Chhattisgarh Kalyan Samiti and Another vs State of M.P. and Others

M.M. Shrivastava, J.—By this petition, the petitioners have prayed for issuance of writ of mandamus or other writ/ direction to respondents to pay an amount of Rs.8,71,827/- being reimbursement to the extent of 50 per cent of the tuition fee and laboratory fee to the petitioner- institution. Petitioners have also prayed for payment of interest @ 12% per annum on the unpaid balance due from the date of demand, till actual payment. Facts necessary for adjudication of controversy involved in the petition are that the petitioner No. 1 is a society registered under the M.P. Societies Registration Act, 1973 bearing registration No.29/9.6.1961. The Petitioner No.1-Society is running a college in the name of Kalyan Mahavidyalay. The college run by the petitioner No. 1-society is a private college, receiving grant in aid from the Govt. On 15th December, 1984, the State Govt. issued an order in the matter of exemption of tuition fee and laboratory fee to girl students. The State Govt. in its order stated that the decision has been taken to exempt girl students of university and colleges from payment of tuition fee and laboratory fee and further that financial loss caused to the university and aided non- Govt. colleges be reimbursed by way of grant. Vide Circular dated 22.2.1986 (Anndure P-2), the Madhya Pradesh Higher Education Grants Commissions, provided that 50 per cent of the tuition fee would be provided as maintenance grant.

Further case of the petitioners is that in view of the aforesaid policy decision and direction issued by the Govt. and assurance of reimbursement to the extent of 50 per cent by way of maintenance grant, the petitioner-institution exempted girl students from payment of tuition fee and laboratory fee and claimed reimbursement by submission of demand in respect of the academic sessions 1984-85 and 1985-86, which was sanctioned by the Grants Commission, which is evident from letter dated 12.9.1986 (Annexure P-3). Thereafter, the petitioner submitted the demand towards reimbursement to the extent of 50 per cent of the tuition fee in respect of academic sessions 1987-88, 1988-89. & 1989-90 and so on from time to time, but the payments were not released even though reminders were sent by the petitioner. According to the petitioner, the amount due and payable in respect of 4 academic sessions is to the tune of R.3,04,455=50/-. The petitioner, thereafter, kept on submitting demand for reimbursement to the extent of 50 per cent up to academic sessions 1998-99, but, no reimbursement was made. Finally, the petitioner, finding that reimbursement, as assured, is not being made, decision was taken to collect tuition fee and laboratory fee from: girl students from academic session 1999-2000 onwards. Even after several reminders sent, the amount claimed by the petitioner was not reimbursed. The petitioner thereafter sent legal notice to respondents (Annexure P-26) and in reply to the legal notice, office of respondent No 3 vide their memo dated 13.1.2003 wrote to the Commissioner, Higher Education, Chhattisgarh that in view of the apportionment of assets and liabilities, the liability towards payment to the petitioner- institution situated in Chhattisgarh is of the State of Chhattisgarh.

Learned counsel for the petitioner submitted that the then State of Madhya Pradesh and Grants Commission by their policy decision dated 15th December, 1984 (Annexure P-1) and dated 22.2.1986 (Annexure P-2), clearly represented to all the private educational institutions receiving grant in aid form the Govt., including the petitioner-institution, that the girl students are to be exempted from payment of tuition fee and the loss would be reimbursed. He further submits that the Grants Commission, in compliance of the order dated 15th December, 1984 of the State Govt. clearly stated in its letter dated 22.2.1986 (Annexure P-2) that non-Govt. aided colleges would be reimbursed to the extent of 50 per cent by way of maintenance grant. He submit that on such clear and unequivocal representation and promise made by the Govt. and Grant Commission, the petitioner altered their position to their detriment and did not recover tuition fee from girl students up to academic session 1998-99. Though respondents reimbursed the petitioner-educational institution for two academic sessions i.e. 1984-85 & 1985-86, thereafter, respondents No. 1 & 3 arbitrarily resiled from their promise and did not reimburse loss caused to the institution on account of non-recovery of tuition fee from girl students up to the academic sessions 1998-99. Learned counsel for the petitioner submitted that the petitioner having acted on the representation made by the respondents No.1 & 3 and having altered its position to its serious detriment, respondents No. 1 & 3 are bound by principles of promissory estoppel to fulfill their promise of reimbursement to petitioner in respect of the period during which the petitioner did not recover the tuition fee from girl students. In support of his contention, learned counsel for the petitioner relied upon the decision in the case of The Madras Port Trust Vs. Hymanshu International by its Proprietor Madras Port Trust Vs. Hymanshu International by its Proprietor V. Venkatadri (Dead) by L.R.s, B.L. Sreedhar and Others Vs. K.M. Munireddy (Dead) and Others, State of Orissa and Others Vs. Mangalam Timber Products Ltd., Learned counsel for the petitioner further submitted that after re-organization of the State and in view of reply to legal notice (Annexure P-27) issued from the office of respondent No.3, the State of M.P. as well as the State of Chhattisgarh both are liable to make payment of the amount of reimbursement to the petitioner. Learned counsel for the petitioner further submitted that though the petitioner approached the respondents 1 & 3 time and again and they were assured till 1999 that the amount would be reimbursed to them, for the first time, when the president of petitioner No 1 -society met the finance officer and other concerned officer in April, 2000 at Bhopal, he was told that after formation of State of Chhattisgarh, the demand raised by the petitioner are to be now satisfied by the State of Chhattisgarh, as the grants, assets and liabilities have been adjusted and settled by the two Govt. and now the State of M.P. is no longer liable for payments of the amount claimed by the petitioner. When the official of the petitioner-institution contacted in the office of respondent No.4, no clear and definite response was given and finally a legal notice was given, to which, reply dated 13.1.2003 was received from respondent No.3 and thereafter the present writ petition has been filed.

Though, respondents No. 1 & 3 have been served, no reply has been filed nor any representation has been made.

Learned counsel for respondent No.2 & 4 submitted that the writ petition suffers from delay and laches. In his submission, if the petitioner was not being reimbursed during the period for which the petitioner-institution did not recover tuition fee and laboratory fee, the petitioner ought to have approached the Court promptly, but the petitioner waited till 2003 and filed this writ petition. He submits that even though the petitioner itself discontinued the policy of exemption and started recovering fee from girls students after academic session 1998-99, no remedy was taken against the grievance arising on account of non-payment. Therefore, it is submitted, the writ petition is liable to be dismissed. Next submission of learned counsel for respondents No. 2 & 4 is that by this petition, the petitioner has raised monitory claim for which, the proper remedy for the petitioner is to avail the money suit for recovery and this writ petition is not maintainable. Next submission of learned counsel for respondent No. 2 & 4 is that the State of Chhattisgarh or its functionary are not liable because the claim of the petitioner is for payment of amount of reimbursement up to 1998-99 academic sessions. He submits that as this liability is in respect of the period prior to the appointed day i.e. 1.11.2000 as appointed under the M.P. Reorganization Act, 2000, the liability, if any, is only of the State of M.P. and M. P. Grants Commission. Lastly, it is submitted that the petitioner has not impleaded Madhya Pradesh Higher Education Grants Commission as party and therefore, the petition is liable to be dismissed for non-joinder of necessary party.

I have heard learned counsel for the parties and perused the records.

From the order dated 15th December, 1984 Annexure P-1), it is crystal clear that the State Govt. directed that girl students of universities and non-Govt. aided institutions are exempted from payments of tuition fee and laboratory fee. In paragraph-2 of the aforesaid order, in explicit and unambiguous terms, it is provided that the loss caused to the non - Govt. colleges and universities would be reimbursed by way of maintenance grant to such institutions. Copy of the aforesaid order was endorsed to the Addl. Directors, Joint Directors, Dy. Directors, Asst. Directors, Accounts Officer of Directorate of Collegiate Education, M.P. Bhopal; in the Directorate of Higher Education, Director - information, all Commissioners, all Collectors, all Universities, all principals of Govt. and non-Govt. aided private colleges in the State. Thus, it is clear that the Govt. promised reimbursement. Thereafter, the Grants Commission vide its letter dated 22.2.1986 (Annexure P-2) issued in compliance of Govt. letter dated 15th December, 1984, clearly stated that the private educational institutions would be reimbursed to the extent of 50 per cent by giving them maintenance grant of the equivalent amount. This letter was issued to all the principals of non-Govt. aided colleges, including the petitioner-institution also. Therefore, there, cannot be any doubt whatsoever that a clear, unequivocal representation was made by the State and its authority that the private educational institution would be reimbursed to the extent of 50 per cent for to the loss caused to them on account of implementation of the Govt. Policy, exempting girl students from payment of tuition fee.

It is also not disputed that for 2 academic sessions i.e. 1984-85 & 1985-86, the petitioner - institution claimed reimbursement by submitting demand letters, which were accepted and the petitioner-institution was reimbursed according to the Govt. policy dated 15.12.1984. This is quite evident from letter dated 12.9.1986 (Annexure P-3). However, thereafter, no such reimbursement was made to the petitioner -- institution. From various demand letters, which have been sent by the petitioner- institution in respect of the academic sessions from 1986-87 up to 1998-1999, it is clear that the petitioner - institution claimed reimbursement of tuition fee in respect of the girl students. In the writ petition, it has been very categorically stated that the petitioner did not recover tuition fee from girl students during this period from 1986-87 to 1998-99 and kept on raising demands for reimbursement. This fact has not been substantially disputed or denied by respondents. Therefore, it is an admitted position that in respect of entire period from 1986-87 up to 1988-89, the petitioner-institution did not recover tuition fee from girl students.

The State Govt. having made clear representation and the petitioner-institution having acted on the said representation, altered its position to its serious detriment, principle of promissory estoppel binds the State to fulfill its promise.

In the case of State of Punjab Vs. Nestle India Ltd. and Another, the Supreme Court considered the development of law with regard to application of principles of promissory estoppel in great detail, referring to large number of decisions rendered by it on the subject including one of the earliest decision in the case of Collector of Bombay v. Municipal Corpn. of the City of Bombay, AIR 1951 SC 469, which laid the foundation of doctrine of promissory estoppel. It was held:-

In other words, promissory estoppel long recognised as a legitimate defence in equity was held to found a cause of action against the Government, even when, and this needs to be emphasised, the representation sought to be enforced was legally invalid in the sense that it was made in a manner which was not in conformity with the procedure prescribed by statute.

Subsequent decision in the case of Union of India v. Anglo Afghan Agencies (AIR 1968 SC 718), was also relied upon, thus:

This principle was built upon in Union of India v. Anglo Afghan Agencies where it was said (5CR at p.385): (MR p.728, para 23)

Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen.

The Supreme Court, in its aforesaid decision, relied upon its earlier landmark decision in the case of Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh and Others, noting the pre-conditions, strengths and limitations outlined in that decisions as below:-

This Court rejected all the three pleas of the Government. It reiterated the well-known preconditions for the operation of the doctrine:

(1) a clear and unequivocal promise knowing and intending that it would be acted upon by the promisee;

(2) such acting upon the promise by the promisee so that it would be inequitable to allow the promisor to go back on the promise.

As for its strengths it was said: that the doctrine was not limited only to cases where there was some contractual relationship or other pre-existing legal relationship between the parties. The principle would be applied even when the promise is intended to create legal relations or affect a legal relationship which would arise in future. The Government was held to be equally susceptible to the operation of the doctrine in whatever area or field the promise is made contractual, administrative or statutory. To put it in the words of the Court:

The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution (SCC p.442, para 24).

[E]quity will, in a given case where justice and fairness demand, prevent a person from insisting on strict legal rights, even where they arise, not under any contract, but on his own title deeds or under statute (SCC p. 425, para 8).

Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it (SCC p. 453, para 33)

(emphasis added)

So much for the strengths. Then come the limitations. These are:

(1) Since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. But it is only if the Court is satisfied, on proper and adequate material placed by the Government, that 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. (SCC p.443, para 24).

(2) No representation can be enforced which is prohibited by law in the sense that the person or authority making the representation or promise must have the power to carry out the promise. If the power is there, then subject to the preconditions and limitations noted earlier, it must be exercised. Thus, if the statute does not contain a provision enabling the Government to grant exemption, it would not be possible to enforce the representation against the Government, because the Government cannot be compelled to act contrary to the statute. But if the statute confers power on the Government to grant the exemption, the Government can legitimately be held bound by its promise to exempt the promisee from payment of sales tax. (SCC p.453)

Therefore, the State Govt. is clearly bound by the principles of estoppel to reimburse the petitioner-institution to the extent of 50 per cent in respect of the loss caused to the petitioner-institution on account of exemption granted to girl students towards payment of tuition fee between the period from 1986-87 to 1998-99. The amount which has been quantified by the petitioner-institution and averred in the petition is Rs 8,71,827/- being 50 percent of the tuition fee and laboratory fee. The aforesaid quantified amount is not substantially disputed by any of the respondents. Respondents No., 2 & 4, in their return, have not raised any specific plea, denying the claim of the petitioner, but have maintained that the State of Chhattisgarh had not taken any such decision and that the liability, if any, is of the State of Madhya Pradesh.

The objection to the maintainability of the writ petition on the ground of delay and laches does not appeal to this Court. In the writ petition, the petitioner has stated on affidavit in paragraph- 5.7 and 5.8 that whenever the petitioner approached respondents they were assured and promised of positive action towards release of payment up to academic sessions 1998-99. In paragraph 5.9 also, it has been categorically averred that for the first time in April, 2000, the petitioner was informed that liability is now of the State of Chhattisgarh, as liabilities have been apportioned and adjusted between the two States. The petitioners thereafter gave a legal notice and after receiving its reply, filed this writ petition. Aforesaid facts have not been denied by respondents No. 1 & 3. Respondents No. 2 & 4 have also not disputed this fact, which are categorically stated in paragraphs 5.7., 5.8 & 5.9 of the writ petition. Therefore, it is clear that the petitioners were being assured of payment from time to time whenever the petitioners approached respondent -authority, but, finally in the month of April, 2000, they were told by the officials of Madhya Pradesh Govt. that the payments are to be made by the State of Chhattisgarh, as the liability has been adjusted and apportioned. Therefore, I am not inclined to dismiss the petition on such ground of delay and lathes, particularly when the claim of the petitioner on merits has not at all been substantially disputed by the respondents. The other technical objection raised by respondents No. 2 to 4 that the petitioners ought to have filed money suit, deserves rejection, inasmuch as the claim of the petitioner is founded on arbitrary action on the part of respondents -- State which is under an obligation to act in a just, fair and proper manner. Merely because there exists alternative remedy of recovery of money by a suit, this Court is not inclined to dismiss this writ petition on this ground when this petition has remained pending since 2003, particularly when the facts relating to liability have not been disputed by the respondents. The respondents have even not disputed the total amount which has been claimed by the petitioner towards reimbursement. The last objection with regard to non-impleadment of Madhya Pradesh Higher Education Grants Commission as party, also deserves to be rejected because the ultimate liability for payment is of the State Govt. and both, the State of Madhya Pradesh and State of Chhattisgarh have been impleaded as parties The Madhya Pradesh Higher Education Grants Commission is only a functionary /instrumentality of the State of Madhya Pradesh.

In view of the above discussions, I am of the firm opinion that the petitioner-institution is entitled for reimbursement of the fee which has not been collected by them from the girl students, acting on the representation made by the Govt. pursuant to its policy of exemption of fee, as discussed hereinabove. Learned counsel for the State of Chhattisgarh submitted that as the liability is in respect of the period prior to date, the Chhattisgarh State was created under the M.P. Reorganization Act, 2000, it is the State of Madhya Pradesh which is liable. Despite service of notice of respondent No 1 - State of M.P. & respondent No.3 / Commissioner, Higher Education, Govt. of M.P., neither any representation has been made nor any reply filed by them. However, the petitioner has placed on record communication dated 13.1.2003 (Annexure P-27) made by the Commissioner, Higher Education, M.P. to the Commissioner, Higher Education, Chhattisgarh, stating that liabilities have been apportioned under allocation of budget vide notification dated 28.10.2000. However, none of the parties, who have appeared before this Court, have placed on record any document with regard to the apportionment of liability as between the two successor State of Madhya Pradesh & Chhattisgarh. In the absence of sufficient material on record with regard to apportionment of liability under agreement, if any, between the State of Madhya Pradesh and State of Chhattisgarh, this Court is unable to issue specific direction with regard to apportionment of the liability towards payment of amount as a measure of reimbursement to the petitioner in respect of the period during which the petitioner did not recover the fee from the girl students acting on the representation of the Govt.

Under the statutory scheme of apportionment of assets and liability engrafted under the M.P. Reorganization Act, 2000, in the absence of there being any agreement contemplated u/s 55 of the Act, liability in respect of actionable wrong is governed by the provision contained in Section 51 thereof. However, that question will arise for consideration only in the absence of an agreement u/s 55 of the M.P. Reorganization Act, 2000.

Accordingly, the petitioners are entitled for reimbursement of fee which was not collected by them in respect of the academic session 1986-87 to academic session 1998-99 from both the State of Madhya Pradesh as well as State of Chhattisgarh to the extent of their liability apportioned under the agreement between the two successor States under the scheme of M.P. Reorganization Act, 2000. As the computation details with regard to the total amount of reimbursement payable to the petitioner-institution has not been disputed by the respondents, the petitioners are entitled for payment of amount of Rs.8,71,827/- being 50 per cent of the tuition fee and the laboratory fee. Both, the successor States of Madhya Pradesh as well as Chhattisgarh shall be liable for payment of aforesaid amount to the petitioner to the extent of their liability as apportioned under the statutory scheme of the M.P. Reorganization Act, 2000. Considering that the petitioners are sufferer of action of the State in resiling from their promise to reimburse the petitioners, equitable considerations also require that petitioners should be paid interest in respect of the amount which is payable to them from the respondents States. Considering the facts and circumstances, it is ordered that the petitioners shall be entitled to interest @8% from the date of filing of the writ petition till the date of actual payment from the respondents. The petition is accordingly partly allowed.