U.C.Banerjee, J. - (1.) The doctrine of promissory estoppel cannot be termed to be of very recent origin as the doctrine had a well-laid foundation long prior to the decision of the Hi-trees case, where however the concept was re-stated as a recognised doctrine of law. Reference in this context, may be made to the decision of this Court in the case of Ganges Manufacturing Co. v. Surajmull reported in 1880 ILR 5 Cal. 660 and the subsequent decision of the Bombay High Court 25 years later in the case of Municipal Corporation of Bombay v. Secretary of State reported in 1905 ILR 29 Bombay 580.
(2.) So far as Indian Courts are concerned, there seems to be a steady refinement on this branch of law, since the decision in the case of Anglo-Afghan Agencies reported in AIR 1968 SC 718. In a later decision of the Supreme Court in the case of M.P. Sugar Mills v. State of Uttar Pradesh reported in AIR 1070 SC 621 the Supreme Court observed: "That the doctrine of promissory estoppel is a principle evolved by equity to avoid injustice. It is neither in the realm of contract nor in the realm of estoppel. The true principle of promissory estoppel seems to be that where one party has by his word or conduct made to the other, a clear and unequivocal promise which is intended to create legal relationship or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between, the parties and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. The Supreme Court further observed that there is no reason in logic or principle why promissory estoppel should not be available as a cause of action if necessary to satisfy the equity. The Supreme Court, extended the applicability of the doctrine of promissory estoppel against the Government and the defence based on executive necessity has been categorically negatived. A promise made knowing or intending that it would be acted on by the promise and in fact the promisee acting in realiance on it, alters his position, the government would be held bound by the promise and the promise would be enforceable against the government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required under Art. 299 of the Constitution. The Supreme Court observed that it is elementary that in a Republic governed by the Rule of law, no one howsoever high or low, is above the law. Everyone is subject to the law as fully and completely as any other and the government is no exception and it is indeed the price of constitutional democracy and rule of law that the government stands on the same footing as private individual so far as the obligation of the law is concerned; the former is equally bound as the latter. 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 letter its future executive action".
(3.) The decision of the Supreme Court in the case of M.P.Sugar Mills (supra) was considered in the case of Jitram Sivkumar v. State of Haryana, reported in AIR 1980 0 SC 1285. Both the above-noted two decisions were subsequently considered by the Supreme Court in the case of Gujrat State Financial Corporation v. Lotus Hotels Pvt. Ltd,. reported in AIR 1983 SC 848. In that decision the Supreme Court observed that the authority cannot act arbitrarily on its mere whim, ignore its promise on some undefined and undisclosed grounds of necessity or change the condition of the projects of a person who had acted upon such representation and put himself in a disadvantageous position. The Supreme Court observed that on this point both the decision, viz., M.P. Sugar Mill's case and Jitram's case concur. In that decision the Supreme Court pointed out that doctrine of promissory estoppel would certainly estop governmental agency from backing out its obligation arising from a solemn promise made to the petitioner.;