2003 (11) TMI 611 - SC - Indian Laws

Challenged the decision taken by the Government of Orissa to revise with effect from back date the terms for making available raw material - Violation of the principle of promissory estoppel - HELD THAT - The High Court has rightly discarded this plea. To attract the applicability of the principle of estoppel it is not necessary that there must be a contract in writing entered into between the parties. We are not satisfied even prima facie that it was a case of an error committed by the State Government of which it was not aware. The State of Orissa should have, while holding out the representation, taken into consideration the fact-who will have to do re- plantation and that the permission of the Government of India would be needed for the purpose. The State cannot take advantage of its own omission. The State Government having persuaded the respondent to establish an industry and respondent having acted on the solemn promise of the state Government, purchased the raw material at a fixed price and also sold its products by pricing the same taking into consideration the price of raw material fixed by the State Government and supplied, the State Government cannot be permitted to revise the terms for supply of raw material adversely to the interest of the respondent and effective from a back date and place the respondent in a situation which it will not be able to resolve. The respondent could not have revised their price from a back date and recovered it from innumerable consumers to whom their finished products were supplied at a fixed price. No fault can be found with the view taken by the High Court. The appeal is devoid of any merit and is dismissed. The interim order dated 17.2.1997 passed by this Court stands vacated. The State Government shall implement the judgment of the High Court expeditiously.

Summary

Issues involved:
The appeal concerns the revision of terms for raw material supply by the Government of Orissa, challenged by the respondent on grounds of promissory estoppel.

Details of the Judgment:

Issue 1: Promissory Estoppel and Revision of Terms
The State of Orissa proposed a revision of terms for raw material supply in 1989, affecting the respondent adversely. However, after the respondent's protest, a decision was made not to alter the terms in 1989. Subsequently, in 1993, the State proposed a revision with backdating, which was challenged by the respondent in a writ petition. The High Court struck down the 1993 revision, citing the principle of promissory estoppel. The State argued that the revision was to correct an error in calculation and for public interest, but the Court found no grounds for interference. The Court emphasized that the State cannot take advantage of its own omission after persuading the respondent to establish an industry based on a solemn promise. The appeal was dismissed, and the State was directed to implement the High Court's judgment promptly.

Issue 2: Applicability of Promissory Estoppel
The respondent contended that the absence of a written contract negated the applicability of promissory estoppel. However, the High Court rightly rejected this plea, stating that a written contract is not necessary to invoke estoppel. The Court found that the State's representation led the respondent to act and make business decisions based on the State's promises. The State's attempt to revise terms retrospectively was deemed inequitable and not permissible under the circumstances. The High Court's decision was upheld, emphasizing the importance of honoring commitments made to induce actions by the other party.

Separate Judgment:
In a related matter, the State Government's appeal against a similar decision in a previous case was also dismissed, upholding the High Court's judgment based on the same principles of promissory estoppel. The State was directed to implement the High Court's decision promptly in this case as well.