Delhi
Cloth & General Mills Ltd. Vs. Union of India [1987] INSC 276 (8 October
1987)
SHETTY,
K.J. (J) SHETTY, K.J. (J) MUKHARJI, SABYASACHI (J)
CITATION:
1987 AIR 2414 1988 SCR (1) 383 1988 SCC (1) 86 JT 1987 (4) 35 1987 SCALE (2)715
CITATOR
INFO : R 1988 SC 354 (11) RF 1992 SC1075 (3) RF 1992 SC2169 (28)
ACT:
Refusal
of permission by the Railway Board to charge concessional station to station
freight rate for the carriage of Naptha for a fertilizer factory complaint
under section 41(1)(a) and (b) of the Railways Act, 1980, against
HEADNOTE:
The
appellant, a company, set up a fertilizer factory at Kota in Rajasthan. The
factory manufactures urea for which the main raw material is Naptha, which has
to be transported from the Koyali Refinery of the Indian oil Corporation.
Before
the actual setting up of the factory, the appellant requested the Railway Board
by letter for a concessional fright rate for the carriage of Naptha to the
factory. The Railway Board by its letter EX 5 dated November 5, 1966, quoted
station to station rate equal to 85-B (special) as against the rate equivalent
to classification 62.5-B requested for by the appellant, and also stated that
as the special rate was being quoted ahead of the actual setting up of the
factory, the frieght rate would be reviewed when the traffic actually began to
move.
When
the factory was almost ready for operation, the appellant again requested the
Railway Board by letter for charging the rate under classification 62-5-B
instead of 85- B (special) quoted by it. The Railway Board refused to oblige.
The appellant wrote another letter to the Board, requesting it to permit
charging the rate equivalent to 85-B (special) pending its final decision, as
the movement of naptha was to commence from June/July, 1968. The Railway Board
refused to grant that request also, saying that it could reconsider the
question if on the basis of the facts and figures of the cost of production
vis-a-vis the sale price of the fertilizers, it could be established that the
production of the fertilisers at Kota was uneconomical unless freight
concession on the movement of naptha was granted.
The
appellant filed a complaint under section 41(1)(a) and (b) of the Railways Act,
1890, before the Railway Rates Tribunal. The Tri- 384 bunal decided against the
appellant. Aggrieved, the appellant appealed to this Court by special leave for
relief against the order and judgment of the Tribunal.
Dismissing
the appeal, the Court ^
HELD:
Three questions arise for consideration of the Court: (1) whether the Railway
Board was bound to allow the concessional rate offered to the appellant, that
is, 85-B (special) quoted in its letter Ex. C 5 dt. November 5, 1966, to the
appellant, (2) whether the rate charged for the carriage of the naptha between
the stations concerned was unreasonable, and (3) whether the Railways were
showing undue preference or advantage in respect of other traffic in
contravention of the provisions of section 28 of the Railways Act. [389E-F ]
Dealing with the third question first, which relates to the contravention of
section 28 of the Railways Act, the scope of the section was considered by this
Court in Rajgarh Jute Mills Ltd v. Eastern Railway and another, [1959] SCR 236
at 241, and the Railway Rates Tribunal, considering the material on record in
the light of the decision of the Court in case, held that there was no evidence
produced by the appellant to justify any grievance under section 28. This
conclusions is perfectly justified. [390E; 391C] The second question above-said
relates to the rate charged by the Railway Administration being per se
unreasonable. Even assuming, as argued by appellant's counsel, that the
Railways are earning some surplus income, that by itself is no ground to hold
that the fright charged is per se unreasonable. In the case of commodities of
national needs such as foodgrains, crude oil etc., it may be necessary for the
Railways to charge below the operation cost, and to offset the loss, the
Railways may charge higher freight for some other classified commodities. The
cost of operation cannot by itself be the basis for judging the reasonableness
of the rate charged. Counsel for the appellant also argued that crude oil and
naptha were comparable commodities for the purpose of carriage but there was disparity
in the rates charged in respect of the two, naptha being charged at a much
higher rate. The Tribunal rejected the demand of the appellant for parity in
frieghts, and the Court cannot interfere with the finding to the Tribunal in
this appeal under Article 136 of the Constitution. On merits also, there is no
justification to demand that neptha should take the same freight rate as that
of the crude oil. [391D, F-H; 392B. D-E] 385 Lastly, the first question: It
relates to the correctness of the view taken by the Tribunal on doctrine of
promissory estoppel consequent upon the letter Ex. 5 of the Railway Board. The
Tribunal rejected this claim of the appellant. Considering the conclusion of
the Tribunal on this question, it appears the Tribunal has not correctly
understood the doctrine of promissory estoppel: The party asserting the
estoppel must have relied and acted upon the assurance given to him. It means
the party has changed or altered the position by relying on the assurance or
representation. The alteration of position by the party is the only
indispensable requirement of the doctrine. It is not necessary to prove further
any damage, detriment or prejudice to the party asserting the estoppel. "A
promise intended to be binding, intended to be acted upon, and in fact acted
upon, is binding", said Lord Denning, sitting as a trial judge in Central
London Properties Ltd v. High trees House Ltd., [1947] K.B. 130. If the
promisee has acted upon the promise, the promisor is precluded from receding
from his promise. The concept of detriment as it is understood now is whether
it appears unjust, unreasonable or inequitable that the promisor should be
allowed to resale from his assurance or representation, having regard to what
the promisee has done or refrained from doing in reliance on the assurance or
representation. It is, however quite fundamental that the doctrine of
promissory estoppel cannot be used to compel the public bodies or The
Government to carry out the representation or promise which is contrary to law
or which is outside their authority or power. Secondly, the estoppel stems from
equitable doctrine. it requires that he who seeks equity must do equity. The
doctrine, therefore, cannot also be invoked if it is found to be inequitable or
unjust in its enforcement. or the purpose of invoking the doctrine, it is not
necessary for the appellant to show that the insurance contained in Ex. (I S
was mainly responsible for the establishing of the factory at Kota. There may
be several representations to one party from different authorities in regard to
different matters. Or there may be several representations from the same party
in regard to different matters; In the instant case, there was one
representation by the Rajasthan government to supply power to the appellant's
factory at concessional rate. There is another representation from the same
government to exempt the appellant from payment of tax for a certain period. If
those representations have been relied upon by the appellant, the Court would
compel the authorities to adhere to their representations. What is required is
the fact that the appellant was induced to act on the representations.
The
assurance given by the Railway Board in the letter Ex. S was not clear and
unqualified. it was subject to review to be undertaken 386 when the appellant
started moving the raw material.
Accordingly,
A appellant was put to notice that it has to approach the Railway
administration again when it would review the whole matter. From the tenor of
Ex. 5, the railways are entitled to say that they have reviewed the matter and
found no justification for a concessional frieght rate for naptha; that does
not amount to resiling from the earlier assurance. No question of estoppel
arises in favour of the appellant in the case out of the representation made in
Ex 5. The Court agreed with the conclusion of the Tribunal but not for all the
reasons stated.
Rajgarh
Jute Mills Ltd v. Eastern Railway & Anr, [1959] SCR 234 at 241; Central
London Properties Ltd v. High Trees House Ltd, [1947] KB 130; Central Newbury
Car Auctions Ltd v. Unity Finance Ltd, [1956] 3 All ER 905 at 909; Article
"Recent Development in the Doctrine of Consideration"-Modern Law
Review, Vol. 15, P. 5, Grundt v. The Great Boulder Ptv Gold, Mines Ltd, [1938]
59 CLR 641; Mohlal Padampet Sugar Mills Co Ltd v. State of UP and ors, [1979] 2
SCR 641 at 695= [1979] 2 SCC 409; Union of India and ors v. Godfrey Philips
Ltd, [1985] 4 SCC 369= [1985] Supp. 3 SCR 123 and Halsbury's Laws of
England-4th Edn., Vol. 16, P. 1071, para 1595, referred to.
Civil
Appellate Jurisdiction: Civil Appeal No. 223 of 1974.
From
the Judgment and order dated 13.7.1973 of the Railways Rates Tribunal, Madras
in Complaint No. 2 of 1969.
K.K.
Jain, Bishamber Lal, Pramod Dayal and A.D. Sanger for the Appellant.
Bed
Brat Barua, Ms. A. Subhashini,.C.V. Subba Rao, Mrs. S. Suri, P. Parmeswaran and
Anil Katiyar for the Respondent.
The
Judgment of the Court was delivered by JAGANNATHA SHETTY, J. This appeal, with
Special Leave, is against the order and judgment dated July 13, 1973, of the
Railways Rates Tribunal Madras, in complaint filed by the appellant under
Section 41(1) of the Indian Railways Act No. 9 of 1890. The background facts
are these:
The
appellant is a Company. It has set up a fertilizer factory at 387 Kota in
Rajasthan. It is said to be an industrially backward area. The factory
manufactures Urea for which the main raw material is Naptha. Naptha has to be
transported from Koyali Refinery of Indian oil Corporation. The nearest railway
station is Bajuva near Baroda. The nearest railway station serving Company's
factory is Dadhevi in Rajasthan. The distance between Bajuva and Dadhevi is
about 520 kms. For transportation, the Naptha has been classified by the
Railway under Clause 110-B of the tariff.
Before
the actual setting up of the factory, the Company, by its letter dated
September 5, 1966 requested the Railway Board for a concessional frieght rate
for the carriage of Naptha. It requested the Railway Board for fixed Station to
Station rate equivalent to classification 62.5-B.
That
would have meant reduction of about 43% in the normal tariff under clause
110-B. In that letter it was pointed out that if such concessional rate was not
fixed, the Company would be put to disadvantageous position as against the
other factories located at ports or near the refineries. The Railway Board by
its letter Ex. C5 dated November 5, 1966 agreed to quote station to station
rate equal to 85-B (Special). In the said letter it was also stated that as the
special rate was being quoted ahead of the actual setting up of the factory the
freight rate need to be reviewed when the traffic actually begins to move.
When
the factory was almost ready for operation the company wrote a letter dated
June 5, 1967 requesting the Railway Board for charging the rate under
classification 62.5-B instead of 85-B(Special). The Railway Board did not
accede to the request. On May 31, 1968 the company wrote another letter
informing the Railway Board that the movement of Naptha would commence from
June/July 1968 and pending decision of the company's earlier request, the
Railway Board may permit charging the rate equivalent to 85-B (Special) already
offered in terms of the letter Ex. 5. The Railway Board refused to grant that
request also. The Railway Board, however, informed the Company in the letter
dated July 11, 1968 as follows:
"However,
if on the basis of facts and figures your cost of production (date to be
furnished for at least one complete year) vis-a-vis the sale price of fertilizers,
it can be established that production of fertilizers at Kota is uneconomical,
until freight concession on the movement of Naptha from Bajuva/Trombay to Kota
is granted, the Railway Board would be prepared to reconsider the
question." 388 on April 19, 1969, the company filed a complaint under
Section 41(1)(a) and (b) of the Railways Act, 1890 before the Railway Rates
Tribunal Madras. The principal contentions raised in the complaint are as
follows:
"(i)
The Railway Board was estopped and/or precluded from going back on the
assurance Of quoting station to station concessional rate 85-B when the company
had in vested a large amount of capital in setting up the factory at a place
away from the refinery or port (ii) The rate charges by the Railway for the
carriage of Naptha between two stations-Bajuva and Dadhevi was unreasonable
under Section 41(1)(b) of the Indian Railways Act, 1980, and (iii) The Railways
were showing undue preference or advantage in respect of other traffic and
contravening the provisions of Section 28 of the Indian Railway Act,
1890." With these and other contentions, the company requested the
tribunal to declare the rate charged for the carriage of Naptha as unreasonable
and to fix a reasonable rate for such carriage.
The
Railway Board in its reply maintained that while quoting the concessional rate
equal to 85-B (Special) it was made clear to the company that the rate was
subject to review when the traffic starts moving and that concessional rate was
provisional in character. The company did not construct the factory relying
solely on the concessional rate offered by the Railway Board. There was no
scope for any such understanding since the Railway reserved its right to
determine the correct rate when the traffic started moving. It was later found
that the chemicals have been advisedly given low class rate with a view to
encourage fertilizer industry and no further concession was necessary to the
company. It was further stated that the question of any undue prejudice of
undue favour to any party does not arise when charging the respective class
rates for specified commodities.
On
these pleadings the Tribunal considered among others, the following issues:
1.
Whether freight charges, now charged, for the carriage of a Company's traffic
in Neptha from Bajuva to Dadhevi station are unreasonable under Section 41(1)
of the Indian Railways Act, 1890? 389
2.
Whether the Railways are contravening Section 28 of the Indian Railways Act in
charging the respective class rates for commodities naptha, chemical manures,
divisions A & B, Urea and Gypsum?
3.
Whether the Railways are estopped by the doctrine of promissory estoppel in
view of the assurance given in the letter Ex. C? The Tribunal determined all
these questions against the company. It was held that there was no
unreasonableness in the rate charged for the carriage of Naptha from Bajuva to
Dadhevi. The Railways are not contravening Section 28 of the Railways Act. The
rate charged has not caused any prejudice to the company. On the question of
promissory estoppel, the Tribunal held that the assurance given by the Railway
Board in the letter Ex. C5 was not mainly responsible for setting up of
fertilizer factory at Kota. It was further held that even if Ex. CS was an
assurance to the Company the withdrawal of that assurance has not adversely
affected the interests of the company.
Upon
the submissions made by learned counsel on both sides, the following questions
arise for our consideration:
(1)
Whether the Railway Board was bound to give the concessional rate offered to
the company under Ex. C5 dated November 5, 1966? (2) Whether the rate charged
for the carriage of Naptha between Bajuva and Dadhevi is unreasonable? (3)
Whether the Railways are showing undue preference or advantage in respect of
other traffic and contravening the provisions of Section 28 of the Railways
Act? We may conveniently take up third question first for consideration.
The
relevant provisions of the Railways Act, 1890, which have a material bearing on
the question are these:
Section
41 provides for filing complaints against Railway Administration. The Section
provides as follows, so far as it is material:
390
41(I) Any complaint that a railway administration (a) is contravening the
provisions of Section 28 or (b) is charging for the carriage of any commodity
between two stations a rate which is unreasonable, or (c) x x x x x may be made
to the Tribunal and the Tribunal shall hear and decide any such complaint in
accordance with the provisions of this chapter.
Section
28 provides:
"28.
A Railway administration shall not make or give any undue or unreasonable
preference or advantage to, or in favour of, any particular person or railway
administration, or any particular description of traffic, in any respect what
soever, or subject any particular person or railway administration or any
particular description of traffic to any undue or unreasonable prejudice or
disadvantage in any respect whatsoever. " The third question formulated by
us relates, to the contravention of Section 28 of the Railways Act. The scope
of this Section has been considered by this Court in Rajgarh Jute Mills Ltd v
Eastern Railway and another, [ 1959] SCR 236 at 241. There it was observed that
a party who complains against the railway administration that the provisions of
Section 28 have been contravened must establish that there has been preference
between himself and his goods on the one hand and his competitor and his goods
on the other.
Gajendragadkar,
J. (as he then was) observed:
"Section
28 is obviously based on the principle that the power derived from the monopoly
of railway carriage must be used in a fair and just manner in respect of all
persons and all descriptions of traffic passing over the railway area. In other
words, equal charges should normally be levied against persons or goods of the
same or similar kinds pas sing over the same or similar area of the railway
lines and under the same or similar circumstances; but this rule does not mean
that, if the railway administration charges un- 391 equal rates in respect of
the same or similar class of goods travelling over the same or similar areas,
the inequality of rates necessarily attract the provisions of S. 28. All cases
of unequal rates cannot necessarily be treated as cases of preference because
the very concept of preference postulates competition between the person of
traffic receiving preference and the person or traffic suffering prejudice in
consequence. It is only as between competitors in the same trade that a complaint
of preference can be made by one in reference to the other." In the light
of these principles, the Tribunal considering the material on record held that
there is no evidence produced by the Company to justify any grievance under
Section 28. We see no reason to disagree with this conclusion. It is, in our
opinion, perfectly justified. In fact Mr. K.K. Jain learned counsel for the
appellant also did not seriously dispute the correctness of that finding
recorded by the Tribunal.
We
may now turn to the second question. Mr. K.K. Jain urged that the rate charged
by the Railway Administration is per se unreasonable. Here again the onus to
prove the alleged unreasonableness of the freight rests on the company. It is
for the company to establish that the rate charged by the Railway
Administration for the carriage of Naptha is unreasonable. Of course, this onus
could be discharged by relying upon the material produced by the Railways. Mr.
Jain, therefore, relied upon a statement Ex. C46 in support of his case. Ex.
C46 is a statement of surplus "working cost" in respect of carriage
of Naptha from Bajuva to Dadhevi. It is, in our opinion, not necessary to
analyse the statement. Even assuming that the railways are earning some surplus
income after deducting the operation cost that by itself is no ground to hold
that the freight charged is per se unreasonable. It must be born in mind that
the railways are run as commercial undertaking and at the same time it being an
instrumentality of the State, should serve the national interest as well. There
is however, no obligation on the railways to pass on the extra amount realised
by the carriage of goods to customers. Nor it is necessary to share the profit
with the commuters. As Mr.
Barua
learned counsel for the Railways said that in the case of commodities of
national needs such a foodgrains, crude oil etc., it may be necessary for the
Railways to charge below the operation cost. To off set such a loss the
Railways may charge higher freight for certain other classified commodities.
Therefore, it seems to us, that the cost of operation cannot by itself be the
basis for judging the reasonableness of the rate changed.
392
It was next urged by Mr. K.K. Jain that the crude oil and Naptha are considered
as comparable commodities for the purpose of carriage. The crude oil carries
the rate equal to class 85-B(old), 85(new) while Naptha carries rate 110-
B(old), 105-B(new). In terms of amounts it works out at Rs.59.45 for crude oil
as against Rs.73.13 for Naptha. The counsel urged that there is no
justification shown for this wide disparity in the first place. Secondly, the
freight rate of crude oil was the rate offered to the company under Ex. CS and
the denial of that rate without any good reason is arbitrary. This argument
though attractive does not carry conviction if one analyses the evidence on
record. Crude oil has been clubbed with Glycerine, fruit juices and syrups,
fibres, flax etc. Naptha has been clubbed with Aviation Spirit, Petrol,
Petroleum, Ether and solvent oil. From the evidence produced by the Railways
Naptha has been classified as a dangerous commodity with the flash point below
24.4øC spontaneously. The crude oil has no such dangerous characteristics. It
is also on record that Naptha requires special type of tank wagons and the
Railways have to take special precautions for transportation. These and other
relevant factors have been taken into account by the Tribunal for rejecting the
demand of the company for parity in freights. This Court cannot, interfere with
such a finding in this appeal under Article 136 of the Constitution. On the
merits also, we see no justification to demand that Neptha should take the same
freight rate as that of crude oil.
We
may now revert to the first question. It relates to the correctness of the view
taken by the Tribunal on the doctrine of promissory estoppel resulting by the
letter Ex.
CS
of the Railway Board. The Tribunal has rejected this claim of the company by
summarising its conclusion in the following terms:
"We
must, therefore, hold that the assurance contained in . Ext. CS was not mainly
responsible for the setting up of the Fertilizer Factory at Kota. 15.3. Even if
it was held that Ex. CS was a definite encouragement to the complainant to set
up the Kota factory, there is no evidence on record to show that the withdrawal
of the concession by Ex. 12 has adversely affected the complainant. We will
show in the (i succeeding paragraphs that the complainant has suffered no
material injury by virtue of the withdrawal of the concessional rate and the
charging of the normal rate. It is well settled that the principle of estoppel
cannot be applied unless the person pleading estoppel can show that he has been
prejudiced by the conduct of the party on whose assurance l l he has acted."
393 Here the Railways Rates Tribunal apparently, appears to have gone off the
track. The doctrine of promissory estoppel has not been correctly understood by
the Tribunal. It is true, that is the formative period, it was generally said
that the doctrine of promissory estoppel cannot be invoked by the promisee
unless he has suffered 'detriment' or 'prejudice'. It was often said simply,
that the party asserting the estoppel must have been induced to act to his
detriment. But this has now been explained in so many decisions all over. All
that is now required is that the party asserting the estoppel must have acted
upon the assurance given to him. Must have relied upon the representation made
to him. It means, the party has changed or altered the position by relying on
the assurance or the representation. The,alteration of position by the party is
the only indispensable requirement of the doctrine. It is not necessary to
prove further any damage, detriment or prejudice to the party asserting the
estoppel. The Court, however, would compel the opposite party to adhere to the
representation acted upon or abstained from acting. The entire doctrine
proceeds on the promise that it is reliance based and nothing more.
This
principle would be clear if we study the cases in which the doctrine has been
applied even since it was burst out into sudden blaze in 1946. Lord Denning in
Central London Properties Ltd v High Trees House Ltd, 11947] K.B.
130
sitting as a trial judge, asserted:
"A
promise intended to be binding, intended to be acted upon, and in fact acted
upon is binding .......
The
history of the High Trees principle is too well known to bear repetition. It
will be enough to make the following points. The promisor is bound because he
led the promisee to commit himself to change the position. If the promisee has
acted upon the promise, the promisor is.
precluded
from receding his promise. No further detriment to the promisee upon his
temporal interests need be established. This position has been made clear by
Lord Denning himself in his article "Recent Developments in the Doctrine
of Consideration" Modern Law Review, Vol. 15 at p.
5.
"A
man should keep his word. All the more so when the promise is not a bare
promise but is made with the intention that the other party should act upon it.
Just a contract is different from tort and from estoppel, so also in the sphere
now under discussion promises may give rise to a different equity from other
conduct.
394
The difference may lie in the necessity of showing "detriment" where
one party deliberately promises to waive, modify or discharge his strict legal
rights, intending the other party to act on the faith of promise, and the other
party actually does act on it, then it is contrary, not only to equity but also
to good faith, to allow the promisor to go back on his promise. It should not
be necessary for the other party to show that he acted to his detriment in
reliance on the promise.
It
should be sufficient that he acted on it.
The
principle governing this branch of the subject cannot be better put then in the
wolds of a great Australian jurist, DIXON, J. in Grundt v The Great Boulder Pty
Gold Mines Ltd, [1938] 59 CLR 641. There he said:
"It
is often said simply that the party asserting the estoppel must have been
induced to act to his detriment. Although substantially such a statement is
correct and leads to no misunderstanding, it does not bring out clearly the
basal purpose of the doctrine. That purpose is to avoid or pre vent a detriment
to the party asserting the estoppel by compelling the opposite party to adhere
to the assumption upon which the former acted or abstained from acting. This
means that the real detriment or harm from which the law seeks to give
protection is that which would flow from the change of position if the
assumption were deserted that led to it. So long as the assumption is adhered
to, the party who altered his situation upon the faith of it cannot complain.
His complaint is that when afterwards the other party makes a different state
of affairs the basis of an assertion of right against him then, if it is
allowed, his own original change of position will operate as a detriment. His
action or inaction must be such that if the assumption upon which he proceeded
were shown to be wrong, and an inconsistent state of affairs were accepted as
the foundation of the rights and duties of himself and the opposite party, the
consequence would be to make his original act or failure to act a source of
prejudice." This passage was referred to, with approval, by Lord Denning
in Central Newbury Car Auction Ltd v Unity Finance Ltd, [1956] 3 All E.R. 905
at 909. The said passage has also been quoted, with approval, 395 by Bhagwati,
J. (as he then was) in Motilal Padampat Sugar Mills Co A Ltd v state of U.P.
& Ors.,[ 1979]2 SCR 641 at p. 695= 1979(2)SCC 409. The learned Judge then
said:
"We
do not think that in order to invoke the doctrine of promissory estoppel it is
necessary for the promisee to show that he suffered detriment as a result of
acting in reliance on the promise. But we may make it clear that if by
detriment we mean injustice to the promisee which could result if the promisor
were to recede from his promise then detriment would certainly come in as a
necessary ingredient. The detriment in such a case is not some prejudice
suffered by the promisee by acting on the promise, but the prejudice which
would be caused to the promisee, if the promisor were allowed to go back on the
promise. " The view taken in Motilal Padmapat Sugar Mills case (supra) has
been reiterated in Union of India & Ors. v.
Godfrey
Philips India Ltd,, [ 1985 ] 4 SCC 369 = [ 1985 ] Supp 3 SCR 123 .
The
concept of detriment as we know understand is whether it appears unjust,
unreasonable or inequitable that the promisor should be allowed to resile from
his assurance or representation, having regard to what the promisee has done or
refrained from doing in reliance on the assurance or representation.
It
is, however, quite fundamental that the doctrine of promissory estoppel, cannot
be used to compel the public bodies or the Government to carry out the
representation or promise which is contrary to law or which is outside their
authority or power. Secondly, the estoppel stems from equitable doctrine. It,
therefore, requires that he who seeks equity must do equity. The doctrine,
therefore, cannot, also be invoked if it is found to be inequitable or unjust
in its enforcement.
We
may also state that for the purpose of invoking the doctrine, it is not
necessary for the company to show that the assurance contained in Ex.C5 was
mainly responsible for establishing the factory at Kota. There may be several
representations to one party from different authorities in regard to different matters.
Or, there may be several representations from the same party in regard to
different matters. As in the instant case, there was one representation by the
Rajasthan Government to supply power to the company at concessional rate. There
was another representation from the same Government to exempt the company from
payment of tax for certain period. There may be other representations from the
same or some other authorities. If those representations have been relied upon
by the company, the Court would compel those parties to adhere to their
respective representations. It is immaterial whether each of the
representations was wholly responsible or partly responsible for locating the
factory at Kota. It is sufficient if the company was induced to act on that
representation.
The
last and final aspect of the matter to which attention should be drawn is that
for the purpose of finding whether an estoppel arises in favour of the person
acting on the representation, it is necessary to look into the whole of the representation
made. It is also necessary to state that the representation must be clear and
unambiguous and not tentative or uncertain. In this context we may usefully
refer to the following passage from Halsbury's Laws of England, Halsbury's Laws
of England 4th Edn. Vol. 16 p. 1071 para 1595.
"1595.
Representation must be unambiguous To found an estoppel a representation must
be clear and unambiguous, not necessarily susceptible of only one
interpretation, but such as will reasonably be understood by the person to whom
it is made in the sense contended for, and for this purpose the whole of the
representation must be looked at.
This
is merely an application of the old maxim applicable to all estoppels, that
they "must be certain to every intent The question now is whether the
assurance given by the Railway Board in the letter Ex.C5 was clear and
unqualified.
But
unfortunately, it is not so. It was subject to review to be undertaken when the
company starts moving the raw material. Ex. C5 reads:- New Delhi I, Dated S
Nov., 1966 Dear Sir, Sub: Integrated Fertilizer-PVC project at Kota, Rajasthan
Rail movement of Naptha. 397 Ref: Your letter No. SFC/Gen-72 dated 5.9.1966 I
am directed to state that the Railway Board agree to quote a special rate equal
o class 85-B (Special) CC: K for transport of Naptha in train loads from Bombay
or Koyali to Kota, for manufacture of fertilizers. The proposed special rate
will apply at owner's risk.
Since
the special rate is being quoted ahead of the actual setting up of the factory
the rate may need to be reviewed when the traffic actually begins to move. The
Railway may accordingly be approached before the traffic actually starts
moving.
Yours
faithfully, Sd/- R.L. Sharma for Secretary Railway Board" What does this
letter mean? The first part of the letter offering the concessional rate equal
to class 85-B (Special) has been completely watered down in the second part of
the letter. It has been expressly stated that the rate may need be reviewed
when the traffic actually begins to move. The company was put to notice that it
has to again approach the Railway Administration. The Railway authorities now
states that they have reviewed the whole matter and found no justification to
offer a concessional freight rate for Naptha, since fertilizers are
deliberately given a low classification in the tariff. From the tenor of Ex. S
the Railways are entitled to state so, and it does not amount to resiling from
the earlier assurance. No question of estoppel arises in favour of appellant out
of the representation made in Ex. CS. We, therefore, agree with the conclusion
of the Tribunal but not for all the reasons stated.
In
the result the appeal fails and is dismissed. In the circumstances, however, we
make no order as to costs.
S.L.
Appeal dismissed.
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