IMPORTANT POINT
To attract applicability of principle of estoppel it is not necessary that there must be a contract in writing entered into between parties.

ORDER

C.A.No. 10664/1996

A decision taken by the Government of Orissa on 27.4.1989 to revise with effect from back date the terms for making available raw material to the respondent has been struck down by the High Court of Orissa as violative of the principle of promissory estoppel. The State of Orissa is in appeal by special leave.

2. On the representation made by the State of Orissa as contained in their Industrial Policy of the year 1980 and 1983 the respondent was persuaded to establish its industry in the State of Orissa. On 27.4.1989 the State Government proposed revision of certain terms which resulted in revision of rate of royalty and the method of stack measurement adversely to the interest of the respondent. The respondent was not obviously agreeable and protested. The representation of the respondent ultimately prevailed with a high level committee of the State Government and on 3.10.1989 a decision was taken to not to alter the terms for supply of raw material on which the respondent had acted and established its industry. The industry continued to function, consumed the raw material and sold its finished products to the buyers in the market. The pricing of the finished product was done by taking into account the rate of royalty and the method of stack measurement as proposed by the respondent and agreed upon between the parties. On 2.9.1993, the State Government again proposed to make a revision with effect from a back date, i.e., 1st April, 1988. This proposal was challenged by the respondent by filing the writ petition in the High Court which has been allowed and the communication dated 2.9.1993 containing the impugned revision has been struck down by the High Court.

3. It is submitted on behalf of the State of Orissa that there was an error of calculation made by the State and what the State proposed to do was only to correct the erroneous method of calculation. Then, the Government of India was not agreeable to re-plantation by private party like the respondent and so the re-plantation had to be undertaken by the State which involved additional cost to it. It is also submitted that striking down the proposal of the State Government made in the year 1993 would be inequitable for the State of Orissa and therefore would not be in public interest. Reliance is placed on the decisions of this Court in Sales Tax Officer & Anr. vs. Shree Durga Oil Mills & Anr. (1998) 1 SCC, 572 and Sharma Transport Rep. by D.P. Sharma vs. Govt. of Andhra Pradesh & Ors. (2002) 2 SCC 188.

4. Having heard the learned counsel for the parties, we are satisfied that no case is made out for interference with the judgment of the High Court. Before the High Court, the principal plea of the respondent was that there was no contract in writing and therefore the applicability of the principle of promissory estoppel was not established. The High Court has rightly discarded this plea. To attract the applicability of the principle of estoppel it is not necessary that there must be a contract in writing entered into between the parties. We are not satisfied even prima facie that it was a case of an error committed by the State Government of which it was not aware. The State of Orissa should have, while holding out the representation, taken into consideration the fact - who will have to do re-plantation and that the permission of the Government of India would be needed for the purpose. The State cannot take advantage of its own omission. The State Government having persuaded the respondent to establish an industry and respondent having acted on the solemn promise of the State Government, purchased the raw material at a fixed price and also sold its products by pricing the same taking into consideration the price of raw material fixed by the State Government and supplied, the State Government cannot be permitted to revise the terms for supply of raw material adversely to the interest of the respondent and effective from a back date and place the respond