Jit Ram Shiv Kumar & Ors Vs. State of Haryana & ANR [1980] INSC 85 (16 April 1980)
KAILASAM, P.S.
KAILASAM, P.S.
FAZALALI, SYED MURTAZA
CITATION: 1980 AIR 1285 1980 SCR (3) 689 1981 SCC (1) 11
CITATOR INFO :
R 1983 SC 848 (10) O 1986 SC 806 (12,13) RF 1986 SC 872 (181) E 1991 SC 14 (11)
ACT:
Punjab Municipal Act, 1911 as amended by Punjab Act 48 of 1953, Section 62A-Power of State Government to direct the Municipality to impose any tax under section 61-Exemption from payment of octroi duty not within the competence of the Municipality and ultra vires of its powers-Whether any such act which is void ab initio, enforceable-Principle of Promissory Estoppel, ingredients of-Applicability to the instant case.
HEADNOTE:
The Municipal Committee of Bahadurgarh, respondent No.
2 established Mandi Fateh in Bahadurgarh Town with a view to improve trade in the area. The Municipal Committee decided that the purchasers of the plots for sale in the Mandi would not be required to pay octroi duty on goods imported within the said Mandi. A resolution (No. 8) dated 20-12-1916 was passed by the Municipality to this effect. Hand bills were issued for the sale of the plots on the basis of the resolution and it was proclaimed that Fateh Mandi would remain exempt from payment of octroi. Subsequently by resolution No. 4 dated 20-5-1917, the Municipal Committee decided that the term No. 14 to the conditions of sale, namely, that the purchasers of plots would not be required to pay octroi, be amended to the effect that the Mandi shall remain immune from payment of octroi duty for ever. When the resolution was received by the Commissioner of Ambala, in paragraph 3 of his letter dated 26-6-1917, he minuted that the undertaking by the Municipal Commissioner never to impose octroi duty in the Mandi was ultra vires and therefore the purchasers of the plots should be informed so that they may withdraw from the purchases. On receipt of this letter the President of the Municipal Committee made representations that if octroi duty was to be levied, there would be no purchasers for the plots and the entire scheme would fall through. On this, the Commissioner revised his earlier view and withdrew his objection by further observing that "as soon as the market is established it will be necessary to consider what form of taxation is best to cover the market share of municipal expenses". The Municipal Committee on 10-3-1919 imposed house-tax of Rs. 3-14-6 per cent per annum on the shopkeepers to cover the expenditure of the market.
This state of affairs continued till 4-9-1953 when the Municipal Committee by notification No. 9697-C-53/63830 dated 4-9-1953 included Fateh Mandi, Bahadurgarh, within the octroi limits. The Examiner of Local Funds pointed out that the Municipal Committee is under obligation to charge octroi on goods imported into Fateh Mandi. The President of the Municipal Committee made a representation to the Deputy Commissioner on 24-2-1954. The Municipal Committee again passed another resolution No. 1 dated 2-3-1954 that the Fateh Mandi will remain free from octroi duty according to the terms of the proclamation of the sale relating to the sale of plots. The matter was referred to Punjab State which after thoroughly examining the whole matter, confirmed Resolution No. 1 passed by the Municipal Committee on 2-3-1954, Subse- 690 quently, the Municipal Committee changed its mind and by its resolution dated 8-5-1954, resolved that octroi duty should also be levied on the goods imported into Fateh Mandi. But this resolution was annulled by the Punjab Government under s. 236 of the Punjab Municipal Act. The Examiner of Local Funds Accounts in the meantime insisted on the levy of octroi duty on the goods imported into Fateh Mandi and the Punjab Government after discussing the issue on 9-4-1956 informed the President of the Municipal Committee that the Government's action in confirming the resolution No. 1 of 2- 3-1954 of the Municipal Committee, Bahadurgarh exempting goods imported into Fateh Mandi from levy of octroi duty under s. 70(2)(c) of the Municipal Act, 1911, is quite in order and that no separate notification to this effect was necessary under the rules. Again on 21-7-1965, the Municipal Committee Bahadurgarh resolved that the Government be requested to cancel Resolution No. 1 dated 2-3-1954. The State of Haryana Respondent No. 1 which came into existence on 1-11-64 under the Punjab Reorganisation Act, by its memo dated 13-10-1967 approved the resolution No. 6 dated 21-7-65 of the Municipal Committee and cancelled the Municipal Resolution No. 1 of 2-3-1964. As a result of the decision of the Government, the Municipal Committee started charging octroi duty on the goods imported into the Mandi. On these facts, the petitioners submitted that the resolution No. 6 of the Municipal Committee dated 21-7-1965 (Annexure 6) and approval granted by the Haryana State as per its order dated 30-10-1967 (Ann. H) were illegal and ultra vires and without jurisdiction.
A Full Bench of the High Court rejected the petition mainly on three grounds. Firstly, it found that the State Government is entitled under S. 62-A of Punjab Act, 48/1953 to direct the Municipal Committee to impose octroi duty and as such even if the municipality is found to have erred in imposing the Octroi Duty, the legislative powers of the State cannot be questioned. Secondly, it found, that it was not within the competence of the Municipality to grant any exemption from payment of octroi duty and this act was ultra vires of its powers and cannot be enforced. Thirdly, it found that the Court cannot go into the question as to whether the petitioners' plea based on equity that the Municipality is bound, cannot be gone into far want of adequate facts. The High Court however granted certificates to the appellants.
Dismissing the appeal, the Court
HELD: 1. Under section 62-A of the Punjab Municipal Act. 1911 as amended by Punjab Act 43/1958 the State Government is empowered to impose octroi duty and under sub clause (b) if the committee fails to carry cut the order of the Government, the State Government may impose octroi Duty.
Under S. 70(2)(c), a Municipal Committee by a resolution passed at a special meeting and confirmed by the State Government may exempt in whole or in part from payment of any such tax any person or class of persons or any property or description of property. In exercise of those powers, the State Government had by its order dated 4-5-1954 confirmed resolution No. 1 passed by the Municipal Committee in its special meeting held on 2-3-1954 regarding the exemption of goods imported into Fateh Mandi from levy of octroi Duty.
Subsequently, in reply to the objection raised by the Examiner of Local Funds, the Government pointed out by its letter dated 9-4-1956 (Ann. F) that the Government's action confirming the resolution No. 1 dated 2-3-1954 of the Municipal Committee exempting Goods imported into Fateh Mandi, under s. 70(2)(c) of 691 the Punjab Municipal Act, 1911, was quite in order. By the impugned order dated 20-10-1967 the Government approved the resolution No. 6 of the Municipal Committee dated 21-7-1965 and permitted the Municipality to levy the octroi Duty.
Therefore, the action taken by the State Government is strictly in conformity with the powers conferred on it under s. 70(2)(c) of the Act. It exempted the petitioners from payment of octroi Duty for a particular period and ultimately withdrew the exemption. The action of the Government cannot be questioned as it is in exercise of its statutory functions. The plea of estoppel is not available against the State in the exercise of its legislative or statutory functions. The Government have power to direct the Municipality to collect the octroi Tax if the Municipality fails to take action by itself under s. 60(A)-(3). Further, even on facts, this plea is not available as against the Government as it is not the case of the petitioners that they acted on the representation of the Government. [698 E- H, 699 A-C]
2. The Municipality is not estopped from levying or recommending the levy of the tax to the Government even though in the proclamation of sale it was notified that no octroi duty would be levied and it was only in pursuance of such representation the appellants purchased the property because the Municipal Committee had no authority to exempt the Fateh Market from the levy of Octroi duty. If the Municipal Committee had passed a resolution or issued a notification that no octroi duty will be levied, it will be ultra vires of the powers of the Municipal Committee. When a public authority acts beyond the scope of its authority the plea of estoppel is not available to prevent the authority from-acting according to law. It is in public interest that no such plea should be allowed. Further, in the instant case, the appellants are not entitled to any enforceable legal right under the terms of the Municipal Act, since non production of any sale deed executed by the Municipal Committee in favour of the purchasers raises the only presumption that the contract between the parties have not been proved to have been reduced in writing and executed in the manner prescribed under section 47 of the Municipality Act, 1911 (Act 3 of 1911). [699 C-E 700 B-D]
3. Article 299(1) of the Constitution of India corresponding to Section 175 (3) of the Government of India Act, 1935 provides that all contracts made in the exercise of executive powers of the Union or of a State shall be expressed to be made by the President or by the Governor of the State, as the case may be, and all such contracts and assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise. The provisions of this Article is mandatory and not directory, is enacted as a matter of public policy that the State should not be saddled with liability for unauthorised contracts and is enacted in the public interest. The provisions are embodied on the ground of public policy-on the ground of protection of general public.
[700 F-H, 701 A-B] Seth Bhikraj Jaipuria v. Union of India, [1962] 2 SCR 880; Mulam Chand v. State of M.P., [1968] 2 SCR 214.
Karamshi Jethabhiai Samrayya v. State of Bombay, [1964] 6 SCR 984; referred to.
4. The scope of the plea of doctrine of promissory estoppel against the Government is as follows:
(a) The plea of promissory estoppel is not available against the exercise of the legislative or executive functions of the State. There could not be estoppel 692 against express provisions of the law nor could the State by its action waive its rights to exercise powers entrusted to it for the public good. [721 F] Antonio Buttigieg v. Captain Stephen H. Cross and ors.
AIR 1907 PC; Adants v. London Improved Motor Coach Builders, [821] 1 K.B. 495, York Corporation v. Henry Leethan and Sons Ltd., [1924] 1 Ch. 557; William Cory and Sons Ltd. v. London Corporation, [1951] 2 K.B. 476; Howell v. Falmouth Boat Construction Co. Ltd., [1951] A.C. 837; Commissioner of Crown Lands v. Page, [1960] 2 K.B. 274; South-end-on-Sea Corporation v. Hodgson (Wickrord) Ltd., [1962] 1 Q.B. 416;
Federal Insurance Corpn. v. Marril, 382 U.S. 380; quoted with approval.
Robertson v. Minister of Pensions, [1949] 1 K.B., 227 dissented from.
Assistant Custodian of E.P. and ors. v. Brij Kishore Agarwala, [1975] 2 SCR 359; Bihar Eastern Gangetic Fishermen Cooperative Society v. Sipahi Singh & ors. AIR 1977 SC 2149;
applied.
Union of India v. Indo Afghan Agencies, [1968] 2 SCR 366; Century Spinning & Manufacturing Co. Ltd. and Anr. v. Ulhas Nagar Municipal Council and anr., [1970] 3 SCR 854;
Turner Morrison Co. Ltd. v. Hungerford Investment Trust Ltd., [1972] 3 SCR 711; explained and distinguished.
Collector of Bombay v. Municipal Corporation of the City of Bombay and ors.,[1952] SCR p. 43; Excise Commr.
U.P., Allahabad v. Ram Kumar, [1976] Supp. SCR 532; M. Ramanatha Pillai v. State of Kerala, [1974] 1 SCR 515; State of Kerala and Anr. v. The Gwalior Manufacturing (Wvg.) Co. Ltd., [1974] 1 SCR 671; followed.
(b) The doctrine cannot be invoked for preventing the Government from discharging its functions under the law.
[721 G] (c) When an officer of the Government acts outside the scope of his authority, the plea of promissory estoppel is not available. The doctrine of ultra vires will come into operation and the Government cannot be held bound by the unauthorised acts of its officers. [721 G-H] (d) When the officer acts within the scope of his authority under a scheme and enters into an agreement and makes a representation and a person acting on that representation puts himself in a disadvantageous position, the Courts is entitled to require the officer to act according to the scheme and the agreement or representation.
The officer cannot arbitrarily act on his mere whim and ignore his promise on some undefined and undisclosed grounds of necessity or change the conditions to the prejudice of the person who had acted upon such representation and put himself in a disadvantageous position. [721 G-H, 722 A-B] Union of India v. Indo Afghan Agencies Ltd., [1968] 2 SCR 366; discussed and followed.
(e) The officer would be justified in changing the terms of the agreement to the prejudice of the other party on special considerations such as difficult foreign exchange position or other matters which have a bearing on general interest of the State. [722 B-C] Union of India v. M/s Indo Afghan Agencies Ltd., [1968] 2 SCR 366 applied.
5. It is only in public interest that it is recognised that an authority acting on behalf of the Government or by virtue of statutory powers cannot exceed his authority. Rule of ultra vires will become applicable when he exceeds his authority and the Government would not be bound by such action. Any person who enters into an arrangement with the Government has to ascertain and satisfy himself that the authority who purports to act for the Government, acts within the scope of his authority and cannot urge that the Government is in the position of any other litigant liable to be charged with liability. [705 G-H, 706 A]
6. The doctrine of estoppel which burst out into sudden blaze in 1946 and ever since continuing to smoulder due to the consistent maintenance of the original author's interest in its further development, now in this direction and now in that, though interesting is not relevant in administering Indian Law. Section 63 of the Contract Act which provides that when a creditor accepts a lesser sum in satisfaction of the whole debt, the whole debt becomes discharged is a wide departure from the English law as laid down in Jordan v. Monye. The doctrine of estoppel referred to in High Trees case is to some extent taken care of by section 65 and 70 of the Indian Contract. Section 65 provides that when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it, to the person from whom he received it. Under section 70 of the Contract Act. an obligation is cast on the person enjoying benefit of a non-gratutious act to compensate the person who lawfully performed the Act. [707 A, 708 B, D-F] Foakes v. Beer, [1884] 9 A.C. 605; Jordan v. Money, [1854] 5 H.L. Cas 185; Fenner v. Blake, [1900] 1 Q.B. 426;
Woodhouse Ltd. v. Nigerian Produce Ltd., [1932] A.C. 431, In Re. Wickham William Porter and Co. Ltd., [1937] 2 All. E.R. 361; Central London Property Trust Ltd. v. High Trees House Ltd., [1956] 1 All. E.R. 256; referred to.
7. The provisions of Section 70 of the Indian Contract Act are applicable to contract which is not according to Section 175 of the Government of India Act and Article 299 of the Constitution of India. [708 G-H] State of West Bengal v. B. K. Mondal and Ors., [1962 Supp. SCR p. 876; New Marine Coal Co. Ltd. v. Union of India. [1964] 2 SCR 859; referred to.
8. All that the Indo-Afghan Agencies case laid down was that a public authority acting on behalf of the Government cannot on its own whim and in an arbitrary manner seek to alter the conditions accepted by him to the prejudice of the other side. The decision in terms accepts that after taking into consideration the exigencies and change of circumstances the authority can modify the conditions in exercise of his powers as a public policy. Apart from not noticing Howell's case, the Court in Indo Afghan's case did not say that the law as extracted from the judgment in Robertson's case by Denning J. was applicable to India. [719 D-E, 721 A] 9. The Judgment in M/s Motilal Padampat Sugar Mills Co. (P) Ltd. v. State of Uttar Pradesh, [1979] 2 SCR p. 641 is not in accordance with the view consistently taken by the Supreme Court in following respects : [722 F] (i) The decision in the case of Union of Indian v. M/s Indo Afghan Agencies Ltd., [1968] 2 SCR 366 cannot be constructed in the manner in which it was 694 done. All that the Indo Afghan case purports to lay down is that the Court can enforce an obligation incurred by an authority on which another has acted upon and put himself in a disadvantageous position, when the authority resiles arbitrarily or on mere whim or on some undefined and undisclosed grounds of necessity. [722 F-G] (ii) The decision of this Court in Century Spinning and Manufacturing Co. Ltd and Anr. v. The Ulhasnagar Municipal Council and Anr., [1970] 3 SCR 854 was understood as refusing to make a distinction between the private individual and public body so far as the doctrine of promissory estoppel is concerned. [723 F] (iii) The three decisions of this Court, two by Constitution Benches M. Ramanatha Pillai v. State of Kerala, State of Kerala v. The Gwalior Rayon Silk Mfg. (Wvg.) Co.
Ltd. and the third by a Bench of four judges in Excise Commissioner, U.P. Allahabad v. Ram Kumar cannot be ignored on the ground that the observations are in the nature of obiter dicta and that it cannot be insisted as intending to have laid down any proposition of law different from that enunciated in the Indo Afghan Agencies case. It was not necessary for this Court in the three cases to refer to Union of India & others v. Indo-Afghan Agencies. If properly understood it only held that the authority cannot go back on the agreement arbitrarily or on its own whim. [723 H, 724 A- B] (iv) The case of the House of Lords in Howell v. Falmouth Boat Construction Co. Ltd. cannot be read as not having overruled the view of Denning J. and as not having expressed its disapproval of the doctrine of promissory estoppel against the crown in Robertson v. Minister of Pensions. [724 B-C] (v) The Indian Constitution as a matter of high policy in public interest has enacted Article 299 so as to save the Government from liability arising out of unauthorised acts of its officers and contracts not duly executed. Sections 65 and 70 of the Indian Contract Act provide for certain reliefs in void contracts and in unenforceable contracts where a person relying on a representation has acted upon it and put himself in a disadvantageous position. The activist jurisprudence and the wide implications thereof, propounded in the Motilal Padampat, Sugar case doubted. [724 E, F, G] (vii) The Indian Contract Act regulates the right of parties and expressly insists on the necessity for lawful consideration which cannot be dispensed with by invoking some new equitable doctrine. Under Section 10 of the Contract Act, for a contract to be valid, it should be for a lawful consideration and Section 25 of the Contract Act provides that an agreement made without consideration is void unless it satisfies one of the conditions mentioned in that section. [725 B-C, D] (viii) Sankaranarayan v. State of Kerala, [1971] 2 S.C.C. 361; Narendra Chand Hem Ram and Ors. v. Lt. Governor Administration, Union Territory of Himachal Pradesh, [1972] 1 SCR 940; State of Tamil Nadu and Ors. etc. v. S. K. Krishnamurthi etc., [1972] 3 SCR 104; and M/s Andhra Industrial Works v. Chief Controller of Imports and Ors., [1975] 1 SCR 327 indicate that the Rule of estoppel against Government cannot be invoked against the Government. [725 F] 695
10. What are the moral values of the society is a complex question because the concept of moral values amongst different persons and classes of persons is not always the same. Being not a state one, it differs from time to time and from society to society. It is hazardous for a Court to attempt to enforce what according to it is the moral value. Before embarking on the mission of "closing the gap between the law and morality and bring about as near an approximation between the two as possible", it is necessary for the Court to understand clearly its limitations. The powers of the Court to legislate is strictly limited.
"Judges ought to remember that their office is jus dicere and not just dare to interpret the law, and not to make law or give law". [727 F, G, 728 A-C] The courts by its very nature are most ill suited to undertake the task of legislating. There is no machinery for the Court to ascertain the condition of the people and their requirements and to make laws that would be most appropriate. Further two judges may think that a particular law would, be desirable to meet the requirements whereas another two judges may most profoundly differ from the conclusions arrived at by two judges. [728 G-H, 729 A] Shri Gurbaksh Singh Sibbia etc. v. State of U.P., [1908] 3 SCR p. 383 followed.
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1237- 1238/1970.
From the Judgment and Order dated 15-12-1969 of the Punjab and Haryana High Court in Civil Writ Appeal Nos. 444/68 and 2975/67.
Hardayal Hardy, Mahinder Narain and Rameshwar Nath for the Appellants in both the Appeals.
S. M. Ashri and M. N. Shroff for the Respondents in both the Appeals.
The Judgment of the Court was delivered by KAILASAM, J. These two appeals are by certificate granted by the Punjab and Haryana High Court at Chandigarh in C. W. No.444/1968 and C. W. No. 2975 of 1967 respectively. The petitions were disposed of by a full Bench of the High Court on 15-12-1969.
The appellants who were the petitioners before the High Court prayed for a writ of certiorari or mandamus or any other appropriate writ for quashing the resolution No. 6 dated 21st July, 1965 of the Municipality and letter of the Government of Haryana to the President of the Municipal Committee Bahadurgarh dated 30-10-1967. The facts of the case briefly are as follows:- The Municipal Committee of Bahadurgarh, Respondent No. 2, established Mandi Fateh in Bahadurgarh Town, with a view to improve trade in the area. The Municipal Committee decided that the purchasers of the plots for sale in the Mandi would not be required 696 to pay octroi duty on goods imported within the said Mandi.
In pursuance of this decision, resolution No. 8 dated 20-12-1916 was passed by the Municipality. Handbills were issued for the sale of the plots on the basis of the resolution and it was proclaimed that Fateh Mandi would remain exempt from payment of octroi. Subsequently by resolution No. 4 dated 20-5-1917, the Municipal Committee decided that the term No. 14 to the conditions of sale, namely, that the plots would not be required to pay octroi, be amended to the effect that the Mandi shall remain immune from payment of Octroi Duty for ever. When the resolution was received by the Commissioner of Ambala, in paragraph 3 of his letter dated 26-6-1917 marked as Annexure A in the writ petition, he noted:- "I note that by its resolution No. 4 of 20-5-1917, the Municipal Committee has undertaken that Octroi shall never be imposed in the Mandi. This is ultra vires, the Municipal Committee cannot make such an undertaking and this should be explained to the purchasers of sites before they begin building so that if they wish they may withdraw from the purchase".
Of course, it is unlikely that Octroi will be imposed." On receipt of this letter, the President of the Municipal Committee made representations that if octroi duty was to be levied, there will be no purchasers for the plots and the entire scheme will fall through. On receipt of this representation on 20-9-1917 (Annexure B), the Commissioner revised his view and stated that he was cancelling para 3 of his letter dated 26-6-1917, that is to say, "that in deference to the strong views of the Municipal Committee and to your own opinion that the market will collapse if I insist upon it, I withdraw my objection to the undertaking made by the Municipal Committee that Octroi will not be imposed on the market. As soon as the market is established it will be necessary to consider what form of taxation is best to cover the market share of Municipal expenses". The Municipal Committee on 10-3-1919 imposed house-tax of Rs. 3- 14-6 per cent per annum on the shopkeepers to cover the expenditure of the market.
This state of affairs continued till 4-9-1953 when the Municipal Committee by notification No. 9697-C-53/63830 dated 4-9-1953 included Fateh Mandi, Bahadurgarh, within the Octroi limits. The Examiner of Local Funds pointed out that the Municipal Committee is under obligation to charge octroi on goods imported into Fateh Mandi. The President of the Municipal Committee made a representation to the Deputy Commissioner on 24-2-1954. The Municipal Committee again passed another resolution No. 1 dated 2-3-1954 that the 697 Fateh Mandi will remain free from octroi duty according to the terms of the proclamation of the sale relating to the sale of plots. The matter was referred to the Punjab State which after thoroughly examining the whole matter, confirmed Resolution No. 1 passed by the Municipal Committee on 2-3- 1954. Subsequently, the Municipal Committee changed its mind and by its resolution dated 8-5-1954, resolved that octroi duty should also be levied on the goods imported into Fateh Mandi. But this resolution was annulled by the Punjab Government under S. 236 of the Punjab Municipal Act. The Examiner of Local Funds Accounts in the meantime insisted on the levy of octroi duty on the goods imported into Fateh Mandi and the Punjab Government after discussing the issue on 9-4-1956 informed the President of the Municipal Committee that the Government's action in confirming the resolution No. 1 of 2-3-1954 of the Municipal Committee, Bahadurgarh exempting goods imported into Fateh Mandi from levy of octroi duty under S. 70(2) (c) of the Municipal Act, 1911, is quite in order and that no separate notification to this effect was necessary under the rules. Again on 21-7- 1965, the Municipal Committee Bahadurgarh resolved that the Government be requested to cancel Resolution No. 1 dated 2- 3-1954. The State of Haryana Respondent No. 1 which came into existence on 1-11-1964 under the Punjab Reorganisation Act, by its memo dated 13-10-1967 approved the resolution No. 6 dated 21-7-1965 of Municipal Committee and cancelled the Municipal Resolution No. 1 of 2-3-1954. As a result of the decision of the Government, the Municipal Committee started charging octroi duty on the goods imported into the Mandi. On these facts, the petitioners submitted that the resolution No. 6 of the Municipal Committee dated 21-7-1965 (Annexure G) and the approval granted by the Haryana State as per its order dated 30-10-1967 (Ann. H) are illegal and ultra vires and without jurisdiction.
A Full Bench of the High Court rejected the petition mainly on three grounds, Firstly, it found that the State Government is entitled under S. 62-A of Punjab Act, 48/1953 to direct the Municipal Committee to impose octroi duty and as such even if the municipality is found to have erred in imposing the Octroi Duty, the legislative powers of the State cannot be questioned. Secondly, it found, that it was not within the competence of the Municipality to grant any exemption from payment of octroi duty and this act is ultra vires of its powers and cannot be enforced. Thirdly, it found that the Court cannot go into the question as to whether the petitioners' plea based on equity that the Municipality is bound, cannot be gone into for want of adequate facts.
698 Dealing with the first contention, relating to the legislative powers of the State, it will be seen that Punjab Act 48/1953, introduced s.62A which runs as follows:- "62-A.
(1) The State Government may, by special or general order notified in the official Gazette, require a Committee to impose any tax mentioned in S.61, not already imposed at such rate and within such period as may be specified in the notification and the Committee shall thereupon act accordingly.
(2) The State Government may require a Committee to modify the rate of any tax already imposed and thereon the committee shall modify the tax as required within such period as the State Government may direct.
(3) If the Committee fails to carry out any order passed under Sub-section (1) or (2) the State Government, may by a suitable order notified in the official gazette, impose or modify the tax. The order so passed shall operate as if it were a resolution duly passed by the Committee and as if the proposal was sanctioned in accordance with the procedure contained in S.62." It is admitted that the State Government is empowered under S. 62A to require the Municipal Committee to impose octroi Duty and under sub-s. (3) if the Committee fails to carry out the order of the Government, the State Government may impose octroi Duty. Under S. 70(2) (c), a Municipal Committee by a resolution passed at a special meeting and confirmed by the State Government may exempt in whole or in part from the payment of any such tax any person or class of persons or any property or description of property. In exercise of these powers, the State Government had by its order dated 4-5-1954 confirmed resolution No. 1 passed by the Municipal Committee in its special meeting held on 2-3- 1954 regarding the exemption of goods imported into Fateh Mandi from levy of Octroi Duty. Subsequently, in reply to the objection raised by the Examiner of Local Funds, the Government pointed out by its letter dated 9-4-1956 (Ann. F) that the Government's action confirming the resolution No. 1 dated 2-3-1954 of the Municipal Committee exempting Goods imported into Fateh Mandi, under S. 70(2) (c) of the Punjab Municipal Act, 1911, is quite in order. By the impugned order dated 20-10-1967 the Government approved the resolution No. 6 of the Municipal Committee dated 21-7-1965 and permitted the Municipality to levy the Octroi Duty. The action taken by the State Government is strictly in conformity with the powers conferred on it under S. 70(2) (c) of the 699 Act. It exempted the petitioners from payment of Octroi Duty for a particular period and ultimately withdrew the exemption. The action of the Government cannot be questioned as it is in exercise of its statutory functions. The plea of estoppel is not available against the State in the exercise of its legislative or statutory functions. The Government have powers to direct the Municipality to collect the Octroi Tax if the Municipality fails to take action by itself under S. 60(A) (3). Further, even on facts, this plea is not available as against the Government as it is not the case of the petitioners that they acted on the representation of the Government. We, therefore, agree with the view of the Full Bench that the plea of estoppel is not available against the Government for questioning the validity of the impugned Government order.
The second contention is that the Municipality is estopped from levying or recommending the levy of the tax to the Government as in the proclamation of sale it was notified that no Octroi Duty will be levied and it was only in pursuance of such representation, the petitioners purchased the property. We feel this plea should also fail, because the Municipal Committee had no authority to exempt the Fateh Market from the levy of Octroi Duty. If the Municipal Committee had passed a resolution or issued a notification that no Octroi Duty will be levied, it will be ultra vires of the powers of the Municipal Committee. When a public authority acts beyond the scope of its authority the plea of estoppel is not available to prevent the authority from acting according to law. It is in public interest that no such plea should be allowed.
The third contention that was raised by the learned counsel for the appellants before the High Court and reiterated before us, is that the Municipality and its successors are bound by the doctrine of promissory estoppel and as such are estopped from levying the Octroi Duty. The High Court rejected the plea on the following grounds:-
1. The Petitioners are not the original purchasers of the plots in Fateh Mandi. They are either descendants of or transferees from the original purchasers of the plots.
2. No sale-deed was executed by the Municipal Committee in favour of the original purchasers undertaking that no octroi duty will be levied.
3. No allegation has been made that the original purchasers would not have purchased the plots, if condition no. 14 about immunity from payment of Octroi had not been there.
The learned counsel by reference to the names of the list of the purchasers was able to satisfy us that some of the appellants are the 700 original purchasers and as such the first objection raised before the High Court is not sustainable. Again, regarding the third objection, that there is no allegation that the original purchasers would not have purchased the plots if condition 14 about immunity from payment of Octroi had not been there, it was submitted as erroneous as in the affidavit filed in support of the writ petition, the petitioners had pleaded in paragraph 2 that on the faith of the representation, the petitioners purchased the plots and constructed establishments. The learned counsel is, therefore, right in his submission that the third objection raised before the High Court is without substance. But the High Court was right in pointing out that none of the sale deeds executed by the Municipal Committee in favour of the purchasers was produced before the Court. These circumstances would show that the contract between the parties have not been proved to have been reduced in writing and executed in the manner prescribed under S. 47 of the Act. Strictly, therefore, under the terms of the Municipal Act, the appellants are not entitled to any enforceable legal right. But it was submitted that even though the contract had not been executed in due form, the appellants would be entitled to relief under, the doctrine of promissory estoppel.
The question that arises for consideration in these cases is whether the proclamation of sale which notified that there would be no octroi levy in the market relying on which statement the petitioners bid at the auction, would estop the Municipality by operation of the doctrine of promissory estoppel from recommending to the Government and the Government levying octroi duty under S. 61 of the Punjab Municipal Act. To answer this question it is necessary to examine at some length the rights and liabilities of the State under a contract entered into by it with third parties and in transactions carried on by it in exercise of its executive and statutory functions.
Art. 299 (1) of the Constitution of India provides that all contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise. This Article in the Constitution corresponds to S. 175(3) of the Government of India Act, 1935. In cases, that arose out of S. 175(3) of the Government of India Act, 1935, this Court starting from Seth Bikhraj Jaipuria v. Union of India, has 701 repeatedly held that the provision is mandatory and not directory, that the provision is enacted as a matter of public policy, that the State should not be saddled with liability for unauthorised contracts and that the provision is enacted in the public interest. In Mulamchand v. State of M. P., the earlier decisions of this Court were relied on and it was held that the reasons for enacting the provision is not for the sake of some form but for safeguarding the Government against unauthorised contracts. The provisions are embodied on the ground of public policy-on the ground of protection of general public-and these formalities cannot be waived or dispensed with. The Court clearly observed that if the plea of the respondent regarding estoppel or ratification is admitted that would mean, in effect, the repeal of an important constitutional provision intended for the protection of the general public. That is why the plea of estoppel or ratification cannot be permitted in such a case." (emphasis Ours) It was contended before this Court in Karamshi Jethabhai Somayya v. State of Bombay that in an agreement entered into under the Act by statutory authority in pursuance of a statutory power, that consequences provided under the statute would follow and would not fall within the ambit of S. 175(3) of the Government of India Act. This Court after examining the terms of the contract found that it did not fall within the provisions of the Act and, found it unnecessary to deal with the contention.
The scope of the doctrine of equitable estoppel arose for consideration before this Court in Collector of Bombay v. Municipal Corporation of the City of Bombay and Ors. In 1865, the Government of Bombay called upon the predecessor in title of the Corporation of Bombay to remove some markets from a certain site and vacate it, and on the application of the then Municipal Commissioner the Government passed a resolution approving and authorising the grant of another site to the Municipality. The resolution stated further that "the Government do not consider that any rent should be charged to the Municipality as the markets will be, like other public buildings, for the benefit of the whole community". The Corporation gave up the sites on which the old markets were situated and spent a sum of over 17 lacs in erecting and maintaining markets on the new site. In 1940, the Collector of Bombay, overruling the objection of the Corporation, assessed the new site under S.8 of the Bombay City Land Revenue Act to land revenue rising from Rs. 7,500/- to Rs. 30,000/- 702 in 50 years. The Corporation sued for a declaration that the order of assessment was ultra vires and that it was entitled to hold the land for ever without payment of assessment. The Supreme Court held by a majority of four Judges to one that the Government was not entitled to assess land revenue for the land in question. Three of the Judges who were parties to the majority judgment found that the Corporation had taken possession of the land in terms of the Government resolution and continued in such possession openly, uninterruptedly and as of right for over 70 years and acquired limited title it had been prescribing for during the period, that is to say, the right to hold the land in perpetuity free of rent, but only for the purpose of a market and for no other purposes. The right acquired included as part of it an immunity from payment of rent which constituted a right in limitation of the Government's right to assess in excess of the specific limit established and preserved by the Government Resolution within the meaning of S.8 of the Bombay City Land Revenue Act. Before the Court there was considerable discussion as to the scope and effect of the principle of equity enunciated in Ramsden v. Dyson, as to whether such principle should be extended to the facts of the case and as to whether the facts of the case attract the application of the equity established in Ramsden v. Dyson or attract the equity established in Maddison v. Alderson, and Walsh v. Lonsdale, and finally as to whether the decision of the Privy Council in Ariff v. Jadunath the equity in Ramsden v. Dyson can prevail against the requirement of formalities laid down in the Victorian Statute referred to above any more than the equity in Maddison v. Alderson can do against the requirements of the Transfer of Property Act. The majority of the judges did not express any opinion on this question but decided the appeal on a narrower and shorter ground stated above. One of the judges, Chandrasekhara Aiyar, J. constituting the majority expressed his view thus:- "Whether it is the equity recognised in Ramsden's case, or it is some other form of equity, is not of much importance. Courts must do justice by the promotion of honesty and good faith so far as it lies in their power. As pointed out by Jenkins C. J. in Dadoba Janardhan's case a different conclusion would be opposed to what is reasonable, to what is probable and what is fair." The other judges of the Court who spoke for the Court refrained from going into this question. The view of Chandrasekhara Aiyer, J.
703 being the view of one of the judges of the majority, cannot be taken as the view of the Court. Patanjali Sastri, J. as he then was dissented with the majority and stated:- "The principle of Ramsden v. Dyson cannot prevail against statutory requirements regarding disposition of property or making of contract by Government * * *The right to levy land revenue is no part of the Government's right to property but a prerogative of the Crown and adverse possession of the land could not destroy the Crown's prerogative to impose assessment on the land." A Bench of four judges of this Court in a decision Excise Commissioner. U. P. Allahabad v. Ram Kumar, after examining the case law on the subject observed that "it is now well-settled by a catena of decisions that there can be no question of estoppel against the Government in exercise of its legislative, sovereign or executive powers." The earlier decisions of this Court in M. Ramanathan Pillai v.
State of Kerala, and State of Kerala and Anr. v. The Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd. were followed. It may, therefore, be stated that the view of this Court has been that the principle of estoppel is not available against the Government in exercise of legislative, sovereign or executive power.
On behalf of the petitioners, it was submitted that a liberal view was taken by this Court in the decision Union of India v. M/s. Indo-Afghan Agencies Ltd. which recognised the principle of promissory estoppel and held that whether the agreement is executive or administrative in character, the courts have power in appropriate cases to compel performance of the obligations imposed by the schemes upon the departmental authorities. At this decision is relied on as the sheet anchor of the doctrine of promissory estoppel, the facts of the case and the decision rendered therein, have to be examined carefully. M/s. Indo-Afghan Agencies Ltd. the respondents before this Court exported woollen goods to Afghanistan and were issued an Import Entitlement Certificate by the Textile Commissions not for the full F. O. B. value of the goods exported, but for a reduced amount.
By virtue of the powers conferred under S.3 of the Imports and Exports (Control) Act, 1947, the Central Government issued the Imports (Control) Order, 1955 setting out the policy governing the grant of import and export licence.
During the relevant period, it provided for the grant to an exporter, certificates to import raw materials of a 704 total amount equal to 100% of the F. O. B. value of his exports. Cl.10 of the Scheme provided that the Textile Commissioner could grant an import certificate for a lesser amount if he is satisfied after holding an enquiry that the declared value of the goods is higher than the real value of the goods. It was contended, amongst other grounds, that the Government on grounds of executive necessity was the sole judge of the validity of its action in matters relating to import and export policy, because the policy depended upon the economic climate and other related matters and had to be in its very nature flexible with power in the Government to modify or adjust it as the altered circumstances necessitate. It was pleaded that if the Government was held bound by every representation made by it regarding its intentions, it would amount to holding the Government as being bound by contractual obligations even though no formal contract in the manner required by Art. 299 of the Constitution was executed. Regarding the objection on the ground of contravention of Art. 299 of the Constitution, the Court held that the respondents were not seeking to enforce any contractual right but were seeking to enforce compliance of the obligation which is laid upon the Textile Commissioner by the terms of the Scheme and the claim of the respondents was founded upon the equity which arose in their favour as a result of the representation made on behalf of the Government in the Export Promotion Scheme. (emphasis supplied). It may be noted that no finding was recorded by the Textile Commissioner, that there was any infringement which entitled him to reduce the quota under Cl. 10 of the scheme.
The facts of the case disclose that the defence of the executive necessity was not relied upon in the affidavit filed on behalf of the Union of India. It was also not pleaded that the representation in the Scheme was subject to an implied term that the Union of India will not be bound to grant the import certificate for the full value of the goods if they deem it inexpedient to grant the certificate. The Court after referring to earlier decisions of this Court accepted the view expressed in those decisions that reduction in the amount of import certificate may be justified on the ground of misconduct of the exporters in relation to goods exported or on such considerations as the difficult foreign exchange position or other matters which have a bearing on the general interest of the State (emphasis supplied). Summing up the law laid down by the earlier cases, the Court found that in each of the three cases this Court held that it was competent to grant relief in appropriate cases, if, contrary to the Scheme, the authority declined to grant a licence or import certificate or the authority acted arbitrarily and that the Union of India and its Officers are not entitled at their mere whim to ignore the promises made by the Government (emphasis 705 supplied). It rejected the plea on behalf of the Government that the Textile Commissioner is the sole judge of the quantum of the import licence to be granted to an exporter and that the Courts were powerless to grant relief if the promised import licence is not given to an exporter who has acted in his prejudice relying upon the representation. The decision is, therefore, an authority for the proposition that in the absence of a plea of executive necessity, the Court in appropriate cases is entitled to compel performance of the obligations imposed by the Scheme on the departmental authority. The right of the Government on relevant considerations such as difficult foreign exchange position or other matters which have a bearing on the general interest of the State, to reduce the amount of import certificate was recognised. But the authorities have to act according to the terms of the scheme and not arbitrarily or at their mere whim to ignore the promises made by the Government (emphasis supplied). On the facts of the case, the Court gave relief as the authorities declined to act according to the terms of the Scheme and acted arbitrarily and at their mere whim ignoring the promises made by the Government. The question as to the applicability of the doctrine of promissory estoppel against the legislative or executive acts of the Government did not strictly arise in the case. The decision was thus generally understood as stated above is seen from the view expressed by Mr. H.M. Seervai on Constitution of India, 2nd Edn. Vol. I, paragraph 11 at para 146-B, p. 433:
"The authorities considered by the Supreme Court, and the conclusions drawn from them, by Shah, J. in the present case, merely affirm the proposition that the Government could not go back upon promises made in the exercise of discretionary power as embodied in a scheme, merely on a whim (emphasis by Mr. Seervai) x x x x x X A promissory estoppel cannot stand on a higher footing than a contract entered into between a citizen or subject and a public authority and it is settled by numerous decisions that no public authority entrusted with discretionary power to be exercised for the public can bind itself by a contract not to exercise that discretion when the public good demands its exercise".
It is only in public interest that it is recognised that an authority acting on behalf of the Government or by virtue of statutory powers cannot exceed his authority. Rule of ultra vires will become applicable when he exceeds his authority and the Government would not be bound by such action. Any person who enters into an arrangement 706 with the Government has to ascertain and satisfy himself that the authority who purports to act for the Government, acts within the scope of his authority and cannot urge that the Government is in the position of any other litigant liable to be charged with liability.
In refuting the contention that the contract is unenforceable on the ground that there had been no strict compliance of the requirement of Art. 299 of the Constitution, the Court observed that the respondents were not seeking to enforce any contractual rights but were seeking to enforce compliance with the obligation which was laid upon the Textile Commissioner by the terms of the Scheme. Thus, the relief that was granted by the Court was by enforcing the compliance of the obligation which was laid upon the Textile Commissioner by the terms of the Scheme.
The Court proceeded to state that the claim of the respondents is appropriately founded upon the equity (emphasis ours) which arises in their favour as a result of the representation made on behalf of the Union of India in the Export Promotion Scheme, and the action taken by the respondents acting upon that representation under the belief that the Government would carry out the representation made by it. Thus the equity which the Court was enforcing was to direct compliance of the obligation which is laid upon the Textile Commissioner by the terms of the scheme. The equity cannot be understood as barring the authority from modifying the scheme on special considerations such as difficult foreign exchange position or other matters which have a bearing on the general interest of the State (vide p. 380).
The purport of the judgment is made clear by its own observation:- "Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot be some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen." The observations of the Court that the claim of the respondents is properly founded on the equity should be understood on the facts and findings of the Court in the case. The Court relying on the observations of Chief Justice Jenkins, observed that even though the case does not fall within the terms of S.115 of the Evidence Act, it is still open to a party who has acted on a representation made by the Government to claim that the Government shall be bound to carry out the promise made by it, even though the promise is not recorded in the form of a formal contract as required by the Constitution. The Court 707 would be bound when the officer made the promise within the scope of his authority and failed to act upon it at his mere whim and acted arbitrarily on some undefined and undisclosed grounds of necessity.
Before proceeding further with the case, we will refer briefly to the purport of the doctrine of promissory estoppel. The doctrine of promissory estoppel burst into sudden blaze in 1946 when Denning. J. sitting in the Court of Kings Bench delivered the judgment in Central London Property Trust Ltd. v. High Trees House Ltd. which has now become famous as the High Trees Case. The facts of the case are: During the war many people left London owing to bombing. Flats were empty. In one block, where the flats were let on 99 years leases at $ 2,500/- a year, the landlord agreed to reduce it by half and to accept $ 1,250/- a year. When the bombing was over, and the tenants came back, the landlord sought to recover the full rent at $ 2,500/- a year. Denning, J. held that the landlord could not recover the full amount for the time when the flats were empty. The lease was a lease under seal which according to English Common Law, could not be varied by an agreement by parole, but only by deed. The learned judge invoked equity to his aid and said that if there has been a variation of a deed by simple contract the courts may give effect to it.
The counsel for the lessee pleaded that the lessor had agreed though without consideration to accept the rent at a reduced rate, and set up a plea of estoppel by way of defence to the claim for arrears of rental calculated at the full rate. Faced with Foakes v. Beer, if the defence was raised as a matter of contract and Jorden v. Money, if it was raised as estoppel. Denning. J. held that the estoppel sustained although based on an assurance as to the future, because the promisor intended to be legally bound and intended his promise to be acted upon, with the result that it was so acted upon. In Jordan v. Money (supra), the House of Lords held that a promise to pay a smaller sum of money in discharge of larger amount which was due, was void since such a promise was without consideration. Denning, J.
relying on Fenner v. Blake, Re: Wickhem William Porter & Co. Ltd. and Buttery v. Pickard observed that they were cases of estoppel in the strict sense. They are really promises- promises intended to be binding-intended to be acted upon, and in fact acted on and in the circumstances the plaintiff company will be bound by the arrangement in its letter.
Though the observations of 708 Denning, J. in High Trees case were in the nature of obiter dicta, the decision became the starting point of the several shades of opinion regarding the scope of promissory estoppel. It is unnecessary for our purpose to go into the development of law of promissory estoppel starting from High Trees case. It is sufficient to state that since the High Trees decision was rendered, many elaborations and glosses have appeared in the reports. Turner in his book Estoppel by Representation, has a separate chapter dealing with promissory estoppel. The doctrine, as observed by the author at the conclusion of the chapter, "burst out into sudden blaze in 1946 has ever since continued to smoulder, and that its original author has constantly maintained his interest in its further development, now in this direction, now in that". But there has been high places counselling conservatism *** Lord Hailsham of St. Marylebone, has expressed his views in Woodhouse Ltd. v. Nigerian Produce Ltd. as follows:- "I desire to add that the time may soon come when the whole sequence of cases based on promissory estoppel since the war *** systematically explored".
This subject though interesting may not be relevant in administering Indian Law. S. 63 of the Contract Act provides that when a creditor accepts a lesser sum in satisfaction of the whole debt, the whole debt become discharged. This provision is a wide departure from the English Law and the discussion about Jordan v. Money wherein it was held that a promise to accept a smaller sum is devoid of consideration, becomes pointless. So also the doctrine of estoppel referred to in the High Trees case is, to some extent taken care of by Ss. 65 and 70 of the Indian contract Act. S.65 provides that when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it, to the person from whom he received it. Under S. 70 of the Contract Act, an obligation is cast on the person enjoying benefit of a non gratuitous act to compensate the person who lawfully performed the act. As to whether the provisions of S. 65 and 70 of the Indian Contract Act , are applicable to contract which is not according to S. 175 of the Government of India Act and Art. 299 of the Constitution of India, there is a difference of opinion. Sir Maurice Gwyer expressed his view that when a contract is void, recourse to S.70 cannot be had. Later, the Supreme Court held in State of West Bengal v. B. K. Mondal & Sons, that S.70 was applicable to such a case. This decision was 709 followed in New Marine Coal Co. Ltd. v. Union, and in later cases by the Supreme Court.
In discussing the scope of the doctrine of promissory estoppel, and its applicability against the Government and Government Officers in their dealings with the subject, Lord Denning J. in Robertson v. Minister of Pensions observed :- "The Crown cannot escape by saying that estoppels do not bind the Crown for that doctrine has long been exploded. Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so as to fetter its future executive action. That doctrine was propounded by Rowlett J., in Redariaktiebolaget Amphtrite v. The King but it was unnecessary for the decision because the statement there was not a promise which was intended to be binding but only an expression of intention. Rowlett, J., seems have been influenced by the cases on the right of the Crown dismiss its servants at pleasure, but those cases must now all be read in the light of the judgment of Lord Atkin in Reilly v. The King-(1954) A. C. 176, 179) *** In my opinion the defence of executive necessity is of limited scope. It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract." Lord Denning was dealing with a case of a serving army officer who wrote to the War Office regarding a disability and received a reply that his disability had been accepted as attributable to "military service". Relying on that assurance, he forbore to obtain an independent medical opinion. The Minister of Pensions took the view that appellant's disability could not be attributed to war services. Lord Denning held that between the subjects such an assurance would be enforceable because it was intended to be binding, intended to be acted upon, and it was in fact acted upon; and the assurance was also binding on the Crown because no term could be implied that the Crown was at liberty to revoke it.
The decision in Robertson's case is quoted with approval in the Indo-Afghan case but before we revert to the Indo-Afghan case, we will follow the course which Robertson's case took. The correctness of the case came up for consideration before the House of Lords in Howell v. Falmouth Boat Construction Co. Ltd. The appeal was preferred to the 710 House of Lords from the Court of Appeal against the judgment of Bucknil, Singhleton and Denning, L.JJ. In his judgment in the Court of Appeal, Denning L. JJ. pressed the principle in the following terms:- "Whenever Government Officers, in their dealings with a subject, take on themselves to assume authority in a matter with which he is concerned, the subject is entitled to rely on their having the authority which they assume. He does not know and cannot be expected to know the limits of their authority, and he ought not to suffer if they exceed it. That was the principle which I applied to Robertson v. Minister of Pensions, and it is applicable in this case also." Commenting on the view taken by Denning, L. J. Lord Simonds observed :- "My Lords, I know of no such principle in our law nor was any authority for it cited. The illegality of act is the same whether or not the actor has been misled by an assumption of authority on the part of a government officer however high or low in the hierarchy.*** The question is whether the character of an act done in face of statutory prohibition is affected by the fact that it has been induced by a misleading assumption of authority. In my opinion, the answer is clearly "no". Such an answer may make more difficult the task of the citizen who is anxious to walk in the narrow way, but that does not justify a different answer being given." Lord Normand referred to the principle laid down by Denning L. J. and observed :- "As I understand this statement, the respondents were in the opinion of the learned Lord Justice, entitled to say that the Crown was barred by representations made by Mr. Thompson and acted on by them from alleging against them a breach of the statutory order, and further that the respondents were equally entitled to say in a question with the appellant that there had been no breach. But it is certain that neither a Minister nor any subordinate officer of the Crown can by any conduct or representation bar the crown enforcing a statutory prohibition or entitle the subject to maintain that there has been no breach of the contract." The view expressed by the House of Lords and the Privy Council has been followed in English cases.
711 The Privy Council in Antonio Buttigieg v. Captain Stephen H. Cross and Ors, has ruled that it is not competent for the Government to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises, that it cannot by contract hamper its freedom of action in matters which concern the welfare of the State. The competent Military Authority approached the appellant for opening a club for officers serving in his Majesty's forces. The appellant stated his willingness to take on lease certain premises and asked the Military authorities to procure him a licence to continue the club after the termination of the war. The military authorities failed to obtain a licence and the appellant was informed of their inability to obtain the licence and an officer on behalf of the military authorities stated that the appellant should have a guarantee seeing that the war was not likely to come to an end quickly and that the club would be kept open throughout the war. The rules for the conduct of the club were drawn up and were approved by the Military Authorities. Rule 18 provided that the club should endure during the time when the said hostilities existed. The club was placed out of bounds for service members by order of the Military Authorities because the club was being mismanaged by the sale of liquor long after permitted hours. As the club was a purely Service Club, it was subsequently wound up. The appellant complained of the loss to which he had been put by placing th
