New Era Fabrics Private Limited and Another vs Assam Industrial Development Corporation and Others

P. Chennakesav Reddi, C.J.—The Petitioner, New Era Fabrics (P) Ltd., a Private Limited Company, seeks to invoke the extraordinary jurisdiction of this Court under Article 226 of the constitution to interdict the notice issued by the Assam Industrial Development Corporation Ltd. (hereinafter referred to as "the Corporation") the first Respondent herein on 13.2.86, inviting fresh offers for joint sector collaboration for 35,000 Tons capacity per annum plant for Galvanised plain and corrugated sheet project (for short "the project") In Assam based on foreign technology, from reputed and established parties buying found financial support, wide technical and industrial background for setting up the aforesaid project costing about Rs. 19.5 Crores with Assam Industrial Development Corporation in the Joint sector.

To have an insight into the issues involved in the case it is essential to state the indispensable facts. The Government of Assam, the first Respondent, applied to the Government of India in the Ministry of Industry and Company Affairs for grant of an industrial licence under the Industries (Development and Regulation) Act, 1951 for the manufacture of Galvanised Sheet-Plain/Corrugated falling under Scheduled Industry No. IA(7). The Government of India was pleased to issue a letter of intent in favour of the said Corporation on 19.3.35, for the establishment of a new undertaking in Kamrup/Pragjyotishpur District in Assam, In the sain letter certain terms and conditions were stipulated, which, inter alia, included the need for settlement of foreign collaboration, financial and technical, to the satisfaction of the Government of India, The letter also laid down guidelines for the selection of a co-promoter incase the Corporation proposed to associate private capital for implementing the scheme approved in the letter of intent.

On 2nd April, 1985 the Corporation invited offers from reputed established consultancy firms for preparation of Techno-Economic Feasibility/Project Report for the following:

Galvanised Plain and Corrugated Sheets Manufacturing Plant, Capacity 35,000 M. T/annum.

The scope of work will include analysis of market demand, consumption, present and future, availability of the product including expert potential, estimation of installed capacity, analysis of various technologies avai labla for manufacture of the product and recommendation of suitable technology, project cost estimation, estimate of cost of production and analysis, details of manpower requirement, analysis of financial results etc.

Offers in duplicate and complete in ell respect should reach the Managing Director within 21 days from the data of publication of this notice. The offer.) should include inter alia a list of similar and other works done by the firm in the last eight years. The successful firm will have to submit the Draft Report within two months from the date of award of works order.

In pursuance of the said notice the Petitioner submitted its offer on 17.4.85 along with a technical report for setting up the said project with the foreign collaboration of M/s Cockerill Mechanical Industries (C.M.I.) Belgium. It appears 12 other parties also submitted their respective offers in response to the said notice. The Corporation by its letter dated 26.4.85 asked the Petitioner company, as done in the case of other interested parties, to submit further particulars as per the prescribed from ''A'' furnished along with in letter, before the venture was finalised. Upon receipt of the required information about the project from the C.M.I. Belgium, the Petitioner furnished the details required in the letter of the Corporation dated 26 4.85 on 10th May, 1985. After receipt of the letter dated 10th May, 1985 along with the particulars and information required by the Corporation, the Corporation wrote to the Petitioner by a letter dated 29.5.85 asking for further clarification about the report submitted by the foreign collaborators. Accordingly the Petitioner by its letter dated 17.6.85 gave such further clarification/information and also answered all the queries which contained in the said letter of the Corporation. Thereafter it appears some discussion took place between the officers of the Corporation and the representatives of the Petitioner-company as required by the Technical Director of , the Corporation to specify why C.M.I. technology was better than any other technology. The Petitioner submitted a note dated 8.7.85 explaining the advantage of C.M.I. technology.

On 12.9.85 the Corporation informed the Petitioner company that they Lave been chosen as co-promoter with the A.J.D.C. Ltd., for setting up the proposed 33,000 MTA GP/CC Sheet project-subject to the satisfactory fulfilment of the conditions stipulated therein. One of the conditions stipulated was that the Petitioner-company should satisfy the Government about their financial, stability and their capability to contribute desired equity in the project.

On 16th September, 1985 the Corporation wrote another letter asking the Petitioner to fulfil the conditions mentioned therein to the satisfaction of the State Government before signing a joint sector collaboration judgment for setting up the proposed project. By the said letter the Petitioner was asked to furnish the following Information .

i) That you have been paying the income tax and all other statutory Govt. dues regularly;

ii) That you will produce firm offer for use of Belgian Technology form M/s COCKERILL Mechanical Industries;

iii) That you will make available to the AIDC/State Govt. audited Balance Sheets/other relevant papers/documents etc. as and when asked for the purpose of verification of financial soundness of your Company and other associates/person/persons, who are likely to be associated in the promotion of the project from your side.

The Petitioner was requested to produce all relevant papers/documents etc. in original along with two photo copies for security and verification relating to the fulfillment of the conditions as mentioned above and also in their earlier letter dated 12.9.85. On 21st September, 1985, the Petitioner acknowledging, the letter dated 16.9.85 submitted papers and documents to satisfy the Respondent-Corporation and the State Government in, respect of the financial soundness of the Petitioner company. On receipt of the said totter dated 21.9.85 the Corporation wrote on 28.9.85 asking for the further information since apparently the Corporation and the Government were not satisfied with the particulars furnished by the Petitioner about the financial position of the company, By the letter the Petitioner was asked to furnish the following:

(1) Audited Balance Sheet and Profit and Loss Account of M/s New Era Fabrics (P) Ltd. for the your ended 30th September, 1984 and 1985.

(2) Latest Income Tax Clearance Certificate of New Era Fabrics (P) Ltd. and Shriram Jute products Ltd.

(3) List of Directors of New Era Fabrics (P) Ltd. and Shriram Jute Products Ltd. with respective date of appointment.

(4) List of major shareholders of New Era Fabrics (P) Ltd. and Shriram Jute product Ltd. with details of their respective shareholdings.

(5) Latest income tax Clearance Certificate of all the Directors of New Era Fabrics (P) Ltd. and Shriram Jute Products Ltd,

(6) Basis of rental Income of Rs. 40 lacs per annum of M/s New Era Fabrics (P) Ltd. as shown in the letter.

(7) Fresh C.A. Certificate with details regarding Govt. dues i.e. Income Tax, ESI, provident Fund, Excise Duties etc.

(8) ''No objection'' Certificate from Bank for diversion of Funds from both the Companies for G.P. Sheet project.

The Corporation on 15th October, 1985 sent a Telex message to the Petitioner mentioning therein that the Corporation was seriously concerned about the Company''s non-fulfillment of the conditions stipulated by the Corporation, The Company was. therefore advised to submit all necessary documents on or before 24th October, 1985. It was specifically mentioned in the message that in the event of the failure, the company shall be treated as not interested in the project. The Petitioner finally by their letter dated 25.10.85 submitted some details and documents in response to a letter of the Corporation dated 28.9,85. Again on 30th October, 2nd November, 5th November and 8th November, 1985, the Petitioner submitted some more documents to clear the doubts of the Corporation in response to the queries -made by the Corporation regarding the financial soundness. It appears, that there was an informal meeting between the Managing Director of the corporation and the Petitioner and their foreign collaborator representatives at New Delhi on 29.10.85. At the meeting several enquiries were made from the representatives of C.M.I. Belgium about their technical data and capability to set up the said plant and the representatives of the C.M.I. appear to have answered all the queries. Subsequently on 31.10.85. and 1.11.85 the Petitioner''s representatives along with the representatives of the C.M.I, Belgium visited Gauhati and inspected several sites along with the representatives of the corporation for the selection of a site for the project. It appears there- was further negotiation and discussion at Gauhati between the Corporation and the Petitioner company. On 5.11.85 the Export Manager, C.M.I. Belgium sent a Telex message to the Petitioner-company asking for some more information and hoping that there would be a finalisation of the agreement relating to the project as early as possible.

On 14th November, 1985 the corporation wrote to the Secretary, Industries Department forwarding the documents submitted by the Petitioner relating to the project and the financial soundness of the Petitioner company as joint-promoter and seeking further directives from the Government for necessary action.

It appears after the receipt of the letter dated 14.11.85 the Government received information raising doubts about the financial soundness of the Petitioner company. Therefore, the State Government by a letter dated 9th December, 1985 sought information from the Central Government, Ministry of Finance about the financial soundness of the Petitioner. By a letter dated 8.1.86 the State Government was informed by the Government of India, Ministry of Finance, Department of Revenue that the Petitioner company was involved in several serious economic offences and that there was a stricture from the Division Bench of the Bombay High-Court that the Petitioner was engaged in lax frauds. Thereafter the State Government wrote to the Corporation not to make any further correspondence or contact with the Petitioner regarding the proposed project for collaboration. The State Government subsequently appointed the Technical Group vide Notification dated 22.1.86 for taking immediate action. The Petitioner wrote a letter to the Corporation on 27th January, 1986 informing the Corporation that the project cost was likely to go up if the implementation of the project was delayed; and that the C.M.I. Belgium also was pressing the Petitioner hard for going ahead with the said project without any delay and requested for immediate decision in the matter. A further reminder was given by the Petitioner to the Corporation on 11th February, 1986 but the Petitioner received no reply to their reminders On 13.2.86 the, Corporation issued a notice inviting offers for the same joint sector collaboration project for setting up same 35000 MT. per annum capacity of GP/GC sheets, based on foreign technology. By the said notice, the applications were required to be submitted to the Managing Director of the Corporation within 15 days from the date of publication of the said notice.

Aggrieved against the said notice the Petitioner company appealed to the Minister-in-charge of Industries, Government of Assam who is also the Chairman of the Corporation and requested for cancellation of the fresh notice and to expedite execution and Implementation of the said project with Joint collaboration with the Petitioner-company. Since no reply was received by the Petitioner, the Petitioner filed this writ petition on 27.2.86 for relief since the last date for submission of applications was 28.2.86 in pursuance of the notice impugned in this writ petition.

The main submission of the learned Counsel for the Petitioner is that by and under the letter dated 12.9.85 the offer of the Petitioner for joint sector collaboration for the project bad been accepted and the Petitioner acting on the basis of the said letter of acceptance incurred considerable expenses and financial liabilities by entering into commitment with various parties and thereby, suffered serious detriment. Therefore, it is maintained that the Corporation and the Style Government are estopped by the doctrine of promissory estoppel from backing out of its obligations to accept the Petitioner company as the co promoter of the said joint sector project. Further, it is submitted that if the Respondents were; not satisfied about financial soundness of the Petitioner-company, they should have offered a reasonable opportunity to the Petitioner company to explain the circumstance appearing against them before drawing any adverse inference and failure to do so before issuing the impugned notification, is violative of the principle of natural justice.

The learned Advocate General appearing for the State of Assam submits that by the letter dated 12.9.85 there was no clear and unequivocal promise which is the sine-qua-non to invoke the doctrine of promissory estoppel and that a close reading of the said letter would immediately make it clear that the acceptance of the Petitioner as co-promoter for setting up the project was subject to the fulfillment of certain terms and conditions mentioned therein, one of which was that the Petitioner company should satisfy the Government about the financial soundness and their capability to contribute the desired equity and that in my case the facts unfolded subsequent to the alleged promise showed that the public interest would be prejudiced if the said equitable doctrine was permitted to be invoked. It is further plencled that the Respondents were only trying to select a co-promoter for the venture and the process of selection inevitably involves various stages before floatation of any agreement of a project Involving foreign collaboration. The Corporation and the Government had to be satisfied about the financial capacity of the cc- promoter. Thereafter the need for and term of foreign collaboration (Financial/Technical) will have to he settled to the satisfaction of the Central Government which is required to give its final approval and only after receipt of such final approval from the Central Government the proposal is finally accepted. It is asserted on behalf of the Respondents that they were not satisfied about the suitability and the financial soundness of the Petitioner and as such there was no question of sending any proposal to the Central Government for its final satisfaction as regards the need for and terms of foreign collaboration, as aforesaid. It is also pleaded that this is a contract involving special personal relationship between the parties and selection of a co-promoter for a joint venture and the principles of natural justice in the matter of collecting of news and information relating to the financial suitability of the Petitioner, cannot be invoked. The principles of natural justice according to the learned Counsel are not immutable and inflexible. It is, however, lastly submitted that in a case where extra-ordinary jurisdiction under Article 226 of the Constitution is invoked, the High Court will not make an enquiry into the circumstances and adjudge the suitability or otherwise of a co-promoter. Objection is also raised to the maintainability of an application under Article 226 of the Constitution against the Assam Industrial Development Corporation, a Government company.

The foremost question and a question of magnitude that arises is whether on the facts and the circumstances of the case the Petitioner is entitled to the protection of the doctrine of promissory estoppel to compel the Respondents to accept the Petitioner company as a co-promoter of the joint sector project.

Before embarking on a consideration of this question it would be convenient to dispose of the contention relating to the maintainability of the writ petition against the Corporation which is a Government Company within the meaning of Section 617 of the Indian Companies Act, 1956, Reliance is placed by the learned Advocate General in support of his submissions on the decision of the Supreme Court in Sabhajit Tewary Vs. Union of India (UOI) and Others, wherein the Supreme Court held that the Council of Scientific and Industrial Research, a society registered under the Societies Registration Act is not an authority within the meaning of Article 12 of the Constitution. The Supreme Court observed that the Society does not have a statutory character like the Oil and Natural Gas Commission or the Life Insurance Corporation or industrial Finance Corporation, Yet another decision to which our attention has been invited is Sukhdev Singh, Oil and Natural Gas Commission, Life Insurance Corporation, Industrial Finance Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II. Officers, Shyam Lal, Industrial Finance Corporation, wherein the Supreme Court explained the meaning of ''Authorities'' in Article 12 and held Oil and Natural Gas Commission, Life Insurance Corporation and Industrial Finance Corporation are ''authorities'' falling within the ambit of Article 12 of the Constitution, Ray, C.J. speaking for the Court observed-"This Court in Rajasthan State Electricity Board, Jaipur Vs. Mohan Lal and Others, said that an ''authority'' is a public administrative agency or corporation having quasi-governmental powers and authorised to administer a revenue producing public enterprise. The expression ''other authorities'' in Article 12 has been held by this Court in the Rajasthan Electricity Board case to be wide enough to include within it every authority created by a statute and functioning within the territory of India, or under the control of the Government of India. This Court further said that the expression ''other authorities'' in Article 12 will include all constitutional or statutory authorities on whom powers are conferred by law. The State itself is envisaged under Article 298 as having the right to carry on trade and business. The State as defined in Article 12 is comprehended to include bodies created for the purpose of promoting economic interest of the people. The circumstance that the statutory body is required to carry on some activities of the nature of trade or commerce does not indicate that the Board must be excluded from the scope of the word "State."

It is, thus, clear that a public administrative agency or corporation having authority to administer a revenue-producing public enterprise is an authority within the meaning of the expression ''other authorities.'' in Article 12 of the Constitution.

In a more recent decision in Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, the Supreme Court held that the Appellant Corporation themselves a Government Company is a State within the meaning of Article 12 of the Constitution. Therefore, a writ application under Article 226 of the Constitution is maintainable against the Assam Industrial Development Corporation which is a Government company as defined u/s 617 of the Indian Companies Act, 1956.

Now we may turn to the principal question or Premissory Estoppel. Before we proceed set out our acts wop, it would be profitable to remind ourselves of the settled principles governing the applicability of the doctrine of promissory Estoppel.

In the celebrated decision of the Supreme Court in Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh and Others, Bhagwati, J. (as he then was), after referring to the English and American authorities on the applicability of the doctrine of promissory estoppel said referring to the decision of the Supreme Court in Union of India v. Indo-Afghan Agencies AIR 1963 S.C. 718.

It was thus laid down that a party who bas, acting in reliance on a promise made by the Government, altered his position, is entitled to enforce the promise against the Government, even though the promise is not in the form of formal contract as required by Article 299 and that Article does not militate against the applicability of the doctrine of promissory estoppel against the Government.

The learned Judge further proceeded and observed at page 643-

There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations, but, let it be said to the eternal glory of this Court, this doctrine was emphatically negatived in the Indo-Afghan Agencies can AIR 1968 SC 718 and the supremacy of the rule of law was established. It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future exclusive action. If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it. But if the Government makes such a promise and the promise acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual.... But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity to requires. If it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise any equity in favour of the promisee and enforce the promise against the Government. The doctrine of promissory estoppel would be displaced in such a case because on the facts, equity would not require that the Government should be held bound by the promise made by it. When the Government is able to show that in view of the facts which have transpired since the making of the promise public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies. It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would buffer if the Government were required to honour it. The Government cannot, as Shah, J. pointed out In the Indo-Afghan Agencies case claim to be exempt from the liability to carry out the promise "on some indefinite and undisclosed ground of necessity or expediency", nor can the Government claim to be the sole judge of its liability and repudiate it "on an ex parte wants to reset the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability the Government would have to show what precisely is the changed policy and also it reason and justification so the Court can judge for itself which way the public interest lies and what the equity of the case demands. 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. The Court would not act on the mere ipse dixit of the Government, for it is the Court which has to decide end not the Government whether the Government should be held exempt from liability. This is the espace of the rule of law. The burden would be upon the Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be 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 the burden.

Desai, J. speaking for the Supreme Court in The Gujarat State Financial Corporation v. Latus Hotels Pvt. Ltd., echoeded the doctrine of promissory estoppel as laid in Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh and Others, and held-The Respondent in that case acting upon the solemn promise made by the Appellant. The Gujarat State Financial Corporation incurred huge expenditure and if the Appellant was not held to its promise, the Respondent would be put in a very disadvantageous position and therefore, also the principle of promissory estoppel should be invoked in the case.

Once again the question arose in Union of India (UOI) and Others Vs. Godfrey Philips India Ltd., Bhagwati, C.J. speaking for the Court laid down the law that the doctrine of promissory estoppel is applicable against the Government in the exercise of its governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel. "There can be no promissory estoppel as laid down in Motilal Sugar Mills case (supra) against the legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires, if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be Inequitable to hold the Government or public authority to the promise or representation made by it, the court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that (be Government or public authority should be held bound by the promise or representation made by it.''''

Krishna Iyer, J., speaking for the Court in Commissioner of Income Tax (Central) Vs. B.N. Bhattacharjee and Another, said-

What, in essence is estoppel? Estoppel is a rule of equity which forbids truth being pleaded or representation, on which faith, another has acted to his detriment, being retracted. Even extending the rule in the new-fangled empire of promissory estoppel, it cannot go beyond the limits of the Law Revision Committee in England which Lord Denning allowed to blossom in the High Trees case 1947 (1) KB 130 also see "Discipline of Law by Lord Denning" p. 202.

''We therefore recommend that a promise which the promisor knows, or reasonably should know, will be relied upon by the promisee, shall be enforceable if the promise has altered his position to his detriment in reliance on the promise.''

The soul of estoppel is equity, not facility for inequity-Nor is estoppel against statute permissible because public policy animating a statutory provision may then become-, the casualty. Halsbury has noted this sensible nicety.

Where a statute, enacted for the benefit of a section of the public, imposes a duty of a positive kind, the person charged with the performance of the duty cannot by estoppel be prevented from exercising his statutory duty.''

...To sum up, where public duties cast by statute are involved, private parties cannot prevent performance by invoking estoppel.

In Bakul Cashew Co. and Others Vs. Sales Tax Officer Quilon and Another, Venkataramiab, J. delivering the judgment of the Court said that-in cases of this nature the evidence of representation should be clear and unambiguous. It must be certain to every intent. The statements that are made by ministers at such meetings, such as, ''let us see'' ''we shall consider the question of granting exemption sympathetically'' ''we shall get the matter examined'', you have a good case for exemption'' etc. even if true, cannot form the basis for a plea of estoppel. Moreover, the events that have taken place subsequently belie- fact of any such the promise by the Ministers.

In Express Newspapers Pvt. Ltd. and Others Vs. Union of India (UOI) and Others, the Supreme Court observed in public law, the most obvious limitation and doctrine of estoppel is that it cannot be evoked so as to give an overriding power which it does not in law possess. In other words, no estoppel can legitimate action which is ultra vires. Another limitation is that the principle of estoppel does not operate at the level of Government policy. Estoppels have, however, been allowed to operate against public authority in minor matters of formality where no question of ultra vires arises: Wade, Administrative Law, 5th edition, pp. 233-34.

Now let us turn to the meaning of "equity''''. In Black''s Law Dictionary, Fifth Edition the term ''equity" is explained to denote the spirit and habit of fairness, justness, and right dealing which would regulate the intercourse of men with men.

In Equitable Remedies by Spry, the author says-

In the first place. it may appear that in the special circumstances of the case there is a duty on the part of the Plaintiff to disclose particular facts, so that if he does not do so a right of rescission arises in the same way as if a positive misrepresentation bad been made; and hence, according to the principles which have been discussed in relation to misrepresentations, specific performance is refused a fortiori, as long at any rate, as the right of rescission continues to subsist. Thus there is a duty of disclosure where the parties have entered into a contract in the uberrimae fidei, that is, a contract of the utmost good faith, such as a contract of insurance or a family arrangement. it has been said that this duty arises out of an implied term that disclosure will be made, but it may be that at least in some cases, it depends simply upon general equitable principles of fairness.

The author again observed at page 106-

In respect of contracts involving special personal relationships there is an additional ground on which specific performance of agreements of this kind is ordinarily denied, for, as was stated by Knight Bruce, L.J. on one occasion, if proceedings are successfully brought to force Defendants to maintain the relationship of employer and employee, or some other such relationship. The inconvenience and mischief to the Defendant?, to say nothing of the interest of society at large, would be greater if the court should interfere than anything that could possibly happen to the Plaintiffs declining to interfere. This further ground, then, is based not merely on inconvenience or hardship to a particular Defendant, which may vary from case to case, but upon a general undesirability, from the view of public policy, to force persons to maintain certain personal relationships, even though they have earlier freely agreed to do so and ordinarily it is held in such instances that the proper course is to confine the parties ,to their remedies at law.

The author under the heading "Hardship and Unfairness- General" says-

Finally, here, it may be added that where questions of unfairness arise as to the creation of particular contractual rights one of the matters which must often be taken into account is the degree of oppression or hardship which the specific enforcement of those rights will cause the Defendant. In a limited sense, then, it may be said that questions of unfairness generally involve considerations of hardship, but the notice of unfairness is wide enough to include, as well as a practical inequality between the parties, such circumstances as fraud on the part of the Plaintiff, and in cases of this nature the fraudulent bringing about of the agreement is generally sufficient itself to lead to a refusal of relief, as has been seen, although performance would not cause any particular hardship to the Defendant."

The principles that can be discerned from the aforesaid discussion devoted to Judicial Precedents and thought on the applicability of the doctrine are:

(1) The doctrine of premissory estoppel is not really bused on the principle of estoppel but it is a doctrine evolved by equity to he invoked in order to prevent injustice where a clear and unequivocal promise is made by a person knowing or who should reasonably know that it would be acted on by the person to whom it is made and in fact it is so acted on relying on such promise and the promise has altered his position to his detriment,

(2) Tue doctrine is applicable against the Government and it could not be defeated by invoking the defence of necessity even though the promise is not in the form of a formal contract as required by Article 299 of the Constitution.

(3) The doctrine however cannot be invoked to compel the Government or even a private party to do an act prohibited by law. There can be no promissory estoppel against the exercise of legislative power. The legislature can never be precluded from exercising its legislative function by resort to the doctrine of promissory estoppel.

(4) The doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires, if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it. The doctrine of promissory estoppel would be displaced in such a case, because'' on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it.

(5) The doctrine can only be allowed to operate against public authority in minor matters of formality where no question of ultra vires arises.

(6) Where public duty of a positive kind for the benefit of the public is involved, the persons charged with the performance of duty cannot be estopped or prevented in exercising his powers.

(7) The soul of estoppel is equity and not facility for inequity. Viewed from the point of public policy it is generally neither desirable nor permissible to raise the doctrine to force persons to force persons to maintain certain personal relationships.

Let us now proceed to examine the facts of this case in the light of the above said principles and see whether this doctrine of promissory estoppel can be raised in favour of the Petitioner. To begin with, it should be pointed out that the notice dated 2nd April, 1985 by the Corporation invited only offers from reputed established firms for preparation of Techno-Economic Feasibility/Project Report. It was not a notice like the impugned notice inviting offers for setting up the project with the A.I.D.C. in the joint sector, However, the Petitioner made the offer for selection of co-promoter for the project on 17tb April, 1985 and on 26.4.85 the Managing Director of the Corporation asked the Petitioner to furnish some more particulars in the proforma enclosed for the joint sector collaboration, before the venture was finalised The Petitioner furnished some particulars on 10.5.85 and the Corporation asked for further information by their letter dated 29.5.85 which was furnished on 17.6.85. The Technical committee constituted by the Government for selection of a party as well as the technology for the joint sector project observed in their report submitted on 19.8.85 that "the analysis of Balance sheets and Profit and Loss Accounts, as furnished by the parties, does not reveal their capability to bring in the required amount, of equity in the project, although all of them have claimed that their promoters are in a position to provide the co-promoter''s share of the equity capital." However, the Committee recommended the Petitioner company for selection as the (co-promoter for the project, subject to their fulfilling the following conditions:

i) Providing documentary evidence by M/s New Era Fabrics Pvt. Ltd. as to their capability for bringing in the required equity capital

ii) Personal inspection and verification by the Committee or by any authorised person/persons of the assets and the business activities of M/s New Era Fabrics Ltd. and their associates prior to signing of the joint-sector collaboration agreement with A.I.D.C. Ltd.

The Government accepted the report of the Committee. By a letter dated 26th August, 1985 the Government of Assam informed that the Government of Assam on a thorough scrutiny of the report of the technical committee, approved the use of Belgium Technology from M/s. Cokerill Mechanical Industries (CMI) for the manufacture of the conventional galvanised products (Plain and corrugated sheets), subject to their fulfilling the following conditions that:

1) M/s. New Era Fabric, Pvt. Ltd., should satisfy the Government about their financial soundness and their f capability to contribute desired equity in the project.

2) M/s Cokerill Mechanical Industries (CMI) if willing to provide technology as per terms find conditions given by Govt. of India from time to time.

3) A sub-committee consisting of representatives from the State Govt. and A.I.D.C. is to be constituted to monitor the progress of the project.

0n 12.9,85 the Managing Director of the Corporation informed the petitioned as follows:

AIDC Assam Industrial Development Corporation Ltd, No. A.I.D.C. MD: PS: GSP; 6738 12th Sept. 1985,

M/s New Era Fabrics Pvt. Ltd. Mogal Lane, Matunga, BOMBAY-16.

Sirs,

Sub: Galvanised Plain and Corrugated Sheets Project of Assam.

The Corporation is pleated to inform you that you have been accepted as a Co-promoter for getting up the proposed 35,000 MTAGP/GC Sheet Project with AIDC Ltd. The project will use the Belgian Technology from M/s Cockerill Mechanical Industries (CMI). 1

Before entering into the necessary Joint Sector Collaboration Agreement with ibis Corporation, you are requested to ensure fulfilment of the following terms and conditions:

i) M/s New Era Fabrics Pvt. Ltd. should satisfy the Government about their financial soundness and their capability to contribute desired equity in the project, and

ii) M/s Cockerill Mechanical Industries (CMI) is willing to provide the technology as per terms and conditions given by Govt. of India from time to time.

You are requested to communicate your acceptance to the above within 7 (seven) days from the date of receipt of this letter.

Yours faithfully, For ASSAM INDUSTRIAL DEVELOPMENT CORPORATION LTD. Sd/- N. BURAGOHAIN Managing Director.

A plain reading of the letter would immediately make it crystal clear that the acceptance of the Petitioner as co-promoter in the joint sector venture was not unequivocal, It was conditional. It was subject to the conditions that the, Petitioner should satisfy the Government about the financial soundness and capability of the Petitioner to contribute desired equity in the project and that C.M.I., Belgium would be willing to provide technology as per terms and conditions given by the Govt. of India from time to time. It should be borne in mind that the technical committee expressed in their report in para 6.5 that the analysis of Balance Sheets and Profit and Loss Accounts, as furnished by the parties, did not reveal their capability to being in the requited amount of equity In the project, although all of them have claimed that their promoters are in a position to provide the co-promoter''s share of the equity capital. Therefore, the technical committee also did not recommend the Petitioner as co-promoter for the project unconditionally. Indeed the committee observed that-M/s New Era Fabrics Pvt. Ltd. should provide documentary evidence as to their capability for bringing in the required capital and the assets and business activities of the company and their associates should be subject to personal inspection and verification by the committee or by any authorised person/persons before signing the joint sector collaboration agreement with the AIDC, The record does not disclose that the Petitioner was able to satisfy the Corporation and the Government about the financial stability of the Petitioner. Strong reliance is placed by the learned Counsel for the Petitioner as proof of acceptance of financial stability of the Petitioner on the letter dated 14th November, 1985 addressed to the Secretary to the Government of Assam by the Managing Director of the Corporation wherein it was staled as follows:

AIDC:...9483 November 14, 1985. Secretary to the Govt. of Assam, Industries Department, Dispur, Gauhati--6,

Sir,

M/s New Era Fabrics Private Limited has submitted financial statement and other relevant documents in support of their financial soundness to join as Jt. Sector Partner in G.P. Sheet Project. We are enclosing herewith all the papers since submitted by M/s. New Era Fabrics- Pvt. Ltd. confirming their financial soundness. It is revealed from the papers that they are (both M/s Shriram Jute Mills Ltd. and M/s New Era Fabrics) running in profit and substantial rental/warehouse income from both the companies.

They have also confirmed that they will divert the necessary fund as may be required for G.P. Sheet Project from the existing Companies. This refers to your letter No. MI 72/84/194 dated 26.8 85.

Kindly send back the papers with directives from the Govt. for necessary action at our end.

Yours faithfully, Enclo: As Sd/- N. Buragohain Managing Director

We are unable to see from this letter any expression of satisfaction about the financial soundness of the Petitioner company. The Managing Director merely forwarded all the papers submitted by the Petitioner company relating to their financial soundness. It should be pointed out that the satisfaction required by the stipulated condition in the letter dated 12.8.85 is that of the Government and not of the Corporation. Therefore, the Government bad to examine on the basis of the papers submitted by the Petitioner company and satisfy themselves about the financial soundness particularly having regard to the doubt expressed by the Technical Committee about the financial soundness. After examination of the documents forwarded and necessary enquiry the Government was not satisfied about the financial soundness of the Petitioner company und therefore wrote to the Managing Director in reply to the letter dated 14.11.85 on 4th January, 1986 asking the Managing Director not to make any commitment nor enter into any agreement with the Petitioner company. It is thus dear from the letter dated 4th January, 1986 that the Government was not satisfied about the financial soundness of the Petitioner company. In such circumstances, who have no option but to conclude on the facts of this case that there was no clear and unequivocal promise made by the Respondents which would enable the Petitioner to evoke the -doctrine of promissory estoppel for enforcing the promise said to have been made by the Government.

Then the question is whether the Petitioner was denied any opportunity to explain the circumstances relating to the financial soundness of the Petitioner which have been relied upon to come to the conclusion that the Petitioner had no capability to bring in the required amount- in the project as a co promoter and thereby the principles of natural justice have been violated by the Government.

The plea of the Petitioner relating to the breach of natural justice is mainly founded on the letter dated 14.11.85 which is the letter issued by the Managing Director of the Corporation'' and addressed to the Secretary, Government of Assam, Industries Department. The learned Counsel submits that the Corporation in the sail letter expressed satisfaction about the financial soundness of the Petitioner as well as the feasibility of foreign collaborators and their technology and the fulfilment of the requisite condition laid down h the letter dated 12.9.85, On the other hand in the re-joinder filed on behalf of the Respondents 1 to 4 it is stated that the Respondent were never satisfied about the financial soundness of the Petitioner and that the Petitioner company was all along being asked to produce documents to the entire satisfaction of the Government of Assam as well as the Corporation. It is further asserted on behalf of the Corporation that the Corporation never recommended the Petitioner''s case to the Government of Assam for being accepted as a co-promoter. It is also stated that the Petitioner had not submitted that the date of the filing of the affidavit in the writ petition the audited balance sheets for the year ending 30th September, 1984 an well as 30th September, 1985, as stated. We have found supra that under the letter dated 14.11.85 addressed to the Secretary to the Government of Assam, Industries Department by the Managing Director of the Corporation the statement and relevant document''s submitted by the Petitioner is a proof of financial soundness were merely forwarded to the Government and further direction were sought from the Government.

After the receipt of the letter, it appears that on some, information''s received by the Government about the financial soundness and integrity of the Petitioner company the Chief Secretary, Government of Assam wrote a letter to the Secretary, Government of India, Ministry of Finance stating that the Petitioner company was new to Assam Government and that they did not know about the reliability and integrity of the Petitioner and so sought information about the antecedents and the background of the Petitioner company. In response to that letter of the Chief Secretary, the Ex-Office Additional Secretary, Ministry of Finance, Department of Revenue wrote a letter to the Chief Secretary informing that the Petitioner company is a textile promising unit, that it was involved is several serious economics offences and that the Bombay High Court found the Petitioner guilty of tax fraud. The Government therefore instructed the Managing Director not to make further correspondences and contact with the Petitioner regarding proposed collaboration for the project. It is the plea of the Petitioner company that the Government utilised the information collected behind the back of the Petitioner and decided about the financial unsoundness in breach of the principles of natural justice.

On the aforesaid facts is the Petitioner entitled to invoke the plea of breach of natural justice? The question in this case mainly relates to selection of a co-promoter of a joint sector project with the Corporation. The law relating to the applicability of the rules of natural justice has been crystalised and their content and implication are well understood. They are not statutory rules. But they are rules of a moral code which every man breathed by birth. Each of the rules yields to- and changes with the exigencies of different situations and circumstances. They do not apply in the same manner to all situations which are not alike. In Union of India and Another Vs. Tulsiram Patel and Others, the Supreme Court observed that these rules are not cast in a rigid would nor can they be put in a legal strait-jacket, They are not immutable but flexible. These rules can be adapted and modified by statutes and statutory rules and also by the constitutions of the Tribunal which has to decide a particular matter and the rules by which such Tribunal is governed.

The Supreme Court in Swadeshi Cotton Mills Vs. Union of India (UOI), observed-"The implication of natural justice being presumptive it may be excluded by express words of statute or by necessary intendment. Where the conflict is between, the public interest and the private interest, the presumption must necessarily be weak and may, therefore, be readily displaced." Therefore, in exceptional case the principles of natural justice can be excluded.

In K.L. Tripathi Vs. State Bank of India and Others, the Supreme Court held that "the basic concept is fair play in action administrative, judicial or quasi-judicial. The concept of fair play in action must depend upon the particular list if there be any, between the parties." The Supreme Court further observed at para 41-"It is true that all actions against e party which involve penal or adverse consequences must be in accordance with the principled of natural justice but whether any particular principle of natural justice would be applicable to a particular situation or the question whether there has been any infraction of the application of that principle, has to be judged, in the flight of facts and circumstances of each particular case. The basic requirement is that there must be fair play inactions and the decision must be arrived at in a just and objective manner with regard to the relevance of the materials and reasons. We must reiterate again that the rules of natural justice are flexible and cannot be put on any rigid formula."

In Life Insurance Corporation of India Vs. Escorts Ltd. and Others, Chinnappa Reddy, J. speaking for the Court observed that-"if the action of the State is related to contractual obligations or obligations arising out of the tort, the court may not ordinarily examine it unless the action has some public character attached to it, Broadly speaking, the court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law filed. The difficulty will lie in demarcating the frontier between the public law domain and the private law field. It is impossible to draw the line with precision and we do not want to attempt it. The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is engaged when performing the action, the public law or private law character of the action and a host of other relevant circumstances. When the State or an instrumentality of the State ventures into the corporate world and purchases the shares of a company, it assumes to itself the ordinary role of a shareholder and dons the robes of a shareholder, with all the rights available to such a shareholder."

Therefore unless the action of the State involves penal and adverse consequences or the action pertains public law domain the breach of principles of natural justice is not a valid ground to uproot the action. If the action relates to mere contractual obligation without involving any consequences or casting a slur, the principles of natural justice are not attracted. The learned Counsel for the Petitioners invited our attention to the decision of the Supreme Court in Erusian Equipment and Chemicals Ltd. Vs. State of West Bengal and Another, In that case the Respondent who was an approved contractor bad been black listed. Tae Supreme Court observed -"The order of black-listing 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 ii unable to sinter into advantageous relations with the Government because of the order of black-listing. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the Stats acts to the prejudice of a person it has to be supported by legal action.

But for the order of black-listing, the Petitioner would have been entitled to participate in the purchase of cinchona; Similarly the Respondent in the appeal would also have been entitled but for the order of blacklisting to tender competitive rates.... The black listing order does not pertain to any particular contract. The blacklisting order involves civil consequences. It creates a slur. It creates a barrier between the persons blacklisted and the Government In the matter of transactions. The blacklists are "Instruments of coercion."

Yet another case referred to by the learned Counsel is the decision in State of Assam v. Tulsi Singh (1962) Supp. 3 S.C.R. 508.

In this case the Supreme Court held that the "Special List" maintained by the Government of Assam of persons suspected or confirmed to be connected with smuggling activities was not a document falling within section 35 of the Indian Evidence Act and while such list must have served a purpose in guiding Criminal Intelligence Department, it would be unsafe to rely on it for deciding civil rights of a person. In that case the Respondent had been denied the grant of settlement of a public ferry by the Executive Engineer on the ground that the name of the Petitioner was found in the Special List. The action in both the above cases involved civil consequences.

The instant case is not one of black listing or inclusion of the Petitioner in any ''Special List.'' What is involved is the selection of a co-promoter for a joint sector project. The offer of the Petitioner for selection bas been considered and the Petitioner was not selected as the Government were not satisfied about the financial stability of the Petitioner. The non-selection does not involve any civil consequences to fall within the terrain of the breach of natural justice.

The learned Advocate General, Assam appearing for the State also submitted that the Petitioner was guilty of non-disclosure of material facts and their actions and dealings have not been fair and honest and therefore they cannot seek any specific relief by way of Mandamus under Article 226 of the Constitution. It is submitted that this Court will not embark upon an enquiry into the facts and circumstances of the case and adjudge about the financial stability of the Petitioner or otherwise.

The State (Government was not satisfied on an effective evaluation of facts and circumstances of the case about the financial stability of the Petitioner a therefore chose pot to take Petitioner as a co-promoter in their joint venture, This court in exercise of its extra-ordinary jurisdiction under Article 226 of the Constitution shall not act as a Court of appeal. The powers of the High Court are purely discretionary and though no limits can be placed upon that discretion it must be exercised along recognised lines and not arbitrarily; and one of the limitation imposed by the Courts on themselves is that they will not exercise jurisdiction in this class of case unless substantial injustice hat ensued, or is likely to ensue, This Court will not set right the errors of law which do not occasion injustice in a broad and general sense, (vide Sangram Singh Vs. Election Tribunal, Kotah, Bhurey Lal Baya,

It is further stated by the leaned Advocate General that in pursuance of the order of this Court dated 23.2.86 in Misc. Case No. 267 of 1986 the offer of the Petitioner in pursuance of the notice dated 2.4.85 was directed to be considered along with other offers given in pursuance of the impugned notice dated 13.2.86 and accordingly the Petitioner wrote a letter dated 28.2.86 to the Managing Director of the Corporation to consider his offer along with other offers made in pursuance of the notice dated 13.2,86. Therefore, the Petitioner has not also suffered any injustice in view of the aforesaid direction already given by this Court.

In the result, the Civil Rule is liable to be dismissed. It is accordingly, dismissed with costs.