2002 Supreme(Guj) 113

Gujarat High Court
Judgename :K.M.MEHTA
MAFATLAL INDUSTRIES LIMITED - Appellant
Versus
NAVASARI NAGAR PALIKA - Respondent
S.C.A. 649 of 1980
Decided On : 02/08/2002

Headnote:(a) Doctrine of Promissory Estoppel — Invoking of — There are three essential conditions for (i) there must have been a definite representation by the Government; (ii) the appellant in fact should have altered his position by acting upon such representation; and (iii) they should have suffered some detriment by resting upon suit representation — All three conditions are very clearly present in the instant case — Petitioner had specifically stated that as far as grey cloth is concerned the Municipality must give complete exemption otherwise it was not possible economically or physically to have plant to be installed at Navsari — On this specific contention the Municipality passed resolution dated 30.12.1968 granting complete exemption so far as grey cloth is concerned — Relying upon the assurance and promise thus made in said resolution petitioner-Company setup a process house at the cost of Rs. 3.44 crores — Municipality did not make any attempt to levy or collect octroi on said goods even after the period of five years had expired on Dec. 31, 1976 — In the facts of the case, doctrine of promissory estoppel is attributed and Municipality is bound by the said assurances to petitioner-Company — Now it does not lie in the mouth of the Municipality to say that as far grey cloth is concerned the power of exemption is only for five years — Contention that Municipality has no power to grant exemption for ever is not acceptable under the facts, rules and regulations.

       There are three essential conditions for successfully invoking the doctrine of promissory estoppel, namely, (1) there must have been a definite representation by the Government; (2) the appellant in fact should have altered his position by acting upon such representation and (3) they should have suffered some detriment by resting upon such representation.

       [Para 6-K]

       It was specifically stated that as far as grey cloth is concerned, the Municipality must give complete exemption in this behalf otherwise it will not be possible economically or physically to have plot to be installed at Navsari. On this very specific contention the Municipality passed resolution dated 30th December, 1968, and granted complete exemption from payment for all times to come so far as grey cloth is concerned regarding process of the goods. As regards chemical and other products, the rate of octroi will be taken as per the rules particularly Rule 5(26) of the Octroi Rules.

       [Para 7]

       Relying upon the said assurance the petitioner-company changed its position and constructed a plant at Navsari and relying upon the doctrine of promissory estoppel as reiterated by the Honble Supreme Court in the various decisions, the Municipality is bound by the said assurance to the petitioner-company. Now it does not lie in the mouth of the municipality to say that as far grey cloth is concerned, the power of exemption is only for five years.

       [Para 8]

       There is no substance in the contention raised by the learned counsel for the respondent that Municipality had no power to exempt grey cloth in this behalf and had no power to pass such resolution particularly resolution dated 30th December, 1968, where it has decided to exempt grey cloth for ever. In fact the Municipality was conscious of this fact. The municipality has granted exemption for limited period only for other chemicals and other products & under Rule 5(26) of the Rules. The authorities cited by the learned counsel fro the respondent are not applicable in the facts and circumstances of the case in my view there is no substance in the conditions of the learned counsel for the respondent.

       [Para 11]

       The petitioner had made a specific representation to the Municipality and after making the said representation the Municipality passed necessary resolution and thereafter the petitioner has altered its position by acting upon such assurance and thereafter the petitioner has suffered some detriment by resting upon such representation. In view of the same, the principle of `promissory estoppel enunciated by various Courts are clearly applicable in this case and the petition can be allowed on this ground also.

       [Para 12]

       (b) Constitution of India, 1950 — Art. 226 — Levy of octroi by respondent-Municipality on the grey fabrics brought only for processing and returned back — Contention of petitioner that processing plant was established at Navsari on the assurance and promise made by respondent-Municipality vide its resolution dated 30.12.1968 that no octroi will be collected thereon — Municipality cannot now turn round and say that said exemption was merely for five years — Contention of respondent is not without force in the facts of the case — Respondent is bound by promissory estoppel which led the petitioner to instal its processing plant at Navsari — Respondent cannot collect octroi on grey fabrics for its entry in its area — They are permanently restrained from collecting any octroi on the score.

       It may be noted that the petitioner has been successfully able to prove the doctrine of promissory estoppel in this case. The petition is, therefore, required to be allowed and it is allowed accordingly. The respondents are permanently restrained from recovering octroi on the grey fabrics brought by the petitioner from their Bombay Mills within the octroi limits of the respondent which fabrics, after processing in their process house, are exported back and they are further restrained from recovering or taking any coercive measures in that behalf for recovery of octroi as threatened by them from 1st January, 1977. Rule is made absolute.

       [Para 14]

       (c) Doctrine of Promissory Estoppel — Scope and meaning of — The basic principle of estoppel is that a person who by some statement or representation of fact causes another to act to his detriment in reliance on the truth of it is not allowed to deny it later even though it is wrong — It is a principle of law and on equitable principle of promissory estoppel which can apply to public authorities as well.

       The basic principle of estoppel is that a person who by some statement or representation of fact causes another to act to his detriment in reliance on the truth of it is not allowed to deny it later, even though it is wrong. Justice here prevails over truth. Estoppel is often described as a rule of evidence, but more correctly it is a principle of law. As a principle of common law it applies only to representations about past or present facts. But there is also an equitable principle of `promissory estoppel which can apply to public authorities.

       [Para 6-A]