straightening the canal, as the Housing Board which allotted the plots in which the members of the 5th respondent association are residing, is duty bound to straighten the canal to avoid flooding during rainy season.
10. I have considered the rival submissions made by the learned Counsel for the petitioner as well as respondents.
11. The points for consideration in this writ petition is whether the petitioners have got any right to claim transfer of 9 grounds and 1062 sq.ft of land at the rate of Rs. 6.11 lakhs per ground on the plea of promissory estoppel or whether they are bound to pay Rs. 31.44 lakhs per ground as demanded in the impugned order and whether this writ petition is maintainable.
12. The facts in this case are not in dispute. The 5th respondent Association, for the benefit of its members, who are allottees of the Tamil Nadu Housing Board, submitted a representation on 26.7.1999 before the respondents for straightening 'Otteri-Nulla Canal' by approaching the petitioners, who are the adjacent land owners. Pursuant to the same, the Superintending Engineer (PWD), Palar Drinking Water Scheme, Chepauk, Chennai-5, sent a reply to the said association on 14.6.2000 stating that during negotiation with the petitioners, they expressed their willingness to hand over the land free of cost to the Housing Board, provided the Housing Board is willing to transfer its 9 grounds and 1062 sq.ft of lands at the rate of Rs. 6.11 lakhs and the petitioners were directed to give option to accept the said proposal before the Tamil Nadu Housing Board. The petitioners also expressed their willingness by submitting declaration in stamp papers on 9.8.2000 stating that they are agreeable for the handing over of their land as well as for the purchase of the Housing Board's land in their favour at the rate of Rs. 6.11 lakhs per ground. Thereafter the matter was placed before the TNHB by the Managing Director on 22.2.2001 for taking a decision as to whether for straightening the canal, petitioners lands can be taken to the Housing Board and 9 grounds and 1062 sq.ft of lands of the Housing Board can be sold to the petitioners at the rate of Rs. 6.11 lakhs per ground.
13. The Housing Board in its meeting held on 1.3.2001 resolved to accept the said proposal by accepting exchange of land offered by the petitioners as per law and thereafter the canal is to be straightened and the lands of the Housing Board can be sold to the petitioners as per the market value, after receiving the entire sale consideration from the petitioners. It is also not in dispute that pursuant to the said resolution of the TNHB, for straightening the canal lands in S.Nos.57/1B and 58/2, owned by the petitioners, were measured and an extend of 5 grounds and 213 sq.ft. was handed over to the Tamil Nadu Housing Board for handing it over to the Public Works Department and the land was handed over to PWD and the Tahsildar, Purasawalkam-Perambur, took possession on 25.9.2001. The same is made clear from the communication of the Assistant Executive Engineer, PWD, Chennai, addressed to the Executive Engineer, TNHB, Chennai-40, through letter No. K32/2/Exe.Engg/2001, dated 27.1.2002.
14. After handing over the lands as stated supra, the petitioners submitted a representation on 19.11.2001 to the third respondent and stated that they are willing to pay the amount to the Tamil Nadu Housing Board as agreed at the rate of Rs. 6.11 lakhs per ground for the transfer of 9 grounds and 1062 sq.ft. and if there is any delay, petitioners are not liable to pay any interest for the belated payment. Therefore, petitioners' readiness and willingness to pay the value of the land and transfer the same without any further delay is also established beyond doubt. The said representation was received by the third respondent on 19.11.2001 itself. However, no action was taken by the respondents 1 to 4 for transferring the said lands to the petitioners as agreed due to administrative delay.
15. The first respondent through G.O.Ms. No. 49, Revenue Department, dated 10.2.2004 ordered the change of revenue records pursuant to the grant of land by the petitioners to PWD by treating the lands given by the petitioners as gift. It is further stated in paragraph 5 of the Government order that the Managing Director, Tamil Nadu Housing Board, is directed to take up the issue of sale of the lands to the parties at cost separately. Thereafter the Housing Board placed the matter of transfer of land before the Pricing Committee in its meeting held on 16.7.2004. The Pricing Committee considered the issue and fixed the price of the land to be conveyed to the petitioners at the rate of Rs. 31.44 lakhs per ground and the total cost of the land was arrived at Rs. 2,96,87,220/- as on 31.3.2004.
16. Petitioners submitted representation dated 23.8.2004 for transferring the land as promised already at the rate of Rs. 6.11 lakhs per ground, followed with reminder dated 3.5.2005 and no action having been taken, petitioners filed W.P. No. 11428 of 2005 and prayed for issuing a writ of mandamus directing the respondents to transfer the land measuring 9 grounds and 1062 sq.ft as per the resolution No. 4.04 passed by the Housing Board dated 1.3.2001 at the rate offered by the second respondent as existed on 25.9.2001, when the respondents took possession of petitioner's lands. This Court by order dated 6.4.2005 directed the second respondent to consider the representation of the petitioner in the light of G.O.Ms. No. 49 passed by the first respondent, within eight weeks.
17. Thereafter, the second respondent passed the impugned order dated 30.5.2005 stating that the land given by the petitioners is to be treated as free of cost to the Government and the Revenue Department has already taken over the land and the same is to be treated as relinquishment. The Pricing Committee, based on the guideline value as on 31.3.2004, fixed the price of 9.1062 grounds at Rs. 2,96,87,220/- at the rate of Rs. 31.44 lakhs per ground. The said price fixed by the Pricing Committee was confirmed by the TNHB in its resolution No. 6.03 dated 21.7.2004 and therefore petitioners were directed to pay the prevailing rate of Rs. 31.44 lakhs per ground. The representation to sell the land at Rs. 6.11 lakhs per ground was also rejected.
18. As rightly contended by the learned Counsel for the petitioners, during the pendency of this writ petition, the issue with regard to fixing of cost of the lands to be conveyed to the petitioners was placed before the Pricing Committee at the instance of the TNHB, which was submitted its recommendations on 5.6.2006. The relevant portion of the recommendation of the Pricing Committee reads as follows:
The Pricing Committee has recommended to fix the land cost as Rs. 6,11,000/- per ground of Ruling Rate of 2000-2001 as per the Board's Resolution No. 4.04, dated 1.3.2001 as agreed by the Board and as per the owner's undertaking in stamped paper value of Rs. 10/- to give his lands to Government as gift for forming the canal, if the Tamil Nadu Housing Board allots the canal land at the rate of Rs. 6,11,000/- per ground. Subsequently in Resolution No. 6.03, dated 21.7.04, the Board had fixed Rs. 31,44,000/- per ground based on the revised Pricing Policy adopting Market value or Guideline value, whichever is higher. Since the owners of the gift land has already given to the same as gift and handed over to the Tahsildar, Purasawalkam for realignment of canal of Otteri Nullah based on the representation of residents of Vasantham Colony and the same has also been agreed by the P.W.D., the Committee recommends to collect the ruling rate of Rs. 6,11,000/- with compound interest from 4/01 to till date of remittance of the amount at the ruling rate of interest by withdrawing the Board's Resolution No. 6.03, dated 21.7.2004. After adding the compound interest, the rate worked out to Rs. 11,88,000/- per ground for the year 2006-2007.
It is also on record that after the said Pricing Committee recommendation the matter was again placed before the TNHB and by resolution No. 6.09, dated 20.7.2006, the Board resolved to get the legal opinion and place it before the next meeting for approval.
19. It appears, the Legal Advisor of TNHB also opined that the delay in transfer of land is due to administrative reasons and usually contract goes on the date of contract and not on the concluding date and the petitioners case is having merits. However, the Board by its resolution No. 6.10, dated 10.3.2007 by a single line order rejected the Pricing Committee recommendations as well as legal opinion without assigning any reason. The said details are available in page Nos.15 to 18 of the Typed set of papers filed by the respondents 1 to 4.
20. It is also not in dispute that the petitioners were given a promise by the second respondent to sell 9.1062 grounds for handing over their lands to an extent of 5.213 grounds and the price for the transfer of land was also fixed at the then prevailing market rate of Rs.6.11 lakhs per ground, it is also not in dispute that Housing Board is now demanding higher rate of Rs. 31.44 lakhs per ground.
21. It is an admitted fact that on the promise made by the respondents, petitioners have parted with their lands to the first respondent free of cost, which was also taken over by the PWD by treating it as gift/relinquishment of the rights of the petitioners. Admittedly the said land was given by the petitioners free of cost in September, 2001, on an assurance given to the petitioners that 9.1062 grounds will be given to the petitioners by way of sale at the rate of Rs. 6.11 lakhs per ground. It is not the case of the respondents that the petitioners were not willing to pay the said amount as agreed immediately. The delay in not transferring the lands in favour of the petitioners is on the part of the TNHB. The administrative delay on the part of the Housing Board as well as the first respondent cannot be put against the petitioners to fix the current market rate. The petitioner's rights were crystalised on the date when they gave their land free of cost to the Housing Board, which has happened in September, 2001.
22. Whether the petitioners are entitled to press into service the principle of 'Promissory Estoppel' in a case like this and whether the writ petition is maintainable for enforcing similar right was considered by the Supreme Court in the decision Gujarat State Financial Corpn. v. Lotus Hotels (P) Ltd.,. In paragraphs 9, 10 and 13, the Supreme Court held as follows:
9. It was next contended that the dispute between the parties is in the realm of contract and even if there was a concluded contract between the parties about grant and acceptance of loan, the failure of the Corporation to carry out its part of the obligation may amount to breach of contract for which a remedy lies elsewhere but a writ of mandamus cannot be issued compelling the Corporation to specifically perform the contract. It is too late in the day to contend that the instrumentality of the State which would be "other authority" under Article 12 of the Constitution can commit breach of a solemn undertaking on which other side has acted and then contend that the party suffering by the breach of contract may sue for damages but cannot compel specific performance of the contract. It was not disputed and in fairness to Mr.Bhatt, it must be said that he did not dispute that the Corporation which is set up under Section 3 of the State Financial Corporation Act, 1955 is an instrumentality of the State and would be "other authority" under Article 12 of the Constitution. By its letter of offer dated July 24, 1978 and the subsequent agreement dated February 1, 1979 the appellant entered into a solemn agreement in performance of its statutory duty to advance the loan of Rs. 30 lakhs to the respondent. Acting on the solemn undertaking, the respondent proceeded to undertake and execute the project of setting up a 4-star hotel at Baroda. The agreement to advance the loan was entered into in performance of the statutory duty cast on the Corporation by the statute under which it was created and set up. On its solemn promise evidenced by the aforementioned two documents, the respondent incurred expenses, suffered liabilities to set up a hotel. Presumably, if the loan was not forthcoming, the respondent may not have undertaken such a huge project. Acting on the promise of the appellant evidenced by documents, the respondent proceeded to suffer further liabilities to implement and execute the project. In the back drop of this incontrovertible fact situation, the principle of promissory estoppel would come into play. In Motilal Padampat Sugar Mills Co. (P) Ltd. v. State of U.P. this Court observed as under : SCC para 8, p. 425 : SCC (Tax) p. 160 The true principle of promissory estoppel, therefore, seems to be that where one party has by his words of 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 of whether there is any pre-existing relationship between the parties or not.
10. Thus the principle of promissory estoppel would certainly estop the Corporation from backing out of its obligation arising from a solemn promise made by it to the respondent.
11. ...
12. ...
13. Now if appellant entered into a solemn contract in discharge and performance of its statutory duty and the respondent acted upon it, the statutory corporation cannot be allowed to act arbitrarily so as to cause harm and injury, flowing from its unreasonable conduct, to the respondent. In such a situation, the court is not powerless from holding the appellant to its promise and it can be enforced by a writ of mandamus directing it to perform its statutory duty. A petition under Article 226 of the Constitution would certainly lie to direct performance of a statutory duty by "other authority" as envisaged by Article 12.
23. The question of promissory estoppel was again considered by the Supreme Court in the decision State of H.P. v. Ganesh Wood Products and in paragraph 55 held thus,
55. ...What does altering the position mean? Does it mean such a change in the position of the promisee (as a result of acting on the faith of representation of the promisor) that compensating him in money would not be just and equitable to him, i.e., a situation where the ends of justice and requirements of equity demand that the promisor should not be allowed to go back on his representation and must be held to it or does altering his position mean doing of some act, big or small, which the promisee does acting on the faith of the representation which he would not have done but for the representation? In other words, is it enough that the promisee has spent some money or has taken some step acting on the basis of representation, which can be recompensed in money or otherwise? Is it not ultimately a matter of doing equity and justice between the parties - a case of holding the scales even between the parties and deciding whether in the interests of justice and equity the promisor can be allowed to resile from his promise and compensate the promisee appropriately or the promisor ought to be held to his promise and not allowed to go back since such a course is necessary in view of the change in position of promisee? Our view of the matter is probably evident from the way we have posed the above questions. To wit, the rule of promissory estoppel being an equitable doctrine, has to be moulded to suit the particular situation. It is not a hard and fast rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. If it is more just from the point of view of both promisor and promisee that the latter is compensated appropriately and allow the promisor to go back on his promise, that should be done; but if the Court is of the opinion that the interests of justice and equity demand that the promisor should not be allowed to resile from his representation in the facts and circumstances of that case, it will do so. This, in our respectful opinion, is the proper way of understanding the words "promisee altering his position". Altering his position should mean such alteration in the position of the promisee as it makes it appear to the Court that holding the promisor to his representation is necessary to do justice between the parties. The doctrine should not be reduced to a rule of thumb. Being an equitable doctrine it should be kept elastic enough in the hands of the Court to do complete justice between the parties. Now, can the doctrine of promissory estoppel be put on a higher pedestal than the written contract between the parties? Take a case where there is a contract between the parties containing the very same terms as are found in the 'approval' granted by IPARA (Sub-Committee) and then the Government resiles from the contract and terminates the contract. The promisee will then have to file a suit for specific performance of the contract in which case the court will decide, having regard to the facts and circumstances of the case and the provisions of the Specific Relief Act, whether the plaintiff should be granted specific performance of the contract or only a decree for damages for breach of contract. It must be remembered that the doctrine of promissory estoppel was evolved to protect a promisee who acts on the faith of a promise/ representation made by promisor and alters his position even though there is no consideration for the promise and even though the promise is not recorded in the form of a formal contract. Surely, a representation made or undertaking given in a formal contract is as good as, if not better than, a mere representation. All that we wish to emphasise is that anything and everything done by the promisee on the faith of the representation does not necessarily amount to altering his position so as to preclude the promisor from resiling from his representation. If the equity demands that the promisor is allowed to resile and the promisee is compensated appropriately, that ought to be done. If, however, equity demands, in the light of the things done by the promisee on the faith of the representation, that the promisor should be precluded from resiling and that he should be held fast to his representation, that should be done. To repeat, it is a matter of holding the scales even between the parties - to do justice between them. This is the equity implicit in the doctrine.
24. To what extent Judicial review is permissible and at what extend the facts of the case can be scrutinised to find out the decision making process as correct or not is considered by the Supreme Court in the decision State of U.P. v. Johri Mal and in paragraph 30 it is held as follows,
30. It is well settled that while exercising the power of judicial review the court is more concerned with the decision-making process than the merit of the decision itself. In doing so, it is often argued by the defender of an impugned decision that the court is not competent to exercise its power when there are serious disputed questions of facts; when the decision of the Tribunal or the decision of the fact-finding body or the arbitrator is given finality by the statute which governs a given situation or which, by nature of the activity the decision-maker's opinion on facts is final. But while examining and scrutinising the decision-making process it becomes inevitable to also appreciate the facts of a given case as otherwise the decision cannot be tested under the grounds of illegality, irrationality or procedural impropriety. How far the court of judicial review can reappreciate the findings of facts depends on the ground of judicial review. For example, if a decision is challenged as irrational, it would be well-nigh impossible to record a finding whether a decision is rational or irrational without first evaluating the facts of the case and coming to a plausible conclusion and then testing the decision of the authority on the touchstone of the tests laid down by the court with special reference to a given case. This position is well settled in the Indian administrative law. Therefore, to a limited extent of scrutinising the decision-making process, it is always open to the court to review the evaluation of facts by the decision-maker.
25. Similar issue of promissory estoppel was considered by a Division Bench of this Court in the decision S.Manickam v. Secretary to Government, Industries Department in which I was also a party. In the said case, it was held that when the employees of Government Company was transferred compulsorily to a Joint Venture concern with an assurance of protection of service conditions without any disadvantage, on closure of the new concern and retransfer of its assets, the employees are also entitled to get re-absorption in the Government Company on the principle of promissory estoppel. In paragraph 15, following the Supreme Court decisions, it is held as follows,
15. Our finding is also based on the decisions of the Honourable Supreme Court dealing with promissory estoppel.
(i) In the decision Century Spg. and Mfg. Co. Ltd. v. Ulhasnagar Municipal Council at paragraphs 11 and 12, the Honourable Supreme Court dealt with the principle of promissory estoppel as follows,
11. 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 contracts by a person who acts upon the promise: when the law requires that a contract enforceable at law against a public body shall be in certain form or be executed in the manner prescribed by statute, the obligation may if the contract be not in that form be enforced against it in appropriate cases in equity. In Union of India v. Indo-Afghan Agencies Ltd. this Court held 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. This Court held that the following observations made by Denning, J., in Robertson v. Minister of Pensions applied in India:
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.
We are in this case not concerned to deal with the question whether Denning, L.J., was right in extending the rule to a different class of cases as in Falmouth Boat Construction Co. Ltd. v. Howell, where he observed at p. 542:
Whenever Government officers in their dealings with a subject take on themselves to assume authority in a matter with which the subject is concerned, he is entitled to rely on their having the authority which they assume. He does not know, and cannot be expected to know, the limits of their authority, and he ought not to suffer if they exceed it.
It may be sufficient to observe that in appeal from that judgment Howell v. Falmouth Boat Construction Co. Ltd. Lord Simonds observed after referring to the observations of Denning, L.J.:
The illegality of an act is the same whether the action 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 force of a statutory prohibition is affected by the fact that it had been induced by a misleading assumption of authority. In my opinion the answer is clearly: No.
12. 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.
(ii) Same is the view expressed in the decision reported in (1979) 4 SCC 409 Motilal Padampat Sugar Mill Co. Ltd v. State of U.P. wherein the Honourable Supreme Court held that the doctrine of promissory estoppel is not really based on the principle of estoppel, but it is a doctrine evolved by equity in order to prevent injustice and it can be the basis of a cause of action.
26. The Tamil Nadu Housing Board, the second respondent herein, is created by the State of Tamil Nadu under Section 3 of the Tamil Nadu Housing Board Act, 1961, and it is fully owned by the Government of Tamil Nadu. It is an instrumentality under Article 12 of the Constitution of India. The breach of promise made by the second respondent can be questioned before this Court under Article 12 of the Constitution of India., particularly when the facts are not in dispute.
27. In this case the negotiation between the petitioner with 2nd respondent, the factum of agreeing to handover 5 grounds and 213 sq.ft. free of cost by the petitioners to the first respondent for straightening the canal and second respondent's willingness to sell 9 grounds and 1062 sq.ft to the petitioners at the rate of Rs. 6.11 lakhs per ground and the consequential handing over of the petitioners' lands to the first respondent in September 2001, petitioners' readiness and willingness to pay the cost immediately and the delay occurred due to administrative reasons, etc., are fully established. The Pricing committee of the second respondent in July, 2006 also found that the second respondent is bound to transfer the lands to the petitioners with interest at the rate of Rs. 6.11 lakhs as agreed and the matter was again placed before the Board. The second respondent without assigning any reason rejected the same and the said action of the second respondent is unreasonable, irrational and violative of fairness in action as it fails to take the relevant issues for its consideration. Since the second respondent is having a pre-determined mind in the matter in issue, no purpose will be served in remanding the matter to the second respondent for reconsideration.
28. In the light of the above decisions of the Supreme Court and of this Court and in view of the admitted facts in this case, I hold that the impugned order passed by the Second respondent demanding Rs. 31.44 lakhs per ground from the petitioners is unsustainable and the second respondent can demand only simple interest for the price already fixed at the rate of Rs. 6.11 lakhs per ground as the petitioners proved beyond doubt that they were always ready and willing to pay the said price at all times.
29. In fine, the writ petition is ordered in the following terms:
(a) The second respondent is directed to implement the decision already arrived at in Resolution No. 4.04 dated 1.3.2001, to sell the lands to the petitioners an extend of 9 grounds and 1062 sq.ft in S.Nos.56/2, 57/2, 60/1 and 59/2 of Villivakkam Village, Purasawalkam-Perambur Taluk, at the rate of Rs. 6.11 lakhs with simple interest at the rate of 9% per annum from October, 2001, till the date of payment and execute the sale deed within a period of eight weeks from the date of receipt of copy of this order.
(b) On execution of the sale deed as directed above, the petitioners are directed to straighten the Otteri-Nulla canal as agreed earlier, which is stated in paragraph 3 of their affidavit filed in support of this writ petition, within six months from the date of transfer of the above said lands in favour of the petitioners.
(c) There will be no order as to costs. Connected miscellaneous petitions are closed.