Report No. 108
2.9. Turner Morrison & Co. v. Hungerford Investment Trust Ltd.-
In this case,1 the respondent was a 100% share-holder of the appellant. The appellant undertook to discharge the income-tax liability of the respondent, and kept back dividends due on respondent's shares for being utilized as working capital. The appellant in fact paid the income-tax assessed on the respondent. While the appellant was keeping the respondent informed of the various steps it was taking and collecting any refunds ordered and keeping them, at no time did it make any demand on the respondent to re-imburse the tax paid. When the respondent transferred its shares, the appellant sued respondent for the amount of tax liability discharged by it and claimed a lien on the respondent's shares. The respondent pleaded as one of its defences, that the appellant was estopped. The Court, upholding the plea of promissory estoppel, observed:
"Estoppel is a rule of equity. That rule has gained new dimensions in recent years. A new class of estoppel i.e. promissory estoppel has come to be recognised by courts in this country, as well as in England. The full implication of 'proinissory estoppel' is yet to be spelled out. The principle stated in the High Trees case2 is that, when one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the party who gave the assurance or promise cannot afterwards be allowed to revert to the previous relationship as if no such promise or assurance has been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced even though it is not supported in point of law by any consideration, but only by his word.
But that principle does not create any cause of action which did not exist before so that, where a promise is made which is not supported by consideration, the promisee cannot bring an action on the basis of the promise. The rule laid down in these decisions undoubtedly advances the cause of justice and hence we have no hesitation in accepting it."
This case, it may be noted, is between parties.
1. AIR 1972 SC 1311.
2. (1947) 1 KB 130.
2.10. In this case,1 the Commissioner HR&CE sanctioned the leasing of Dewaswom land to the petitioner and a lease was executed for 99 years. The petitioner was given a permit for clear felling with respect to a part of the land. But the Government, under section 99, HR&CE Act, cancelled the sanction of the lease. One of the contentions raised by petitioner was that by the permit for clear-felling there was a representation by the Government that the sanction was valid, that the petitioner acted on the representation to his detriment by investing large amounts for developing the property. The High Court however held:
"The Government was not estopped from exercising its statutory power under section 99, first for the reason that there was no representation by the Government that the sanction for the lease was valid-the grant of a clear-felling permit under the MPPF Act by no means implied that the lease granted by the Devaswom is valid; secondly, because the petitioner did not act to his detriment on the faith of the representation; and thirdly, because the power under section 99, is one conferred on the Government to be exercised for the public good or at any rate for the benefit of persons other than the Government."
Referring to the Anglo Afghan and Ulhasnagar cases, the High Court observed:
"These cases have no application to the facts of this case as they did not consider or decide the result of an impact of a representation on a discretionary statutory power to be exercised for the public good or for the benefit of a person other than the person or body exercising the power ... There cannot be an estoppel in respect of the exercise of a discretionary statutory power which is to be exercised for the public good or for the benefit of some one other than the person against whom the estoppel is asserted."
1. AIR 1972 Ker 39.