K. Parthasarathy v. Member Secretary, Chennai Metropolitan Development Authority, Chennai & Another
2009-09-17
K.VENKATARAMAN
body2009
DigiLaw.ai
Judgment : This writ petition is filed challenging the notification of the first respondent published in “Dinakaran” newspaper dated 17. 2009 informing the petitioner about the cancellation of auction scheduled to be held on 1. 2009 at Koyambedu Wholesale Market Complex, Chennai. 2. The grievance of the petitioner in nutshell are set out here under: 1. The second respondent had published a notification dated 1. 2009 in leading newspapers inviting applications for allotment of shops of various sizes, scheduled to be held on 24. 2009 at 11.00 a.m. at Koyambedu Wholesale Market Complex, Chennai. Pursuant to the said notification, the petitioner applied for a shop in question and paid 20% of E.M.I., and Rs. 1,000/- towards registration fees. Though the drawl of lots was fixed on 24. 2009, later it was postponed to 5. 2009. Though it was stated that the postponement was initiated in view of the General Election for Lok Sabha, even after the election, the auction was not conducted. The petitioner made numerous enquiries about the same. While so, the first respondent, vide notification dated 17. 2009, informed that allotment of shops is cancelled due to administrative reasons and the initial deposit amount as well as registration fees would be returned to the applicants by way of demand draft. Challenging the said proceedings, the petitioner has approached this Court by filing the present writ petition. 3. Additional affidavit was filed on behalf of the petitioner wherein the following facts have been set out: 1. The petitioner was made to believe to participate in the auction process. The respondents have neither reserved their right to cancel the notification or to modify the terms for conducting the drawl of lots either in the notification or in the application. In the absence of such an indication, the cancellation of the drawl of lots is absolutely arbitrary and consequently, the same is unsustainable. 2. The respondents cannot now change their policy to the detriment of the petitioner, that too, for administrative reasons. The respondents are estopped from changing the existing policy to some other policy. The petitioner although have no legal right, but could base their right on the basis of legitimate expectations which have been approved by the Hon’ble Apex Court as well as this Court. 3.
The respondents are estopped from changing the existing policy to some other policy. The petitioner although have no legal right, but could base their right on the basis of legitimate expectations which have been approved by the Hon’ble Apex Court as well as this Court. 3. He has invested huge amount with the second respondent for initial deposit of 20% of the total value of the shop, without any rhyme or reason, the same cannot be cancelled. 4. Counter affidavit was filed on behalf of the second respondent wherein the following facts have been set out: 1. The drawl of lot scheduled to be held on 6. 2009 was cancelled and it was also informed to the applicants that 20% of the initial deposit amount and the registration fees would be returned to them. It was decided to revise the policy in such a way that the allotment of shops in Vegetables, Fruits and Flower Markets may be allotted based on type of shops in all blocks, instead of calling applications shops number-wise. By this system, all the shops can be allotted through drawl of lot. In the present system, there is a chance for declining the allotment by some successful applicants. It will lead to forfeiting of the initial deposit, which will avoid unhealthy practice of declining the shops after allotment. 2. It was decided to allot the shops in the market to the wholesale traders in Chennai Metropolitan Area instead of calling applications from all the general public because the market is meant only for wholesale traders in perishable goods. Further, it was decided to introduce one shop to one family to provide equal opportunity to everyone. 3. The petitioner have absolutely no locus standi to question the policy decision of the respondents since the same is done in the interest of public and to discourage speculative business. The Hon’ble Apex Court held that the power of judicial review in contractual matters is very limited and only in rare circumstances, such interference could be made. Thus, the counter affidavit sought for the dismissal of the writ petition. 5. I have heard Mr. Su. Srinivasan, the learned counsel for the petitioner and Mr. C. Kathiravan, the learned counsel appearing for the C.M.D.A. 6. The first and foremost submission that has to be considered is, whether the writ petition is maintainable in contractual matters? 7.
Thus, the counter affidavit sought for the dismissal of the writ petition. 5. I have heard Mr. Su. Srinivasan, the learned counsel for the petitioner and Mr. C. Kathiravan, the learned counsel appearing for the C.M.D.A. 6. The first and foremost submission that has to be considered is, whether the writ petition is maintainable in contractual matters? 7. Learned counsel appearing for the petitioner vehemently contended that judicial review is possible in contractual matters also, where there is violation of principles of natural justice and there exists an arbitrary act on the part of the respondents and that it is trained with mala fide. 8. However, it is contended by the learned counsel appearing for the Chennai Metropolitan Development Authority that judicial power in contractual matters is very very limited and that the Court shall not interfere with such mattes, that too, exercising the power under Article 226 of the Constitution of India. 9. Before deciding the said issue, it will be useful to rely on the decisions of the Hon’ble Apex Court as well as this Court. 1. In Noble Resources Ltd., v. State of Orissa and Another, (2006) 10 SCC 236 Their Lordships have held that even in contractual matters, the power of judicial review is vested to prevent arbitrariness and favouritism. Paragraphs 15, 19, 27, 28 and 29 are usefully extracted here under” “15. It is trite that if an action on the part of the State is violative of the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the Court’s scrutiny would be more intrusive, in the latter the Court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter. 19.
While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter. 19. On a conspectus of several decisions, a Division Bench of this Court in ABL International Ltd. opined that such a writ petition would be maintainable even if it involves some disputed questions of fact. It was stated that no decision lays down an absolute rule that in all cases involving disputed questions of fact, the party should be relegated to a civil Court. 27. Contractual matters are, thus, not beyond the realm of judicial review. Its application may, however, be limited. 28. Although the terms of the invitation to tender may not be open to judicial scrutiny, but the Courts can scrutinise the award of contract by the Government or its agencies in exercise of their power of judicial review to prevent arbitrariness or favouritism. (See Directorate of Education v. Educomp Datamatics Ltd.) However, the Court may refuse to exercise its jurisdiction, if it does not involve any public interest. 29. Although the scope of judicial review or the development of law in this filed has been noticed hereinbefore particularly in the light of the decision of this Court in ABL International Ltd. each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise the power of judicial review. In a case where a public law element is involved, judicial review may be permissible. (See Binny Ltd., v. V. Sadasivan and G.B. Mahajan v. Jalgaon Municipal council.)” 2. In Reliance Energy Ltd. v. Maharashtra State Road Development Corpn. Ltd., (2007) 8 SCC 1 , the same view was taken by the Hon’ble Apex Court. Paragraph 36 of the said judgment is extracted here under: “36. We find merit in this civil appeal. Standards applied by Courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of “nondiscrimination.” However, it is not a free-standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution.
Standards applied by Courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of “nondiscrimination.” However, it is not a free-standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to “right to life.” It includes “opportunity.” In our view, as held in the latest judgment of the Constitution Bench of nine Judges in I.R. Coelho v. State of T.N., Articles 21/14 are the hearth of the chapter on fundamental rights. They cover various aspects of life. “Level playing field” is an important concept while construing Article 19 (1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of “level playing field.” We may clarify that this doctrine is, however, subject to public interest. In the world of globalization, competition is an important factor to be kept in mine. The doctrine of “level playing field” is an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equally placed competitors are allowed to bid so as to subserve the larger public interest. “Globalisation”, in essence, is liberalization of trade. Today India has dismantled licence raj. The economic reforms introduced after 1992 have brought in the concept of “globalisation.” Decisions are acts which result in unequal and discriminatory treatment, would violate the doctrine of “level playing field” embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of “equality” should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of “level plying field.” According to LORD GOLDSMITH, commitment to the “rule of law” is the heart of parliamentary democracy. One of the important elements of the “rule of law” is legal certainty.
There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of “level plying field.” According to LORD GOLDSMITH, commitment to the “rule of law” is the heart of parliamentary democracy. One of the important elements of the “rule of law” is legal certainty. Article 14 applies to government policies and if the policy or act of the Government, even in contractual matters, fails to satisfy the test of “reasonableness”, then such an act or decision would be unconstitutional.” 3. In Tata Cellular v. Union of India, (1996) SCC 11 at paragraphs 93 and 94, Their Lordships have laid certain guidelines while interfering with the contractual matters and the same are extracted here under: “93. The duty of the Court is to confine itself to the question of legality. Its concern should be 1. Whether a decision making authority exceeded its power? 2. committed an error of law? 3. committed a breach of the rules of natural justice? 4. reached a decision which no reasonable Tribunal would have reached or 5. abused its power. 94. Therefore it is not for the Court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fait. It is only concerned with the manner in which those decisions have been taken. The extend of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality: This means the decision maker must understand correctly the law that regulates his decision making power and must give effect to it. (ii) Irrationality, namely, Wednesbury and reasonableness. (iii) Procedural impropriety.” 4. In Ramana v. I.A. Authority of India, AIR 1979 SC 1628 , the Hon’ble Apex Court has held that the State cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but it must be in conformity with some principles which meets the test of reasons and relevance. It shall satisfy Article 14 of The Constitution of India. Paragraphs 20 and 21 of the said judgment are usefully extracted here under: “20.
It shall satisfy Article 14 of The Constitution of India. Paragraphs 20 and 21 of the said judgment are usefully extracted here under: “20. Now, obviously where a corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as Government. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such corporation is dealing with the public whether by way of giving jobs or entering into contracts or otherwise, and it cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevance. 21. This rule also flows directly from the doctrine of equality embodied in Art 14. It is now well settled as a result of the decisions of this Court In. E.P. Royappa v. State of Tamil Nadu AIR 1974 SC 555 : (1974) 2 SCR 348 and Maneka Gandhi v. Union of India AIR 1978 SC 597 : (1978) 1 SCC 248 that Article 14 strikes at arbitrariness in State action and ensures fairness and equality or treatment It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is nondiscriminatory; it must not be guided by any extraneous or Irrelevant consideration, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness is projected by Article 14 and it must characterize every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and non-discriminatory. This principle was recognised and applied by a Bench of this court presided over by RAY, C.J., in Erusian Equipment and Chemicals Ltd. v. State of West Bengal AIR 1975 SC 266 (supra) where the learned Chief Justice pointed out that ‘the State can carry on executive function by making a law or without making a law.
This principle was recognised and applied by a Bench of this court presided over by RAY, C.J., in Erusian Equipment and Chemicals Ltd. v. State of West Bengal AIR 1975 SC 266 (supra) where the learned Chief Justice pointed out that ‘the State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of black-listing – A citizen has a right to claim equal treatment to enter into a contract which may be proper, necessary and essential to his lawful calling – It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods. It must, therefore follow as a necessary corollary from the principle of equality enshrined in Article 14 that though the State is entitled to refuse to enter into relationship with any one, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and non-discrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and non-discriminatory ground.” 10. The above judgments make it very clear that in exercising power under Article 226 of the Constitution of India, Courts can interfere with contractual matters also, if there is violation of Article 14 of the Constitution of India, if the action is arbitrary and that it is tainted with mala file.
The above judgments make it very clear that in exercising power under Article 226 of the Constitution of India, Courts can interfere with contractual matters also, if there is violation of Article 14 of the Constitution of India, if the action is arbitrary and that it is tainted with mala file. In view of the present stand taken by the petitioner that cancellation of the auction was made with an ulterior motive, it is arbitrary and violative of Article 14 of the Constitution of India, I am of the considered view that this Court is not powerless to interfere with the contractual matters exercising power under Article 226 of the Constitution of India. I am also conscious that the judicial review has to be exercised sparingly. Considering the grounds taken in the present writ petition, I am of the considered view that this writ petition is maintainable. 11. The second question that arises for consideration is, whether the respondents vest with the power to cancel the auction held earlier and return the initial deposit made as well as the registration fees in order to conduct the auction afresh, changing the policy regarding allotment of shops at C.M.D.A. 1. Learned counsel appearing for the petitioner strenuously contended that the petitioner has participated in the auction held on 1. 2009 and he has also deposited 20% of the value of the shop plus the registration charges. According to the learned counsel, the right of the petitioner emerges on the basis of the legitimate expectations. The doctrine of legitimate expectations, if applied, the respondents are estopped from bringing out a fresh auction changing the existing policy to new policy. 2. On the other hand, learned counsel appearing for the Chennai Metropolitan Development Authority submitted that the petitioner have no legal right to question the re-auction, that too, on introduction of new policy. Learned counsel further submitted that the new policy and the reason thereof have been put in the form of a counter affidavit in the present writ petition. Further, it is contended on behalf of the respondents that this Court shall not interfere with the policy decision on the Government. 3. I have considered the submissions made by the learned counsel appearing for the petitioner as well as learned counsel appearing for the respondents/CMDA.
Further, it is contended on behalf of the respondents that this Court shall not interfere with the policy decision on the Government. 3. I have considered the submissions made by the learned counsel appearing for the petitioner as well as learned counsel appearing for the respondents/CMDA. The learned counsel appearing for the petitioner contended that although the petitioner has no legal right but he can base his right on the basis of legitimate expectations which has been approved by this Court as well as the Hon’ble Apex Court in several decisions. Therefore, according to the learned counsel appearing for the petitioner, the respondents are estopped from retracting their proposal of conducting the drawl of lots. In this connection, the learned counsel appearing for the petitioner relied on the decision in Confederation of Ex-Servicemen Association and Others v. Union of India AIR 2006 SC 2945 . The learned counsel appearing for the petitioner emphasized on Para 33 to 35 which is usefully extracted here under: “33. We are also not impressed by the argument that all medical benefits and facilities must be provided to ex-servicemen under the doctrine of ‘legitimate expectation’. The doctrine of ‘legitimate expectation’ is a ‘latest recruit’ to a long list of concepts fashioned by Courts for review of administrative actions. No doubt, the doctrine has an important place in the development of Administrative Law and particularly law relating to judicial review’. Under the said doctrine, a person may have reasonable or legitimate expectation of being treated in a certain way by an administrative authority even though he has no right in law to receive the benefit. In such situation, if a decision is taken by an administrative authority adversely affecting his interest, he may have justifiable grievance in the light of the fact of continuous receipt of the benefit, legitimate expectation to receive the benefit of privilege which he has enjoyed ail through out. Such expectation may arise either from the express promise or from consistent practice which the applicant may reasonably expect to continue. 34. The expression ‘legitimate expectation’ appears to have been originated by LORD DENNING, M.R. In the leading decision of Schmidt v. Secretary of State, ((1969) 1 All ER904 : (1969) 2 WLR 337 : (1969) 2 Ch D 149).
Such expectation may arise either from the express promise or from consistent practice which the applicant may reasonably expect to continue. 34. The expression ‘legitimate expectation’ appears to have been originated by LORD DENNING, M.R. In the leading decision of Schmidt v. Secretary of State, ((1969) 1 All ER904 : (1969) 2 WLR 337 : (1969) 2 Ch D 149). In Attorney General of Hong Kong v. Ng Yuen Shiu, (1993) 2 All ER 346 : (1983) 2 AC 629), LORD FRASER referring to Schmidt v. Secretary of State started: “The expectations may be based on some statement or undertaking by, or on behalf of, the public authority which has the duty of making the decision, if the authority has, through its officers, acted in a way that would make it unfair or inconsistent with good administration for him to denied such an inquiry. (emphasis supplied) 35. In such cases, therefore, the Court may not insist an administrative authority to act judicially but may still insist it to act fairly. The doctrine is based on the principle that good administration demands observance of reasonableness and where it has adopted a particular practice for a long time even in absence of a provision of law, it should adhere to such practice without depriving its citizens of the benefit enjoyed or privilege exercised.” 4. That is the case where the ex-servicemen claimed medical benefits on par with the Government Servants. It is contended that, refusal to extend similar medical benefits to ex defence personnel is arbitrary, discriminatory, unreasonable and violative of Article 14, 16, 19 and 21 of the Constitution. While, dealing with the said issue, the Hon’ble Apex Court had opined that the doctrine of ‘Legitimate Expectation’ has an important place in the development of administrative law and particularly the law related to the judicial review. however, the Hon’ble Apex Court while considering the issue raise by the petitioner there on namely ex-service men had held that in that instant case doctrine of legitimate expectation has no application. 5. Coming to the case on hand, any person who takes part in the auction may expect that he or she will be successful bidder. There cannot be any “legitimate expectation” on mere participation in the tender. Unless, he or she is a successful bidder and was awarded a contract or an allotment is made as per tender.
5. Coming to the case on hand, any person who takes part in the auction may expect that he or she will be successful bidder. There cannot be any “legitimate expectation” on mere participation in the tender. Unless, he or she is a successful bidder and was awarded a contract or an allotment is made as per tender. In the case on hand, the petitioner was one of the person who participated in the tender for allotment of a shop in CMDA. A mere participation alone will not cloth him any right or that he or she cannot be heard to say that his or her participation in the tender alone had given legitimate expectation. Thus, I am of the considered view that the said judgment may not be of any use to the petitioner. 6. The next decision that was relied on by the learned counsel appearing for the petitioner is Chandra Prakash Tiwari and Others v. Shakuntala Shukla and Others AIR 2002 SC 2322 . That is the case where it pertains to the promotion of police officers from Sub-Inspector to Inspector in the State of U.P. in 1997 for vacancies for the period between 1992 and 1996. The selection process came to scrutiny before the High Court and later to the Hon’ble Apex Court. Para 30 of the said judgment which was emphasized by the learned counsel for the petitioner is usefully extracted here under: “30. Significantly, on a brief reference to factual matric interviews were held under 1965 Order which had participants without demur or protest and the judgment impugned itself records that as regards the interviews there has been no mala fides neither any bias nor nay favouritism. Even the 50% marks earmarked for interview stands accepted by the impugned judgment. The Principal ground of challenge thus against the judgment impugned is that the Regulation of 1994 was applied by the High Court and the other ancillary reason being that clubbing was not permissible. It is at this juncture the conduct in the matter of participation in the selection process without demur ought to be noticed, as strongly propagated by Dr. Dhawan, which in turn brings in to a discussion of estoppel by conduct. This Court in Tata Iron and Steel Co.
It is at this juncture the conduct in the matter of participation in the selection process without demur ought to be noticed, as strongly propagated by Dr. Dhawan, which in turn brings in to a discussion of estoppel by conduct. This Court in Tata Iron and Steel Co. Ltd. v. Union of India and Others (2001) 2 SCC 41 dealt with the issue of estoppel by conduct rather exhaustively and one of us (BANERJEE, J.) in paragraphs 20 and 21 stated the law pertaining thereto as below: “20. Estoppel by conduct in modern times stands elucidated with the decisions of the English Courts in Pikard v. Sears (1837) : 6Ad and E1.469 and its gradual elaboration until placement of its true principles by the Privy Council in the case of Sarat Chunder Dey v. Gopal Chunder Laha (1891-92) 19 I.A. 203) whereas earlier LORD ESHER in the case of Seton, Laing Co. v. Lafone (1887 : 19, QBD 68) evolved three basic elements of the doctrine of Estoppel to writ: “Firstly, where a man makes a fraudulent misrepresentation and another man upon it to its true detriment; Secondly, another may be where a man makes a false statement negligently though without fraud and another person acts upon it: And thirdly, there may be circumstances under which, where a misrepresentation is made without a fraud and without negligence, there may be an estoppel.” LORD SHAND, however, was pleased to add one further element to the effect that may be statements made, which have induced other party to do that from which otherwise he would have abstained and which cannot properly be characterized as mispresentation. In this context, reference may be made to the decisions of the High Court of Australia in the case of Craine v. Colonial Mutual Fire Insurance Co. Ltd. (1920) 28 CLR 305, DIXON, J. in his judgment in Grundt v. Great Boulder Gold Mins Pty. Ltd. (1939: 59 CLR 6410 stated that: “In measuring the detriment, or demonstrating its existence, one does not compare the position of the representee, before and after acting upon the representation upon the assumption that the representation is to be regarded as true, the question of estoppel does not arise.
Ltd. (1939: 59 CLR 6410 stated that: “In measuring the detriment, or demonstrating its existence, one does not compare the position of the representee, before and after acting upon the representation upon the assumption that the representation is to be regarded as true, the question of estoppel does not arise. It is only when the representor wished to disavow the assumption contained in his representation that an estoppel arises, and the question of detriment is considered, accordingly, in the light of the position which the representee would be in if the representor were allowed to disavow the truth of the representation.” In this context see SPENCER BOWER and TURNER: ESTOPPEL BY REPRESENTATION 3rd Edn.) LORD DENNING also in the case of Central Newbury Car Auctions Ltd. v. Unity Finance Ltd. (1956(3) All ER 905) appears to have subscribed to the view of LORD DIXON, J. pertaining to the test of ‘detriment’ to the effect as to whether it appears unjust or unequitable that the representor should now be allowed to resile from his representation, having regard to what the representee has done or refrained from doing in reliance on the representation, in short, the party asserting the estoppel, must have been induced to act to his detriment. So long as the assumption is adhered to, the party who @ page-S2334 altered the situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs, the basis of an assertion of right against him then, it is allowed, his own original change of position will operate as a detriment, (vide Grundt v.Great Boulder Gold Mins Pty.Ltd. (supra): High Court of Australia (1939) 59 CLR 641)) 21. PHIPSON ON EVIDENCE (Fourteenth Edn.) has the following to state as regards estoppels by conduct.
PHIPSON ON EVIDENCE (Fourteenth Edn.) has the following to state as regards estoppels by conduct. “Estoppels by conduct, or, as they are still sometimes called, estoppels by matter in pais, were anciently acts of notoriety not less solemn and formal that the execution of a deed, such as livery of seisin, entry, acceptance of an estate and the like; and whether a part had or had not concurred in an at of this sort was deemed a matter which there could be no difficulty in ascertaining, and the legal consequences follows; (Lyon V. Reed (1844) 13 M and W.285, 309) The doctrine has, however, in modern times been extended so as to embrace practically any act or statement by a party which it would be unconscionable to permit him to deny. The rule has been authoritatively stated as follows: “Whereas one by his words or conduct willfully causes another top believe the existence of a certain state of things and induces him to act on that belief so as to alter his won previous position, the former is concluded from averring against the latter a different state of things as existing at the same time.” (Pickard v.Sears (1837) 6 Ad and E1.469, 474) and whatever a man’s real intention may be, he is deemed to act willfully “if he so conducts himself that a reasonable man would take the representation top be true and believe that it was meant that he should act upon it (Freeman V.Cooke:1848(2) Exch.654,663).” 7. By relying on the said passage, the learned counsel appearing for the petitioner contended that the respondents having made a publication inviting tenders for the allotment of shops are estopped from canceling the tender with a view to call for a new tender without assigning any reason and thereafter giving reasons by way of counter affidavit. Thus, according to the learned counsel appearing for the petition, the respondents are estopped from proceeding with the matter further by calling for a fresh tender. 8. However, I am unable to accept the said contention of the learned counsel appearing for the petitioner, the reason being that though tender was called for the allotment of shops, the authorities thought it fit to call for new tenders revising the policy in the allotment of shops. The decision taken to revise the policy cannot be tested in this writ petition. 9.
The decision taken to revise the policy cannot be tested in this writ petition. 9. The next decision that has been relied on by the learned counsel appearing for the petitioner is Delhi Cloth and General Mills Ltd., v. Union of India AIR 1987 SC 2414 (1). That it is the case, where a fertilizer factory requested the railway board to offer concessional freight rate for carrying the raw materials. The railway board wrote back to the company saying that it would reconsider the question. The matter was taken up by the company before the Railway Rates Tribunal, Chennai, that the railway board was estopped and the board shall be precluded from going back on the assurance. The Tribunal however, negatived the contention of the company. There upon the matter was taken up by way of an appeal to the Hon’ble Supreme Court. The learned counsel appearing for the petitioner emphasized on Para 18 to 25 of the judgment which is usefully extracted here under: “18. Here the Railways Rates Tribunal apparently, appears to have gone off the track. The doctrine of promissory estoppel has not been correctly understood by the Tribunal. It is true, that in the formative period, it was generally said that the doctrine of promissory estoppel cannot be invoked by the promise unless he has suffered “detriment” or “prejudice.” It was often said simply, that the party asserting the estoppel must have been induced to act to his detriment. But this has now been explained in so many decisions all over. All that is now required is that the party asserting the estoppel must have acted upon the assurance given to him. Must have relied upon the representation made to him. It means, the party has changed or altered the position by relying on the assurance or the representation. The alteration of position by the party is the only indispensable requirement of the doctrine. It is not necessary to prove further any damage, detriment or prejudice to the party asserting the estoppel. The Court, however, would compel the opposite part to adhere to the representation act upon or abstained from acting. The entire doctrine proceeds on the premise that it is reliance based and nothing more. 19. This principle would be clear if we study the cases in which the doctrine has been applied ever since it burst out into sudden blaze in 1946.
The entire doctrine proceeds on the premise that it is reliance based and nothing more. 19. This principle would be clear if we study the cases in which the doctrine has been applied ever since it burst out into sudden blaze in 1946. LORD DENNING in Central London Property Trust Ltd., V. High Trees House Ltd., sitting as a trial Judge, asserted: A promise intended to be binding, intended to be acted upon, and in fact acted upon is binging. 20. The history of the Central London Property Trust Ltd., v. High Trees House Ltd., (supra) principle is too well known to bear repetition. It will be enough to make the following points. The promisor is bound because he led the promise to commit himself to change the position. If the promise has acted upon the promise, the promisor is precluded from receding (sic resiling from) his promise. No further detriment to the promise upon his temporary interests need be established. This position has been made clear by LORD DENNING himself in his article “RECENT DEVELOPMENTS IN THE DOCTRINE OF CONSIDERATION”. “A man should keep his word. All the more so when the promise is not a bare promise but is made with the intention that the other party should act upon it. Just as contract is different from tort and from estoppel, so also in the sphere now under discussion promises may give rise to a different equity from other conduct. The difference may lie in the necessity of showing “detriment.” Where one party deliberately promises to waive, modify or discharge his strict legal rights, intending the other party to act on the faith of promise, and the other party actually does act on it, then it is contrary, not only to equity but also to good faith, to allow the promisor to go back on his promise. It should not be necessary for the other party to show that he acted to his detriment in reliance on the promise. It should be sufficient that he acted on it.” 21. The principle governing this branch of the subject cannot be better put than in the words of a great Australian jurist, DIXON, J., Grundt v. Gold Mines Ltd. There he said: “It is often said simply that the party asserting the estoppel must have been induced to act to his detriment.
The principle governing this branch of the subject cannot be better put than in the words of a great Australian jurist, DIXON, J., Grundt v. Gold Mines Ltd. There he said: “It is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong, and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice. 22. The passage was referred to, with approval, by LORD DENNING in Central Newbury Car Auctions Ltd. v. Unity Finance Ltd. The said passage has also been quoted, with approval, by BHAGWATI, J. (as he then was) in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. The learned Judge had said: “We do not think that in order to invoke the doctrine of promissory estoppel it is necessary for the promise to show that he suffered detriment as a result of acting in reliance on the promise. But we may make it clear that if by detriment we mean injustice to the promise which could result if the promisor were to recede from his promise, then detriment would certainly come in as a necessary ingredient.
But we may make it clear that if by detriment we mean injustice to the promise which could result if the promisor were to recede from his promise, then detriment would certainly come in as a necessary ingredient. The detriment in such a case is not some prejudice suffered by the promise by acting on the promise, but the prejudice which would be caused to the promise, if the promisor were allowed to go back on the promise.” 23. The view taken in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. (supra) has been reiterated in Union of India v. Godfrey Philips India ltd. 24. The concept of detriment as we now understand it is whether it appears unjust, unreasonable or inequitable that the promisor should be allowed to resile from his assurance or representation, having regard to what the promise has done or refrained from doing in reliance on the assurance or representation. 25. It is, however, quite fundamental that the doctrine of promissory estoppel, cannot be used to compel the public bodies or the Government to carry out the representation or promise which is contrary to law or which is outside their authority or power. Secondly, the estoppel stems from equitable doctrine. It, therefore, requires that he who seeks equity must do equity. The doctrine, therefore, cannot also be invoked if it is found to be inequitable or unjust in its enforcement.” 10. Emphasizing on the above passage, the learned counsel appearing for the petitioner submitted that the Doctrine of Promissory Estoppel” has to be invoked for the present case on hand, since the CMDA invited application through tender for the allotment of ships in CMDA. The petitioner have taken part in the tender and now to cancel the tender on the ground of introduction of new policy is un-turnable. The CMDA is estopped from doing so. I am unable to accept the said contention of the learned counsel for the petitioner. In the case cited above, the fertilizer company was made to believer on the statement made by the railway board regarding change of rates, but in the case on hand, it is only an invitation for the public to take part in the auction. This will not cloth with any right to a person who had participated in the tender. Hence the said judgment also may not be of any use to the petitioner.
This will not cloth with any right to a person who had participated in the tender. Hence the said judgment also may not be of any use to the petitioner. 12. The other judgment that was relied on by the learned counsel appearing for the petition is Navijyoti Coo-Group Housing Society etc. v.Union of India and others AIR 1993 SC 155 . In the said decision, the Hon’ble Apex Court affirmed the judgment on the High Court, Delhi which has quashed the impugned memorandum of 20.1.1990, making change in the existing criterion for the allotment to the group housing societies. In the said judgment, it is held that the existence of legitimate expectation may have a number of different consequences and one such consequences is that the authorities ought not to act to defect the ‘legitimate expectation’ without some over-riding reason of public policy to justify its doing so. In the given case on hand, there cannot be any legitimate expectation on mere participation on the tender and moreover the authority concerned has postponed the tender process in order to bring in new policy for allotment of shops. Hence, the said judgment may not be of any use to the petitioner. 13. The learned counsel for petitioner relied on yet another decision in K.K.Bhalla v.State of M.P and others (2006) 1 MLJ 134 (SC). That is the case where public interest litigation was filed in respect of allotment of land in favour of 3rd parties which came to be challenged. Question that was posed before the Hon’ble Apex Court was whether grant was made for public purposes. It was held by the Hon’ble Apex Court that an action taken by way of policy decision or otherwise at the hands of a statutory authority must be in consonance with the statutory rules and the state has limited role to play in the allotment of land. 11. By such PublicInterest Litigation, the allotment of land made at concessional rate in favour of 3rd party was challenged and the Apex Court has held that the decision or discretion exercised by the state in allotment of land at concessional rates even it is policy decision is ultra vires being contrary to the statutory rules framed by it. 12.
11. By such PublicInterest Litigation, the allotment of land made at concessional rate in favour of 3rd party was challenged and the Apex Court has held that the decision or discretion exercised by the state in allotment of land at concessional rates even it is policy decision is ultra vires being contrary to the statutory rules framed by it. 12. The said judgment may not be of any use in the present case on hand since the authority in the present case seeks to introduce new policy in the allotment of shops at CMDA. 14. The learned counsel appearing for the CMDA relied on the decision in Directorate of Education and Others v. Educomp Datamatics Limited and Others JT (2004) Supply. 1 SC 502 and submitted that there are inherent limitations in the exercise of power of judicial review permissible in contractual matters. Para 9 of the said judgment is usefully extracted here under: “9. It is well settled now that the Courts can scrutinise the award of the contracts by the Government or its agencies in exercise of its power of judicial review prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular v. Union of India. After examining the entire case law, the following principles have been deduced. 94. The principals deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. (2) The Court does not sit as a Court of appeal but merely review the manner in which the decision was made. (3) The Court does not have the expertise to correct the administrative decision. If review of the administrative decision is permitted, it will be substituting its own decision without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking the decision to accept the tender to award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract.
Normally speaking the decision to accept the tender to award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.” The judgment cited above clearly shows that though this Court exercising power under Article 226 of the Constitution of India in contractual, cannot sit as a Court of appeal to review the decision taken by the authorities. Further more, this Court cannot sit and review all the decision taken by the authorities submitting own reasons as pointed out by the Hon’ble Apex Court, without necessary expertise. 15. The other decision that has been relied on by the learned counsel appearing for the respondents is made in Writ appeal No.402 of 2009 dated 28. 2009. that is the case where the allotment made by the Tamil Nadu Housing Board was canceled by the board which came to be challenged by filing the writ petition invoking Article 226 of the Constitution of India. The learned single Judge set aside the order and directed the Housing Board to give notice before passing an order of cancellation. The matter came before the Division Bench. The Division Bench has held that no equity was created in favour the allottee and that no specific payment was received from them and no specific parcel of land was also earmarked for them and that the Government was within its powers to inform the Housing Board that since the Revenue was going to suffer, the allotments could be canceled. Thus the writ appeal was allowed. 15.1 In the present case on hand also, though 25% of the cost of the shop was deposited with the CMDA, no equity was created in favour of the petitioner and that no specific shop was earmarked for him. Hence, the said judgment is squarely applicable to the facts of the present case. 16.
Thus the writ appeal was allowed. 15.1 In the present case on hand also, though 25% of the cost of the shop was deposited with the CMDA, no equity was created in favour of the petitioner and that no specific shop was earmarked for him. Hence, the said judgment is squarely applicable to the facts of the present case. 16. Thus, considering the discussion made above, the irresistible conclusion that could be arrived at are: (1) The writ petition is perfectly maintainable against the challenge made with regard to tender process of the CMDA. (2) The petitioner has no legal right to question the cancellation of the auction, since (i) He is only a mere participant in the auction. (ii) A mere participation will not cloth with any right to question the cancellation of the auction. (iii) The petitioner was not allotted any particular shop. (iv) The CMDA has got power to introduce new policy for the allotment of the shop. (v) The Court has no power to review administrative decisions and substitute its own reason or decisions. (3) A mere participation in the auction cannot be heard to say that there was a legitimate expectation on mere participation in the tender process. 17. In fine, the writ petition stand dismissed. Connected miscellaneous petition is closed. No order as to costs. Petition dismissed.