Ganesh Prasad v. State of Bihar — 1981 DIGILAW 148 (PAT)

JUDGMENT : Umesh Chandra Sharma, J. 1. This is an application under Articles 226 and 227 of the Constitution of India. The prayer is for quashing the ORDER :contained in Annexure 3, by which the Additional Collector, Patna respondent no. 3) directed the Sub-divisional Officer, Dinapore (Respondent no. 4) to hold re-bid of Lodipur Janesut Downa Harason Jalkar (hereinafter to be called as "the Lodipur Jalkar"). Most of the relevant facts giving rise to the present application are undisputed. The Additional Collector, Patna by his letter dated 26.12.1978, directed the Deputy Collector, Incharge Land Reforms, Dinapore (hereinafter to be called as "the D.C.L.R") to make settlement of the Lodipur Jalkar for the year 1979-80, and fixed the reserved Jama at Rs. 6,545/-. It may be stated here that the Jalkar is in two parts, namely, the upstream which is the northern part and the southern part. The northern part is under the control of the Government in the Revenue Department and the southern part is controlled by Dinapur Cantonment Board and the two authorities make settlement of their parts of the Lodipur Jalkar every year. It is not in dispute that for year in question the southern part of the Jalkar was settled by the Cantonment Board in favour of Lallan Prasad Singh (respondent no. 6. The dispute in this case is with respect to the settlement of the northern part. 2. In obedience to the ORDER :of the Additional Collector as aforesaid the D.C.L.R., fixed 23.2.1979 as the date for settlement of the Lodipur Jalkar by open bid to be held at Anchal Office. This was widely published and on the date fixed, open bid was held in which the petitioner offered Rs. 7,001/-. His being the highest bid, the settlement was made in his favour subject to the approval of the competent authority. The petitioner deposited Rs. 400/- as the amount of security and Rs. 3500/- being 60 percent of the bid money. The records were submitted to the Additional Collector for approval of the bid. While the matter was pending before the Additional Collector, respondent no. 6 filed a petition praying that the settlement of the Jalkar should be made with him and offered to pay Rs. 10,500/-. He deposited 50 percent of the said amount as directed. The Additional Collector and the Collector, (respondent no. While the matter was pending before the Additional Collector, respondent no. 6 filed a petition praying that the settlement of the Jalkar should be made with him and offered to pay Rs. 10,500/-. He deposited 50 percent of the said amount as directed. The Additional Collector and the Collector, (respondent no. 3 and 2 respectively) directed the D.C.L.R. to hold a fresh bid after giving notice to all including the petitioner and respondent no. 6. Accordingly, the D.C.L.R. fixed 28.3.1979 as the date for holding re-bid and issued notices to the persons concerned. As scheduled the bid was held on 28.3.1979, but respondent no. 6 did not participate. The bid was knocked down in favour of the petitioner who offered Rs. 11,551/-. The petitioner was asked to deposit 50 per cent of the bid amount which he did. This was approved by the Collector (respondent no. 2). The petitioner was asked to execute agreement which was done on 4.4.1979. Parwana was issued in his favour on the same date. On 14.4.1979 respondent no. 6 again filed a petition before the Additional Collector, stating that he had no notice of the re-bid held on 28-3-1979. It appears that the matter was enquired into and it was found that no notice was served on respondent no. 6 before the re-bid was held. It was, therefore, ORDER :ed that the bid be held again. It was submitted that the ORDER :for holding the bid after Parwana was issued to the petitioner was arbitrary and the respondents State of Bihar and its officers were estopped from cancelling the settlement made with the petitioner and that the ORDER :be quashed or cancelled. 3. With the above prayer, the present writ application was filed in this court on 8-8-1979. By ORDER :dated 17-6-1979, this court directed that the auction, if any, may be held but no further steps should be taken. It was also stated that it would be open to tile petitioner to bid at the auction without prejudice to the right claimed in this writ petition. It was further ORDER :ed that the status quo in respect of possession shall be maintained in the meantime. The application was however, admitted on 5-9-1979. 4. A counter affidavit was filed on behalf of respondent nos. 1 to 5 on 28-8-1979. Respondent no. 6 also filed counter affidavit on 29-8-1979. It was further ORDER :ed that the status quo in respect of possession shall be maintained in the meantime. The application was however, admitted on 5-9-1979. 4. A counter affidavit was filed on behalf of respondent nos. 1 to 5 on 28-8-1979. Respondent no. 6 also filed counter affidavit on 29-8-1979. It was stated in paragraph 21 of the counter affidavit filed on behalf of respondent nos. 1 to 5 that in accordance with the ORDER :of the Collector, a re-bidding done on 29-8-1979 after giving general and separate notice to all concerned including the petitioner and respondent no. 6. In the said auction respondent no. 6 offered the highest amount, that is, Rs. 39,151/-. This fact was admitted by respondent no. 6 also in the counter-affidavit the matter stands at that as a result of the ORDER :of this court mentioned above. 5. Learned counsel appearing for the petitioner raised the only point in support of the application, namely that his client having deposited requisite amount of the bid, his settlement haying been approved by the competent authorities and Parwana having been issued in his favour, the ORDER :cancelling his bid and directing fresh bid was absolutely unjustified, inasmuch as, the respondents were bound by their promise by approving the settlement in his client's favour and that they were estopped from doing so on the principle of promissory estoppel. 6. Promissory estoppel is a part of the principle of equity. It arises out and on account of equity and ends in I equity. It has been said that where law ends equity begins. By its very nature, therefore, it can be called in aid where the justice of the case so requires. It follows that the doctrine of promissory estoppel will not apply to enforce contractual relations between the parties nor would it apply in the teeth of an obligation or liability imposed by law. "Promissory estoppel" has a chequered history. Its true scope and amplitude were almost lost in obscurity which was salvaged by the genius of the courts of justice. The cases of promissory estoppel found sporadic appearances at long intervals both in England and in India and the Courts were taking different views on different aspects of the applicability of the doctrine. Some of the courts took the view that promissory estoppel has a limited application by way of defence. The cases of promissory estoppel found sporadic appearances at long intervals both in England and in India and the Courts were taking different views on different aspects of the applicability of the doctrine. Some of the courts took the view that promissory estoppel has a limited application by way of defence. In some cases it was held that promissory estoppel cannot be applied against the Government and public bodies. In the case of (1) M.S. Motilal Padampat Sugar Mills Co. Ltd. Vs. The State of Uttar Pradesh and others (A.I.R. 1979 SC 621) Bhagwati, J. traced the evolution of this doctrine in ORDER :to appreciate its true scope and ambit because it had been the subject of a considerable recent development and is steadily expanding. After examining a series of English and American decisions as also the cases decided by the Indian Courts. His Lordships in his learned JUDGMENT : settled the law of promissory estoppel which may be summarised thus. ......The true principle of promissory estoppel seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or effect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is 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. The doctrine of promissory estoppel need not be inhibited by the same limitation as estoppel in the strict sense of the term. It is an equitable principle evolved by the courts for doing justice...... It follows that the doctrine of promissory estoppel can be invoked for the purpose of relieving a party from injustice, who acted upon the faith of the promise held out or representation made to him by the other party. In that case the other party shall be held bound by its promise or representation. It follows that the doctrine of promissory estoppel can be invoked for the purpose of relieving a party from injustice, who acted upon the faith of the promise held out or representation made to him by the other party. In that case the other party shall be held bound by its promise or representation. The promise shall be binding also on the Government as any other citizen notwithstanding that there is no consideration for the promise or that the promise not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is not necessary for the applicability of the doctrine that the promise should suffer any detriment. It is enough if one party by its words or conduct caused the other party to change its position. It can be used both as shield and sword. 7. In the background of the law as laid down, I may now proceed to examine the facts of the present case. It has been stated that the Government decided to settle the Lodipur Jalkar by auction for which a public notice was given. In pursuance of the said notice, the petitioner participated in the bid. His bid being the highest, it was knocked down in his favour but before it was approved by the competent authority, a second bid was ORDER :ed to be held. In that bid also the petitioner took part and offered the highest amount. His bid was approved by the competent authority and Parwana for settlement was issued in his favour. The effect of the approval was that the State Government and its officers bound themselves by the promise that the settlement shall be made in favour of the petitioner. But subsequently they cancelled the bid and ORDER :ed to hold another bid. On the facts as stated above, the petitioner would have been, perhaps, justified in relying on the doctrine of promissory estoppel, inasmuch as, the petitioner acted upon the promise and changed his position by investing money for the settlement on the faith of the assurance held out by the respondents first party that on fulfilment of the conditions of the auction, the settlement of the Jalkar would be made with him. 8. 8. But in ORDER :to appreciate the question of applicability of the doctrine to the facts and the circumstances of the present case the facts which emerged later or in the course of the proceeding cannot be lost sight of. Before doing so, I would like to say that in ORDER :to base one's claims on promissory estoppel one must state definitely and specifically that he acted on the faith of the promise or representation held out to him. In other words, he must make out a clear and proper case of promissory estoppel. In the light of the above proposition, the facts of the present case has to be examined. The petitioner stated certain facts which have been referred in the earlier paragraph. It was then stated in the writ petition that for the purpose of fishing, the petitioner constructed two Baliaries (Sic) consisting of bamboos, plecs rope, net, iron wires etc. and has spent about Rs. 15,000/- over the same. The accuracy of this fact has, however, been challenged by respondent no-6 in his counter affidavit. So, this is a disputed question of fact. Even as it is, it has not been clearly and specifically stated that relying on the representation of the Government, the petitioner had altered his position by investing a large sum of money. Instead, a quite vague and general statement was made. Apparently, therefore, no factual foundation for establishing the plea of promissory estoppel was laid in the writ application. 9. It is admitted on all hands that the auction held was not final unless it was approved by the competent authorities, namely, the Additional Collector or the Collector. The first bid which was knocked down in favour of the petitioner was not yet approved when respondent no. 6 filed a petition before the Collector and on his petition second bid was ORDER :ed to be held. In these circumstances, the petitioner possibly cannot challenge the validity of the ORDER :of the Collector ORDER :ing second bid. The ORDER :already stated that the notice of the re-bid shall be given to respondent no. 6. It appears from the records that a notice was issued to respondent no. 6. The petitioner submits that respondent no. 6 did not participate in the second bid inspite of service of notice on him. This is countered by respondent no. The ORDER :already stated that the notice of the re-bid shall be given to respondent no. 6. It appears from the records that a notice was issued to respondent no. 6. The petitioner submits that respondent no. 6 did not participate in the second bid inspite of service of notice on him. This is countered by respondent no. 6 who asserts that no notice was served on him and complained that although he was assured that the auction shall be held after giving him notice, it was held without giving him notice. To the same effect he filed a petition before the Collector and the Collector got an enquiry made into the matter of service of notice on respondent no. 6 by an Executive Magistrate. The Magistrate after enquiry reported that no notice was served on respondent no. 6, instead, it was served on Mahadeo Singh. The petitioner submitted that Mahadeo Singh was the man of Respondent no. 6 and hence it would be deemed to have been served on respondent no. 6. Respondent no. 6 flatly denied this assertion of the petitioner and it was found in the enquiry that Mahadeo Singh was not the man of the family of respondent no. 6. On the basis of the report, the Collector ORDER :ed that a fresh bid should be held. The bid was, accordingly, held and it was knocked down in favour of respondent no. 6 for a sum of Rs. 39,151/-. It would appear from the facts stated above that respondent no. 6 had offered to take part in the bid and as a matter of fact he had deposited half the amount to the tune of Rs. 5000/- and odd on the assurance of the Collector that he would be given notice of the bid, but as found, the bid was held without giving him notice and thus he was deprived of the chance of taking part in the bid. In these circumstances it may well be said that there was some kind of equity in favour of respondent no. 6 also. Thus both the parties are claiming equity in their favour. In this state of clash of equity the authorities had to take decision one way or the other. In these circumstances it may well be said that there was some kind of equity in favour of respondent no. 6 also. Thus both the parties are claiming equity in their favour. In this state of clash of equity the authorities had to take decision one way or the other. If on the facts and in the circumstances as obtained in the case, the competent authority decided to hold re-bid in presence of all the persons concerned including the petitioner and respondent no. 6. I do not think it took absolutely an untenable or unreasonable view. As a result of the fresh bid, the petitioner was not going to suffer, because both parties were allowed to take part in the bid. In these circumstances I do not think the petitioner can invoke the doctrine of promissory estoppel and the Government cannot be held bound by the promise. In the view I have taken. I am fortified by the following observations of Bhagwati, J. in the case referred to above-- **But since the doctrine of promissory estoppel is inequitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have subsequently transpired it would be inequitable to hold the Government to the promise made by it the court would not raise an equity in favour of the promisee and before the promise against the Government. The doctrine of promissory estoppel would be displaced in such a case because on the facts equity would not require that the Government should be held bound by the promise made by it. 10. While considering the facts of the present case, it seems to be necessary to notice a Bench decision of this court in the case of (2) Kusheshwar Singh Vs. The State of Bihar and others (A.I.R. 1974 Pat 267). That was also a case of auction where the petitioner's bid was the highest. He deposited requisite amount and the Collector issued a provisional Parwana of settlement and the petitioner was put in possession. Thereafter the settlement was made in favour of respondent no. 3 of that case by the Revenue. Department. In these, circumstances, it was held that the government was not exempt from liability arising out of representations made by it relying upon which a citizen has altered his position to his prejudice. Thereafter the settlement was made in favour of respondent no. 3 of that case by the Revenue. Department. In these, circumstances, it was held that the government was not exempt from liability arising out of representations made by it relying upon which a citizen has altered his position to his prejudice. That case, however, is not an authority for the prosecution that the doctrine of promissory, estoppel would apply even in the case where the government or its officers had acted fairly and in a judicious manner. In that case the petitioner offered the highest bid which was accepted and provisional Parwana was issued in his favour. He had taken possession and had invested huge amount and without any apparent reason and without notice to the petitioner, in an arbitrary manner, the Government in the Revenue Department ORDER :ed settlement in favour of respondent no. 3. Obviously, the equity was in favour of the petitioner in that case who had acted on the faith of the promise made by the government and there was absolutely no equity in favour of respondent no. 3. The ORDER :of the Government was absolutely arbitrary in making settlement in favour of respondent no. 3 in that case. But in the present case the position is quite different. Here the promise was made to respondent no. 6 to give him notice, but without notice having been served on him, the bid was held although on the assurance of the authority he had deposited certain amount. The petitioner's bid was not arbitrarily cancelled, rather he was given a chance to participate in the bid. There is no question of any arbitrary ORDER :by the Government in this case nor is there any question of prejudice having been caused to the petitioner. On consideration of all the facts and the circumstances of this case and the law on the subject I am not satisfied that the petitioner is entitled to rely on the doctrine of promissory estoppel. The application is, accordingly, dismissed, but in the circumstances of the case, there will be no ORDER :as to costs. Learned counsel for the petitioner in course of his argument submitted that in case the settlement is not made in his favour, the amount deposited by him should be refunded to his client. This seems to be quite reasonable and none of the parties objected to it. Learned counsel for the petitioner in course of his argument submitted that in case the settlement is not made in his favour, the amount deposited by him should be refunded to his client. This seems to be quite reasonable and none of the parties objected to it. It appears from the record that the petitioner deposited Rs. 400/- as security money and Rs. 5,770/- as 50 percent of the bid amount, total being Rs. 6,176/- Respondent nos. 1 to 5 are directed to refund Rs. 6,176/- to the petitioner within one month from today. Respondent no. 6 it is stated has deposited 50 per cent of the bid amount of Rs. 39,151/-. Learned counsel appearing for respondent no. 6 agreed to deposit a further sum of Rs. 10,000/-. He is directed to deposit a sum of Rs. 10,000/- with the competent authority within one month from today positively, failing which the bid knocked down in his favour shall stand cancelled. Uday Sinha, J. I agree.