M.M. Kumar, J. - (1.) THIS petition has been filed under Articles 226/227 of the Constitution of India, with a prayer for quashing orders dated 20.10.2005 and 7.11.2005 (Annexures P -5 and P -6), declining the request of the petitioner -company to disburse the maturity amount of "5 1/2 Kisan Vikas Patras" (Annexure P -1), purchased by it for an amount of Rs. 80,000/ -on 19.5.1998. The Sub Postmaster, Kot Kishan Chand, Jalandhar has passed the aforementioned orders by citing the policy of the Govt. of India that with effect from 1.4.1995, the Institutions were not permitted to invest in Kisan Vikas Patras etc. The aforementioned stand has also been pleaded in the reply filed by the respondents and copies of the policy and notification have been attached as Annexures R -1 and R -2. The rules known as "The Post Office Time Deposit (Amendment) Rules, 1995" which came into force w.e.f. April 01, 1995 had discontinued the policy of investment by Institutions in the Post Office Time Deposit, Kisan -Vikas Patra and National Savings Certificate (VIII issue). It has also been pleaded that representation made by various quarters were considered by the Finance Department and vide letter dated 6.9.2005 (R -3), all the requests for regularization of irregular issue of National Savings Certificate/Kisan Vikas Patras in HUF etc. have been rejected.
(2.) HAVING heard learned Counsel for the parties we are of the considered view that once a promise has been held out to the petitioner - company by the respondents permitting it to purchase the Kisan Vikas Patra then the right of the petitioner -company could not be defeated by invoking the amendment in 1995. The petitioner -company on the basis of holding out by the respondents, has been persuaded to purchase the Kisan Vikas Patra, which it might not have purchased otherwise. On account of holding out, the Kisan Vikas Patra was purchased by the petitioner -company and allowing the respondents to go back from their promise after the Kisan Vikas Patra matured for payment on 19.11.2003 would mean permitting the respondents to take advantage of their own wrong. We are further of the view that the doctrine of promissory estoppel by holding out would be applicable in such cases. The principle can be illustrated by placing reliance on a judgment of the Court of Appeal of England in the case of Liverpool Finance Limited v. Westminister (City) London Borough Council, (1970) 3 All ER 496. In that case the Liverpool Finance Limited had obtained permission for a group of houses, which they wanted to be sanctioned by the Planning Officer. However, the Planning Officer held out that they did not need fresh permission to do so because the variations were not of material nature. Accordingly, the Liverpool Finance Limited started building the houses in accordance with the valid plans. On the complaint made by some of the neighbours that illegal construction was being raised by the Liverpool Finance Limited, it was advised to apply for permission to validate the variations. On application filed by the Liverpool Finance Limited permission was refused, which led to the filing of an action claiming that they were entitled to go ahead with the work on the basis of Planning Officer 's promise held out that the variations were not of material nature. It was found to be a practice with the Planning Officer for the last number of years. The Court of Appeal held that in the light of the reliance placed by the Liverpool Finance Limited on the statement of the Planning Officer, the authorities were to be bound by it and there were sufficient reason on the part of the Liverpool Finance Limited to think that the Planning Officer had the authority to bind the Council. It was in these circumstances that the principle of estoppel was to be applied in this case. Likewise, Hon'ble the Supreme Court in the case of Motilal Padampat Sugar Mills v. : [1979]118ITR326(SC) , has made the following statement of law: The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution.
(3.) APPLYING the aforementioned principle to the facts of the present case, we are of the considered view that the respondents must be strictly held to the promise made by them to the petitioner -company. We are further of the view that the mere irregularity committed by the respondents in issuing the Kisan Vikas Patra, cannot be used to defeat the rights of the petitioner -company. Moreover, no notice canceling such Kisan Vikas Patra was given nor any hearing has been granted. The petitioner had legitimate expectation before it is refused payment of the matured amount by the respondents. The action is wholly arbitrary and is, thus, liable to be set aside.;