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TMI Blog1980 (1) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... day Tribune, Ambala, Hindusthan Times Weekly, Hindusthan Standard and Amrita Bazar Patrika, all dated November 8,1964. The plaintiff and the said Giridharilal made a joint representation in writing dated 25/26, October, 1965, to the then Commissioner of Income-tax (No. 1) giving information of concealed income by seven firms in the jute Market mentioned in para. 3 of the plaint and furnished valuable particulars regarding the books of accounts relating to their concealed income. Thereafter from time to time information regarding about 52 firms guilty of concealing income were furnished by the plaintiff to the defendant and list of such names has been set out in para. 8 of the plaint. On January 31, 1967, the plaintiff along with Giridharilal actively helped the defendant's officers in raiding 37 business places. As a result of the raids the defendant discovered concealed income to the extent of Rs. 4 crores, which was published in the Sunday Statesman on February 5, 1967. According to the plaintiff, he acted on the basis of the promises made by the defendant and relied on its representations published in the newspapers mentioned above and as a result thereof he changed his position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at that stage. The plaintiff had filed a supplementary affidavit in that proceeding affirmed on August 14, 1972, in which he stated in para. I, that the defendant had recovered more than 8 crores by way of extra taxes and this allegation was not denied by the defendant by filing any affidavit although the supplementary affidavit was duly received by the defendant on August 16, 1972. On the basis of the allegation by the defendant that the assessment was incomplete, the plaintiff did not press the said rule and withdrew the same with leave to take out a fresh proceeding. By the order dated September 27, 1972, disposing of the said rule, this court directed the defendant to make an ad interim payment to the plaintiff at an early date and to expedite the matter. The plaintiff, thereafter, gave several reminders to the defendant. The defendant by its letter dated June 2, 1973, informed the plaintiff that the matter could not be finalised due to various litigations instituted by the assessees and the question of final reward would be taken up after the relevant assessments would become final and on realisation of extra taxes. As the defendant remained silent and no final reward was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff suffered to his detriment by acting on the alleged representations alleged to have been made by the defendant ? 2. Is the plaintiff entitled to recovery of the money claimed in the suit under s. 70 of the Indian Contract Act? 3. Has the defendant through its Income-tax Commissioner, Mr. Krishnamurthy, admitted the plaintiff's claim in writing by affidavit affirmed on 29th February, 1972, in C.R. No. 2619(W) of 1971, as alleged in para. 19 of the plant? 4. Did the defendant realise Rs. 8 crores as alleged in paras. 1 and 3 of the plaintiff's supplementary affidavit dated 14th August, 1972, alleged in para. 20 of the plaint? 5. Has the plaintiff any cause of action against the defendant ? 6. To what relief, if any, is the plaintiff entitled ? On behalf of the plaintiff, the plaintiff himself and Giridharlal Ganatra were examined. No oral evidence was adduced on behalf of the defendant. The plaintiff proved the Hindusthan Times Weekly, Sunday Hindusthan, Standard, Sunday Statesman and Sunday Amrita Bazar Patrika, all dated November 8, 1964, containing the announcements of payment of reward to the informants of concealed income as alleged in the plaint and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the information supplied by you in the jute cases which are being assessed in this charge. The claim for reward in these cases will depend on discovery of concealment, if any, after examination of all the seized materials and upon their assessments and on realisation of tax on such assessments." This letter is a clear admission of acknowledgment of the defendant's liability to the plaintiff in writing. It appears that by the end of November, 1970, the defendant offered the plaintiff to accept another sum of Rs. 12,500 in full and final settlement of his claims for reward. The plaintiff by his letter dated December 4, 1970, refused to accept the said sum in full and final settlement of his claims. By a letter dated January 21, 1971, the plaintiff requested the defendant's, D. H. Dutta, Deputy Director of Inspection, to furnish him with copies of the search lists and seizure lists and wanted to know what steps the defendant had taken for completing the assessments and what amounts had been assessed as extra taxes. In reply to this letter, Mr. B. K. Naha wrote to the plaintiff on March 4,1971, that the plaintiff was not entitled to any information and that the payment of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will expedite the matter and will also consider if it is possible for them to make another interim payment, if due, to the petitioner in the meantime. If so, the authorities will make such ad interim payment to him at an early date." It is to be noted that in the writ petition, the defendant did not take the stand that the plaintiff had no legal right to recover the reward or that the reward was in the nature of an ex gratia payment and would depend on the discretion of the authorities as alleged in the written statement before me or in the letter dated March 4, 1971. Subsequent to the disposal of this rule, the plaintiff made various representations to the defendant for payment of his reward but without any result. Being exasperated, the plaintiff, by a letter dated November 10, 1972, addressed to the Chairman, CBDT, recorded the whole history of the case. It was specifically recorded that on january 31, 1967, the department made sudden raids in 37 places pursuant to the information given by the plaintiff. In that letter the plaintiff stated that the defendant had realised Rs. 8 crores by way of extra taxes. A long list of names supplied by the plaintiff to the defendant was en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rosad, Assistant Inspector, jute Circle and MT. R. Chopra, Commissioner of Income-tax, told him that assessment had been completed and tax had been realised and these officers are still in service (Giridharilal Q. 103-110, 241-243). Giridharilal, mentioned the names of several officers of the defendant who according to him bad given information to Ganatra about the realisation of huge taxes but none of these officers came forward to deny this oral testimony. Both the documentary and the oral evidence before me remained unchallenged and unrebutted. The entire record of assessments and information and records of recovery of extra taxes have been withheld by the defendant from court. The defendant has not come forward to assist the court in this matter. Mr. Dasgupta, the plaintiff's counsel submitted that the whole records relating to assessment and realisation of taxes were suppressed. The shyness of the defendant's officers to go to the witness box and to face cross-examination and the suppression of all relevant records from court, naturally would give rise to the adverse presumption that the records, if produced, would go against the defendant and would support the plaintiff's cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is for the defendant to prove what sum has actually been realised by the defendant. The defendant failed to discharge that onus. It is a fit case where an adverse presumption should be raised against the defendant under s. 14(g) of the Evidence Act, The counsel for the defendant submitted that there was no question of suppression of records by the defendant. The assessment records are secret documents as there is a statutory prohibition against disclosure of these documents. He very strongly relied on s. 54 of the Indian I.T. Act, 1922, and s. 137 of I.T. Act of 1961. Mr. Dasgupta thereupon invited my attention to the fact that s. 137 of the I.T. Act of 1961 was deleted with effect from April 1, 1964, by the Finance Act, 1964, and whatever statutory bar was there was removed from April, 1964. He cited Nazir Mahammad v. Jamila Bibi [1972] 85 ITR 342 (Orissa). In this case the effect of the omission of s. 137 from the I.T. Act of 1961, by the Finance Act, 1964, with effect from April 1, 1964, was considered and it was held at page 345 as follows : " Thus, as it appears, after the omission of section 137 from the statute, the restriction in respect of disclosure of information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an offer to the general public does not find any place in the written statement. In para. 2 of the written statement, the defendant admitted that certain statements were made by the Chairman, CBDT, New Delhi, and reported in the press. In para. 31 of the written statement, the defendant's case is : " This suit is not maintainable as the payment of reward is in the nature of ex gratia payment. " This case of offer and acceptance of void contract has no basis whatsoever as the plaintiff has not come to court to enforce any contractual right against the defendant. The cause of action in the suit is " promissory estoppel " or s. 70 of the Contract Act. Although this particular term " promissory estoppel " has not been used in the plaint, both the parties have argued this branch of law in fall. Hence this Carbolic Smoke Ball case [1892] 2 QB 484 (Ch D) has no application to the facts of this case. According to the defendant's counsel, the question of promissory estoppel would not arise as no legal relationship or right was in existence between the parties when the alleged representations were made by the defendant. The defendant's counsel submitted that where an existing legal righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rately as the entire law of promissory estoppel including the cases relied on by both the plaintiff and the defendant have been thoroughly dealt with in the epoch making judgment of Bhagwati J. in Motilal Padampat Sugar Mills' case [1979] 118 ITR 326 (SC). The entire law has been summarised and settled in this case and the apparent inconsistency in Excise Commr. v. Ram Kumar, AIR 1976 SC 2237, relied on by the defendants' counsel and Union of India v. Anglo-Afghan Agencies, AIR 1968 SC 718, relied on by the plaintiff's counsel has been resolved on the basis of the ratio of both these judgments as will clearly appear from that decision. This case clearly lays down that so far as the Indian courts are concerned, they have always held that promissory estoppel, standing alone, without any consideration or pre-existing legal or jural relationship between the parties, gives rise to a cause of action and on this point there is a clear departure from the law in England. In India, the law on this point is uniform since 1880. It is worthwhile reproducing para. 19 of AIR 1979 SC 621 (Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P.), where the Supreme Court, in bold language, held as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act if it was embodied in writing in accordance with art. 299 of the Constitution, but the same not being done it became void on account of non-compliance with the constitutional provisions, that would not stand in the way of enforcing the equitable principle of promissory estoppel against the Government. It will not give the defendant a valid defence as will appear from the observation of the Supreme Court at page 643 of this report, where relying on the case of Anglo-Afghan Agencies' case, AIR 1968 SC 718, it was held (see also [1979] 118 ITR at p. 361) : " It was thus laid down that a party who has, acting in reliance on promise made by the Government, altered his position, is entitled to enforce the promise against the Government, even though the promise is not in the form of a formal contract as required by art. 299 and that article does not militate against the applicability of the doctrine of promissory estoppel against the Government." The defendants' counsel had argued that the doctrine of promissory estoppel was not applicable in this case because there is no evidence, so far as the plaintiff is concerned, that he had suffered any prejudice or detriment by acting on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... almost undefended. The Government cannot claim to be exempted on some indefinite and undisclosed ground. The defendant's allegation at a very late stage, that the promise was not a representation but was an intimation of an ex gratia payment to the informant depending on the discretion of the Government cannot be accepted. In the premises, I hold that the plaintiff has a cause of action on the basis of promissory estoppel and the suit is maintainable against the defendant. Moreover, Ganatra has said that both he and the plaintiff had to give up their business in the jute market. Section 70 of the Contract Act has been introduced by way of amendment in paras. 3A and 4A of the plaint. As against this, the defendant's counsel has raised three points.: 1. This case does not find any place in section 80 notice and cannot be entertained. 2. The plaintiff admitted in the plaint that he bad supplied information " pursuant to the request " of the defendant. Section 70 does not contemplate any such " request " and its operation would, therefore, be excluded. 3. This amendment was made at a time when the plaintiff could not have filed any suit on this cause of action as it was bar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, it has been held that where goods are delivered pursuant to a request, s. 70 of the Contract Act has no application and that there must be a pleading for compensation under s. 70. According to the defendant's counsel, under s. 70, compensation is the market value of the goods, which is a question of fact and there must be proper pleading and proof of market value. The plaintiff did not plead or prove the market value of work done by him and the suit must be dismissed on that ground. The plaintiff's counsel, however, submitted that B. N. Elias and Co. Ltd. v. State of West Bengal, AIR 1959 Cal 247, has been overruled by implication by State of West Bengal v. B. K. Mondal and Sons, AIR 1962 SC 779. The facts of this case were that the plaintiff at the request of the defendant submitted its estimate for certain construction works and completed the same and became entitled to Rs. 2,322.81 from the defendant. Thereafter the Sub-Divisional Officer requested the plaintiff to erect certain storage sheds which was done by the plaintiff and his bill came up to Rs. 17,003. In the suit, these two amounts were claimed. There was no pleading under s. 70 of the Act. The defence was that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rompt in submitting its bill after the work was done." The aforesaid observation of the Supreme Court is fully applicable to the facts of this case. The supply of information and the active help by the plaintiff and the discovery of concealed income by the defendant on the basis of the plaintiffs' information are not only admitted by the defendant but also have been fully established by both oral and documentary evidence of the plaintiff in this suit. That the plaintiff had no intention to act gratuitously is also proved by the oral and documentary evidence which show that the plaintiff had been repeatedly demanding the promised reward from the defendant. The plaintiff's counsel rightly submitted that all the requisites under s. 70 of the Act were already pleaded in the original plaint and the amendment only clarified the position. This also disposes of the other point taken by the defendant that s. 80 notice did not mention anything about cause of action under s. 70 and as such the plaintiff was not entitled to recover the claim on that basis. I have carefully gone through the notice and am satisfied that all the requirements under s. 70 have been fully and substantially pleade ..... X X X X Extracts X X X X X X X X Extracts X X X X
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