The government may withdraw from a representation that induced persons to take certain steps if there is a supervening public equity.

( 1 ) [ed. facts : Govt. by notification dt. 15. 3. 79 granted total exemption from duty to PVC upto 31. 3. 81. Govt. withdrew same by notification dt. 16. 10. 80 stating that duty would be 40%. Appellant challenged this on the ground that on the basis of earlier notification, it had ordered import and Govt. could not withdraw the same and was estopped. High Court dismissed the petition and appeal was carried to the Supreme Court]. After detailing above, Judgement is:.

( 2 ) THE same impugned Notification No. 205 came to be challenged in another set of appeals decided by this Court in Kasinka Trading vs. Union of India JT. 1994 (7) S. C. 362. The Notification was upheld by a Division Bench of this Court comprising of M. N. Venkatachaliah, CJI and A. S. Anand, J. It is, however, contended before us that the judgment in Kasinka Trading in not correct.

( 3 ) IT is not necessary for us to go into a historical analysis of the case law relating to promissory estoppel against the Government. Suffice it to say that the principle of promissory estoppel is applicable against the Government but in case there is a supervening public equity, the Government would be allowed to change its stand; it would then be able to withdraw from representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. However, the Court must satisfy itself that such a public interest exists. The law on this aspect has been emphatically laid down in Motilal Padampat Sugar Mills Co. vs. State of Uttar Pradesh [1979] 2 S. C. R. 641. The portion relevant for our purpose is extracted below :-

"it is only if the Court is satisfied, on proper and adequate material placed by the Government, the overriding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the Court would refuse to enforce the promise against the Government, for it is the Court which has to decide and not the Government whether the Government to show that the pubic interest in the Government acting otherwise than in accordance with the inequitable to hold the Government bound by the promise and the Court would insist on a highly rigorous standard of proof in the discharge of this burden. But even where there is no such overriding public interest, it may still be competent to the Government to resile from the promise "on giving reasonable notice which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position" provided of course it is possible for the promisee to restore status quo ante. If however, the promisee cannot resume his position, the promise would become final and irrevocable. Vide Emmanuel Ayodeji Ajayji vs. Briscoe, [1964] 3 AII. E. R. 556. "

( 4 ) TWO propositions follow from above analysis: (1) The determination of applicability of promissory estoppel against pubic authority/government hinges upon balance of equity or "public interest". (2) It is the Court which has to determine whether the Government should be held exempt from the liability of the "promise" or "representation". In the present case, the first Notification exempting tee customs duty on PVC itself recites ". . . . central Government being satisfied that it is necessary in public interest to do so. . . ". In the Notification issued later which gave rise to the present cause of action, the same recitation is present.

( 5 ) IN Kasinka, the the Court has actually gone into this aspect. In para 19, the Court says: "pvc resins, it is not disputed, is manufactured in India and is also imported from abroad. In the counter to the Writ Petition filed by the Union of India in the High Court, the justification for the issuance of the exemption Notification No. 66/79 in the "public interest" was spelt out by the respondents. It was stated that it was with a view to equalising sale prices of the indigenous and the i