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1970 DIGILAW 236 (KER)

ERNAKULAM MILLS LTD. v. STATE OF KERALA

1970-11-03

K.K.MATHEW, P.T.RAMAN NAYAR

body1970
Judgment :- 1. The Ernakulam Mills Ltd., the petitioner, was the owner of 69-58 cents of land comprised in Sy. Nos. 1178/2,1195/2 and 1103/4 of Ernakulam village. The land was acquired in 1122 ME. (1947) for the formation of the Fore-shore Road, Ernakulam. The petitioner states that the land was high level land not required for the formation of the road and that the Dewan of Cochin on inspection of the spot was satisfied about the inequity of the acquisition. During the course of the.acquisition the Government of Cochin sent a communication to the petitioner, Ext. P1 dated 13 11947, apparently in reply to a letter sent by the petitioner on 10 11947, informing it that "portions of high level parambas not required for the Road, foot-paths or drains to be constructed will be returned to the present owners". On 3101957 the petitioner made a representation to the District Collector of Trichur for return of the land acquired from it in view of the assurance in Ext. P1. The Collector informed the petitioner that the matter was under consideration of government. When the Ernakulam District was formed the petitioner renewed its request to the Collector of Ernakulam to return the land to it on 3121945 and 12 61958, but the petitioner was informed by the original of Ext. P2 that the request can be considered only after the completion of the work of the Foreshore Road and directed it to renew the request in June 1960. The petitioner accordingly filed another application in June 1960, but getting no reply, the petitioner requested the government for reconveyance of the land to it. Government rejected the request. The petitioner then made an application to review the order. That was rejected by Ext. P3 order dated 10 111966. 2. The petitioner contends that the decision of the government not to reconvey the land to it is wrong and prays for a writ of mandamus or other appropriate writ or order directing the government to reconvey the land to it. The petitioner submits that the government was estopped by the representation in Ext. P1 from denying its right to get a reconveyance of the land, and that another plot of land acquired under similar circumstances was returned to its former owner on the basis of the representation in Ext. The petitioner submits that the government was estopped by the representation in Ext. P1 from denying its right to get a reconveyance of the land, and that another plot of land acquired under similar circumstances was returned to its former owner on the basis of the representation in Ext. P1, and therefore, the decision of the government not to return the land to the petitioner is discriminatory and offends Art.14 of the Constitution. 3. The petitioner submits that there was a promise in Ext. P1 to return the land to it, as the land acquired from it being high level paramba, was not required for the construction of the road, footpaths or drains etc, that on the faith of the promise it did not file an application for reference under S 17 of the Cochin Land Acquisition Act claiming enhanced compensation and has thus altered its position to its deriment. in that the compensation awarded was only Rs, 350/- to Rs. 450/- per cent, whereas the market value of the land in the locality was even then Rs. 1,000/- per cent, and it stood a good chance of getting compensation at the market value if it had applied for a reference. Counsel for the petitioner relied on the ruling of the Supreme Court in Union of India v. Anglo Afghan Agencies AIR. 1968 SC. 718 to support his argument. In that case the court said that government must honour its promise just like any other individual, and that a person, who acting upon the representation contained in the Export Promotion Scheme adumbrating the policy of government, makes an application for import licence of wool of a specified value, was entitled to have the licence issued to him notwithstanding the change of policy by the government in the meanwhile. The court said that where a person had acted upon a representation made in the Export Promotion Scheme that import licence upto the value of goods will be issued and has exported goods, his claim for import for the maximum value cannot be arbitrarily rejected, that the doctrine of equitable estoppel is applicable to government and that the claim of the respondents was appropriately founded upon the equity which arises in their favour as a result of the representation made on behalf of the Union of India in the Export Promotion Scheme, and the action taken by the respondents acting upon that representation under the belief that government would carry out the representation made by it. 4. The doctrine of promissory estoppel is by no means a new one although the name has been adopted only in comparatively recent years. According to this doctrine, an estoppel may arise from the making of a promise even though without consideration if it was intended that the promise should be relied upon and in fact was relied upon; and a refusal to enforce it would be virtually to sanction the perpetration of fraud and would result in other injustice. Although promissory estoppel is sometimes spoken of as a species of consideration or as a substitute or the equivalent of consideration, the basis of the doctrine is not so much one of contract with a substitute for consideration as an application of the general principle of estoppel, since the estoppel may arise although the changed position of the promisee was not in any way an inducement to the promise and was not regarded by the parties as any consideration therefore. See 'American Jurisprudence', 1st Edn., Vol. 19, 'Estoppel', page 657. 5. The doctrine of promissory estoppel, though traceable to the decision of the House of Lords in Hughes v. Metropolitan Rail Co., 1877- 2 AC. 439, was given its comprehensive modern shape by the decision of Denning L. J., in Central London Property Trust Ltd. v. High Trees House Ltd. 1947 KB. 130. In that case in September 1939, the plaintiffs there leased a block of flats to the defendants at a ground rent of £2,500 per annum. In January 1940, the plaintiffs agreed in writing to reduce the rent to £1250, plainly because of war conditions, which had caused many vacancies in the flats. 130. In that case in September 1939, the plaintiffs there leased a block of flats to the defendants at a ground rent of £2,500 per annum. In January 1940, the plaintiffs agreed in writing to reduce the rent to £1250, plainly because of war conditions, which had caused many vacancies in the flats. No express time limit was set for the operation of this reduction. From 1940 to 1945 the defendants paid the reduced rent. In 1945 the flats were again full, and the receiver of the plaintiff company then claimed the full rent both retrospectively and for the future. He tested his claim by suing for rent at the original rate for the last two quarters of 1945. Denning L.J., thought that there was no consideration for the plaintiff's promise to reduce the rent. It. 'therefore, the defendants had themselves sued upon the promise they must have failed. Their claim would have depended upon a contract of which one of the essential elements was missing. But where the promise was used merely as a defence the presence or absence of consideration was irrelevant. The defendants were not seeking to enforce a contract and therefore, they need not have one. It was decided by the House of Lords in Jorden v. Money 1854-5 H. L. Cas.185 that a representation as to the intention of a party cannot found an estoppel. But Denning L. J., said in High Trees case 1947 KB. 130 that "the law has not been standing still since Jorden v. Money. There has been a series of decisions over the last 50 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". In Lyle-Mellor v. A. Lewis & Co. 1956 I-All E.R. 247, Denning L. J., had occasion to consider the matter afresh, and he said: "I do not think it necessary to go into these refinements about law and fact. In such cases the courts have said that the promise must be honoured". In Lyle-Mellor v. A. Lewis & Co. 1956 I-All E.R. 247, Denning L. J., had occasion to consider the matter afresh, and he said: "I do not think it necessary to go into these refinements about law and fact. I am clearly of opinion that this assurance was binding, no matter whether it is regarded as a representation of law or of fact or a mixture of both, and no matter whether it concerns the present or the future. It may not be such as to give rise to an estoppel at common law, strictly so called, for that was confined to representations of existing fact; but we have gone far beyond the old common law estoppal now. We have reached a new estoppel which affects legal relations." In Emmanuel Ayedeji Ajyi (The Colony Carrier Co.) v. R. T. BriscoeLtd.1964-3 All E. R.556 HodsonL.J. said: "The principle, which has been described as quasi estoppel, and perhaps more aptly as promissory estoppel, is that when one party to a contract in the absence of fresh consideration agree not to enforce his rights, an equity will be raised in favour of the other party This equity is, however, subject to the qualification (a) that the other party has altered his position, (b) that the promisor can resile from his promise on giving reasonable notice, giving the promise a reasonable opportunity of resuming his position, and (e) the promise only becomes final and irrevocable if the promise cannot resume his position." The question immediately arises whether this new estoppel is limited to cases where the parties are already Bound contractually one to the other. The principle as stated by Lord Cairns L. C. is Hughes v. Metropolitan Rail Co.,1877-2 AC. 439 and by Bowen L. J., in Birmingham & District Land Co. v. London & North Western Rail Co., 1888-40 Ch. The principle as stated by Lord Cairns L. C. is Hughes v. Metropolitan Rail Co.,1877-2 AC. 439 and by Bowen L. J., in Birmingham & District Land Co. v. London & North Western Rail Co., 1888-40 Ch. D. 268 would limit the application of the doctrine to "persons who have contractual right against others induced by their conduct those against whom they have such rights to believe that such rights will either not be enforced or will be kept in suspense or abeyance for some particular time, those persons will not be allowed by a Court of Equity to enforce the rights until such time has elapsed, without at all events placing the parties in the same position as they were before". But the judgment of Denning L. J., in High Trees case 1947 KB. 130 contains no such limitation. The learned judge would have the principle restated as being that "a promise intended to be binding' intended to be acted upon, in fact acted upon, is binding so far as its terms properly apply". And the principle has been applied in several cases where there was no previous contractual rights between the parties, as in this case. 6. But the question still remains whether promissory estoppel can supply a cause of action. Whether common law estoppel can furnish a cause of action to a party who has none otherwise has been considered in several cases. Brett L.J. in Simm v. Anglo-American telegraph Co., 1879-5 QBD.188 said: "In my view estoppel has no effect upon the real nature of the transaction: it only creates a cause of action between the person in whose favour the estoppel exists and the person who is estopped". Eight years later Brett L. J., as Lord EsherM. R., said in Seton v. Lafone 1887 19 QBD. 68: "An estoppel does not in itself give a cause of action: it prevents a person from denying a certain state of facts." Bowen L. J., in Low v. Bouverie 1891-3 Ch. 82 at 106 summed it up in an oft-quoted dictum: "Estoppel is only a rule of evidence. You cannot found an action upon estoppel". In Dawsons Bk. v. N. M. K. K. Gap Trading Co.) AIR. 1935 PC. 79 Lord Russel of Killowen speaking for the Board said: "Estoppel is not a cause of action. 82 at 106 summed it up in an oft-quoted dictum: "Estoppel is only a rule of evidence. You cannot found an action upon estoppel". In Dawsons Bk. v. N. M. K. K. Gap Trading Co.) AIR. 1935 PC. 79 Lord Russel of Killowen speaking for the Board said: "Estoppel is not a cause of action. It may (if established) assist a plaintiff in enforcing a cause of action by preventing a defendant from denying the existence of some fact essential to establish a cause of action." In Canadian and Dominion Sugar Company Ltd. t. Canadian National (West Indies) Steampships Ltd. 1947 AC. 46, Lord Wright observed: "Estoppel is a complex legal notion, involving a combination of several essential elements, the statement to be acted on, action on the faith of it, resulting detriment to the actor. Estoppel is often described as a rule of evidence, as, indeed, it may be so described. But the whole concept is more correctly viewed as a substantive rule of law." In Combe v. Combe 1951-2 KB. 215 the question whether promissory estoppel can create a new cause of action was considered, and Denning L. J. said: "The principle stated in the High Trees case 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." Then he said that "it may be a part of a cause of action but not a cause of action itself". In the same case Birkett L. J. said that "the doctrine is to be used as a shield and not a sword". It would seem to be impossible to allow promissory estoppel to found a cause of action without completely deviating from our accepted ideas about the necessity of consideration in contract. Promissory estoppel deals with promises of a contractual nature although they are made without consideration, and to give a cause of action on promissory estoppel must be little less than to allow an action in contract where consideration is not shown. But in J. F. Perrott & Co. v. Cohen, 1950-2 All ER. Promissory estoppel deals with promises of a contractual nature although they are made without consideration, and to give a cause of action on promissory estoppel must be little less than to allow an action in contract where consideration is not shown. But in J. F. Perrott & Co. v. Cohen, 1950-2 All ER. 939 Denning L. J. observed: "I know that this looks like treating an estoppel almost as if it were a cause of action but it is habitually done in cases of waiver; see Charles Richard v. Oppenhaim; and I see no reason why do not do the same here." A learned writer has observed: "A representation of fact or intention if intended to be acted upon and acted upon is, it is submitted, actionable. If the representor cannot fulfil the representation, or if to fulfil it would be unjust in all the circumstances, compensation may (or should) be awarded. It is submitted that the action is dependent upon the representation without more, its basis and the whole content of the cause of action being the representation." (See'Estoppel as a Sword' by David Jackson in 81 Law Quarterly Review, page 223 at 247.) It would seem that in Anglo Afghan Agencies case AIR. 1968 SC. 718 the Supreme Court treated promissory estoppel as creating a cause of action possibly the estoppel was only used to establish the entitlement which was the true cause of action, but since there is no discussion on the point it is difficult to tell. We do not think it necessary for the purpose of this case to come to a conclusion whether the petitioner can rely on promissory estoppel as creating a cause of action and use it as a sword, as we think that this case can be disposed of on the short ground that there was really no representation or promise that the land acquired from the petitioner would be returned to it. Nor do we think that the petitioner, could have, as a reasonable person, acted upon the representation, such as it was, to alter its position in the manner alleged. 7. In order to found a plea of estoppel, the representation or promise must be specific and unqualified. The representation.in Ext. P1 reads: "The proposal to acquire all the lands in the area involved has been confirmed. 7. In order to found a plea of estoppel, the representation or promise must be specific and unqualified. The representation.in Ext. P1 reads: "The proposal to acquire all the lands in the area involved has been confirmed. But, portions of high level parambas not required for the road, foot-paths, drains, etc., to be constructed; are proposed to be returned to the present owners after the reclamation is over, after realising from them the compensation which will be paid to them for the acquisition of the land, inclusive of 15 per cent solatium and the proportionate cost of reclamation and any other items of expenditure which may have to be incurred in the course of the reclamation. This will not however apply to lands which Government consider, are marshy, or paddy fields or portions lying to the west of the road. The Dewan Peishkar has been instructed to inform the owners of high level parambas accordingly." In Low v. Bouverie,1891-3 Ch. 82 at 106 Bowen'.L.J. said.; "Now an estoppel, that is to say, the language upon which an estoppel is founded must be precise and unambiguous. That does not necessarily mean that the language must be such that it cannot possibly be open to different constructions, but that it must be such as will be reasonably understood in a particular sense by the person to whom it is addressed." (See the passage quoted with approval by Lord Writ in Canadian and Dominion, Sugar Company Ltd. v. Canadian National (West Indies) Steamships Ltd) Secondly, the representation or promise must be made with intention that it should be acted upon. In other words, the promise found in a promissory estoppel 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 upon. Ia this respect promissory estoppel resembles estoppel proper. While intention to affect legal relationship must be established, such an intention may be dedueed objectively, namely, it may be shown that the promisor in his own mind intended to affect legal relationship or that he voluntarily so conducted himself that he cannot be heard to say that he did not intend this to be the result. Lord Cran-worth L.C. in Jorden v. Money 1854-5HL. Lord Cran-worth L.C. in Jorden v. Money 1854-5HL. Cas.185 remarked that "if a party has unwittingly misled another, you must add that he has misled another under such circumstances that he had reasonable ground for supposing that the person whom he was misleading was to act upon what he was saying." We have quoted the relevant portion from Ext. P1 to show the nature of the representation made by the government. The government never represented to the petitioner that they will return the land acquired from it or that the land acquired from the petitioner was not necessary for the formation of the fore-shore road, foot-paths drains, etc. They only made a general statement that if it is found that any portion of high level paramba is not required for the formation of the road, foot-paths, drains, etc., such land will be returned to their present owners. Ext. P1 itself shows that it is a restatement of the contents of a general order passed by government for the information of the petitioner. The language of Ext.-P1 makes it clear that the government was not certain at the time that the land acquired from the petitioner would or would not be required for the purpose for which it was acquired. How can it be said then that the government intended the petitioner to act upon the representation in Ext. P1 as a specific promise to return the land to it? From Ext. P2 dated 9 21960 it would appear that the question of returning the land to the petitioner can arise only after completion of 'the work of the fore-shore area". All that the government said in Ext. P1 was that "portions of high level parambas not required for the road, foot-paths, drains, etc., to be constructed, are proposed to be returned to the present owners after the reclamation work is over". There was, therefore, no intention on the part of the government to create a legal obligation to the petitioner to return the land to it. There must have been an intention actual or presumed on the part of the government to induce the petitioner or a class of persons to which it belongs to act upon the representation as well as the fact that the petitioner did act upon it. There must have been an intention actual or presumed on the part of the government to induce the petitioner or a class of persons to which it belongs to act upon the representation as well as the fact that the petitioner did act upon it. This condition precedent to a successful estoppel has been stated and emphasised in several judgments and taken for granted in others, but in as much as in nearly every case where inducement has been found as a fact, or was so obvious as not to admit of dispute. The conduct on the part of the representor must be of such a nature as to induce a normal person in the circumstances of the particular case to act as the representee did. In other words, the representation must be shown to have been reasonably capable of influencing the petitioner to act as it did and not merely the percursor in point of time of its alteration of position. 8. It is stated by the petitioner that by reason of the promise in Ext. P1 it did not file an application for reference under S.17 of the Cochin Land Acquisition Act claiming enhanced compensation. The petitioner submits that the land was worth Rs. 1,000/-a cent in the locality, but that it was awarded only Rs. 350/-to 450/-a cent and that but for the promise given in Ext. P1, it would have applied for reference and obtained enhanced compensation. Forbearance to exercise the right to claim enhanced compensation would have been an alteration of the position of the petitioner to its detriment. But then the representation or promise must have been one reasonably capable of inducing the alteration of the position which the petitioner says was its actual consequence. It must have been of a nature and in that sense calculated, or of which the tendency or the natural or probable result is, to induce the petitioner in the circumstances of the case to alter its position in the manner alleged. We do not think that the statement in Ext. P1 was sufficiently definite or unambiguous that a reasonable person would have acted upon it in the manner in which the petitioner alleges it did. As there was no statement in Ext. We do not think that the statement in Ext. P1 was sufficiently definite or unambiguous that a reasonable person would have acted upon it in the manner in which the petitioner alleges it did. As there was no statement in Ext. P1 that the land of the petitioner would not be required for the formation of the road, foot-paths, drains, etc., we do not think that there could be any unconditional promise in Ext. P1 that the land will be returned to the petitioner on the basis of which, as a reasonable person, it could have altered its position by not claiming enhanced compensation. 9. The petitioner then contended that a similar land acquired from another person had been returned to him and that it is discriminatory if the petitioner is denied similar treatment. There is no constitutional guarantee of uniformity of judicial or executive decisions. The fact that a decision has been taken or made by government to return the land acquired from another person to him is not a ground for compelling the government to make the same decision in the petitioner's case, even if the facts and circumstances of both the cases might be similar. It might be that the decision to return the land in that case was wrong or gratuitous. Does Art.14 render it necessary to perpetuate the error or indulgence by its application in a similar case, for the reason that Art.14 requires equality of treatment before the law? We think not. In this case we are only concerned with the question whether there is any statutory duty or a duty arising out of estoppel on the part of the government to return the land to the petitioner, and whether a writ of mandamus can be issued to enforce that duty. If we find there is none, can a decision made by the Government to return the land acquired from another person, situate, let us assume, in similar circumstances, to him be a ground to prevent the disposal of this case in accordance with law? We think that no such argument can be countenanced. 10. If we find there is none, can a decision made by the Government to return the land acquired from another person, situate, let us assume, in similar circumstances, to him be a ground to prevent the disposal of this case in accordance with law? We think that no such argument can be countenanced. 10. The learned Advocate General submitted that the title to the land acquired from the petitioner vested in government absolutely and that it can be disposed of only under R.5 of the Rules made under the Cochin Land Acquisition Act which provides for disposal of land not required for the purpose for which it was acquired, or in the alternative, he submitted that if for any reason the rule is not available to the government, the land can be disposed of only under the provisions of the Kerala Land Assignment Act, Act 30 of 1960, as that Act provides for the exclusive mode for assignment of government lands, and therefore, the land cannot be returned to the petitioner on the basis of the promissory estoppel. He argued that when there is a statutory duty to dispose of the land in a particular mariner either under R.5 or under the provisions of the Kerala Land Assignment Act, there is no question of the government being estopped by a promise to return the land. He relied on the Full Bench ruling in O. P. Nos. 791, 986 and 996 of 1967 (1970 KLT. 838) in support of the contention. Although we see considerable force in the submission, we do not think it necessary to pronounce upon it in view of our conclusion that Ext. P1 does not contain a specific promise intended to be acted upon or which could have been acted upon by the petitioner as a reasonable person in the manner alleged by him. We dismiss the petition, but without any order as to costs. A. N. K. Dismissed.