# JIT RAM SHIV KUMAR AND ORS. ETC v. STA~ OF HARYANA AND ANR. ETC

- **Citation:** [1980] 3 S.C.R. 689
- **Court:** Supreme Court of India
- **Decided:** 1980-04-16
- **Bench:** S. Murtaza Fazal Ali, P. S. Kailasam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jit-ram-shiv-kumar-and-ors-etc-v-sta-of-haryana-and-anr-etc-8207
- **Pages:** 41

## Headnote

B
P1'11}11b M1111icipal Act, 1911 as amended by Punjab Act 48 of 1951, Section
62.A-Power of State Government to di'rect the ,\lunicipality to impose any tax
ulllkr ~ction 61-Exemption from payment of octroi duty not within the com·
pelence of the Municipality and ultra vires of its powers-.Whet/1er any suc/1
lllCI whidi is void ab initio, enforceable-Principle of Promissory Estoppel, ingrt•
dienll of-Applicability to the instant case.
C
The Municipal Committee of Bahadurgarh, respondent No. 2
established
Maadi Fateh in Bahadurgarh Town with a view to improve trade in the area.
The Municipal Committ<e decided that the purchasers of the plots for sale in
the Mandi would not be required to pay octroi duty 01> goods imported within
the said Mandi. A resolution (No. 8) dated 2().12-1916 was passed by the
Mllllicipality to this effect. Hand bills wore issued for tho sale of the plots on
the basis of tpe 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 tho purchasers of plots would not be required to
pay octroi, be amended to the effect that the Mandi shall remain intmuno from
payment of octroi duty for ever. When the resolution was received
by the
Commissioner of Ambala, in paragraph 3 of his letter datod 26-6·1917, he
minuted that the undertaking by the Municipal Commissioner never to in1pose
octroi duty in the Mandi was ultra vires and therefore the purchasers of the
p)Qla 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, tha-e would be no purchasers for the
plota end the entire scheme would fall tllrough. On this, the Commissioner
reviled his earlier view and withdrew his objection by further observing tha~ "as
l!OOn es the market is established it will be necessary to consider what form of
taxation is best to cover the market share of municipal expelnses". The Muni·
cipal COmmittee on I().3-1919 imposed house-tax of Rs. 3·14·6 per cent
per
alinum on the shopkeepers to cover the ell<penditure of tho market.
This state of affairs continued till 4-9-1953 when the MunicipaJ Committee
by nolification No. 9697-C.53163830 dated 4·9-1953 included Fateh
Mand~
Bahadurgarh, within the Cktroi limits. The Examiner of Local Funds pointed
out that the h.funicipal Committee- is under obligation to charge octroi on goods
imported into Fateh Ma'1di. The President of the Municipal Committee made
a repr0oentation to the Deputy Comm:ssioner on 24-2-1954. The Municipal
Committee again passed another resolution No. I 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. I passed by the Municipal
Committee on 2·3-1954. Subs'eD
E
F
G
Jl
A
'C
D
E
F
G
H
690
SUPREME COURT REPORTS
[1980] 3 S.C.R,
quently, the Municipal Committee changed its mind and by its resolution dated
S-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
imr-orted into Fateh Mondi and the Punjab Govermnent after discussing the
issue on 9-4-19 56 informed the President of the Municipal Committee that the
Government's action in confirming ·me resolution No. 1 of 2-3-1954
of the
Municipal Committee, Bahadurgarh exempting goods imported into Fateh Mandi
from levy of ocroi duty under s. 70(2)(c) of the Municipal Act, 1911, is lluite
in order ood that no ·separate notification to this effect was necessary unde

## Text

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'
689
JIT RAM SHIV KUMAR AND ORS. ETC.
A
v.
STA~ OF HARYANA AND ANR. ETC.
April 16, 1980
[S. MURTAZA FAZAL ALI AND P. S. KAILASAM, JJ.J
B
P1'11}11b M1111icipal Act, 1911 as amended by Punjab Act 48 of 1951, Section
62.A-Power of State Government to di'rect the ,\lunicipality to impose any tax
ulllkr ~ction 61-Exemption from payment of octroi duty not within the com·
pelence of the Municipality and ultra vires of its powers-.Whet/1er any suc/1
lllCI whidi is void ab initio, enforceable-Principle of Promissory Estoppel, ingrt•
dienll of-Applicability to the instant case.
C
The Municipal Committee of Bahadurgarh, respondent No. 2
established
Maadi Fateh in Bahadurgarh Town with a view to improve trade in the area.
The Municipal Committ<e decided that the purchasers of the plots for sale in
the Mandi would not be required to pay octroi duty 01> goods imported within
the said Mandi. A resolution (No. 8) dated 2().12-1916 was passed by the
Mllllicipality to this effect. Hand bills wore issued for tho sale of the plots on
the basis of tpe 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 tho purchasers of plots would not be required to
pay octroi, be amended to the effect that the Mandi shall remain intmuno from
payment of octroi duty for ever. When the resolution was received
by the
Commissioner of Ambala, in paragraph 3 of his letter datod 26-6·1917, he
minuted that the undertaking by the Municipal Commissioner never to in1pose
octroi duty in the Mandi was ultra vires and therefore the purchasers of the
p)Qla 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, tha-e would be no purchasers for the
plota end the entire scheme would fall tllrough. On this, the Commissioner
reviled his earlier view and withdrew his objection by further observing tha~ "as
l!OOn es the market is established it will be necessary to consider what form of
taxation is best to cover the market share of municipal expelnses". The Muni·
cipal COmmittee on I().3-1919 imposed house-tax of Rs. 3·14·6 per cent
per
alinum on the shopkeepers to cover the ell<penditure of tho market.
This state of affairs continued till 4-9-1953 when the MunicipaJ Committee
by nolification No. 9697-C.53163830 dated 4·9-1953 included Fateh
Mand~
Bahadurgarh, within the Cktroi limits. The Examiner of Local Funds pointed
out that the h.funicipal Committee- is under obligation to charge octroi on goods
imported into Fateh Ma'1di. The President of the Municipal Committee made
a repr0oentation to the Deputy Comm:ssioner on 24-2-1954. The Municipal
Committee again passed another resolution No. I 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. I passed by the Municipal
Committee on 2·3-1954. Subs'eD
E
F
G
Jl
A
'C
D
E
F
G
H
690
SUPREME COURT REPORTS
[1980] 3 S.C.R,
quently, the Municipal Committee changed its mind and by its resolution dated
S-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
imr-orted into Fateh Mondi and the Punjab Govermnent after discussing the
issue on 9-4-19 56 informed the President of the Municipal Committee that the
Government's action in confirming ·me resolution No. 1 of 2-3-1954
of the
Municipal Committee, Bahadurgarh exempting goods imported into Fateh Mandi
from levy of ocroi duty under s. 70(2)(c) of the Municipal Act, 1911, is lluite
in order ood that no ·separate notification to this effect was necessary under -the
rules. Again on 21-7-1965, the Municipal Committee Bahadurgarh resolved that
the Govemment be requested to cancel Resolution No. 1 dated 2-3-1954. The
State of Haryanai Respondent No. 1 which came into existence on 1-11-64,wtaer
the Punjab Reorganisation Act, by its memo dated 13-10-1967 approv.4 tile
resolution No. 6 dated 21-7-65 of the Municipa~ Committee and cancelled the
Municipal Resolution No. 1 of 2-3-1964.
As a result of the deci9ioo <It the
Government, the Municipal Committee startetl charging octroi duty on ·.-the
goods imported into the Mandi. On these facts, the petitioner• subml!Ml that
the resolution No. 6 of the Municipal Committee dated 21-7-1965 (~
6)
and approval granted by the Haryana State as per its order dated 30-19'1%7
(Ann. H) were illegal and ultra vires and without jurisdiction.
A Full Bench of the High Court rejei:ted the petition mainly
Oil three
grounds. Firstly, it found that the State Government is entitled under S. 112-A
of Punjab Act, 48/1953 to direct the Municipal Committee to impose oettt>i 1duty
and as such even if the municipality is found to have erred in impOBing lfle
Octroi Duty, the legislative powers of the State cannot be questioned. Seconilly,
it found, that it was not within the competeru:e of the Municipality to grant
any exemption from payment of octroi duty and this act '"as ultra vfrts t1t·its
power< and cannot be enforced. Thirdly, it found that the Court canndt gn
into the question as to whether the petitioners' plea based on equity fhat the
Municipality is bound, cannot be gorre into far waint of adequate faclB. · 'i'lle
High Court however granted certificates to the appellants.
Dismissing the appeal,. the Court
HELD : l. Under section 62-A of the Punjab Municipal Act,
1911
as
amended by Punjab Act 43/1958 'the State G1>vemmen! is empowered to Im~
octroi duty and under sub clause (b) if the committee fails to canY cat ·the
order of the Government, the State Government
1may
impose
Octroi
Duty.
Under S. 70{2) (c), :l Municipal Comn1ittee by a resolution pa£sed 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,
Jn exercise of those powers, the State Government
had by its order dated 4-5-1954 confirmed resolution No. I passed by the Municipal Committee in its specia1 meeting held on 2-3-1954 regarding the eittription of goods imported into Fateh Mandi from levy of Octroi Duty. So"-'equently, 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. I dated 2-3-1954 of the Municipal
Comn1ittee exempting Goods imported into Fateh Mandi, under s. 70(2)(c) of
JIT RAM V. HARYANA
691
the Punjab. :rviunii:ipJl Act, 1911, was quite in order.
By the impugned
order
dated 20-10-1967 the Government approved the resolution No. 6 of- the Municipal Co1nmittte 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. lt
exempted the petitioners from payment of Octroi Duty for· a partic~ar period
and ultimately withdrew the exemption. The action of th~ Government cannot
be q;1estione<l 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 Governn1ent have powers to direct the Municipality to collecl
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-CJ
2. The Municipality is not estopped from levying or recommending the levy
of the tax to the Government even though in the proclan1ation of sale it was
notified that no octroi duty would be. levied and it was only in pursuance cf such
rep~sentation. the appt.Jlants purchased the property because the Municipal
Committee had uo authority to exempt the Fateh Market from the levy ot ·
Octroi .Duty. If the l\funicipa·I Committee had passed a reSolution or issued a
notification that no Octroi duty will ber 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 interes,t 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 tvlunicipal Act, since non production of any sale deed executed by the Municipal Connnittee in fa,•our of the
purchasers raises the only presumption that the; contract between the parties have
not been proved to have been reduced in writing and exocuted 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
17.5(~) of t-he Government of India Act, 1935 provides that all contracts made
A
B
c
E
in the exercise of the executive powers of the Union or of a State shall be
exp~etl to he made by the President or by the Governor of the State, as the
F
case may be, and all such contracts and all assurances of property made in the
exe~ of that power shall be executed on behalf of the President or the
GOYemor 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 wid is enacted in the public interest. The· provisions
are e.Qlbodied on the ground of public1 policy-on the ground of protection of
G
general public.
[700 F-H, 701 A-BJ
Seth Bhikraj Jaipu1~i'a v. Union of India, [1962] 2 SCR 880; ¥ulam Chand
v. State of M.P., [1968] 2 SCR 214, Karan1shi Jethabfial Sa1nrayya v. Stat~ of
Bombay. r19641 6 SCR 984; referred to.
4. The scope of the plea of doctrine of pron1issory estoppel against the
Government is as follows :
(a). Th~ plea o.f promissory estoppel is not available against thei exeifcise of
the legislative or executive functions of the State. There could not be est?ppel .
H
692
SUPREME COURT REPORTS
[1980] 3 S.C.R.
A
against express provisiom of the Jaw nor could the State by its action waiive its
rights to exerc:se powers entrusted to it for the public good. [721 F]
B
c
D
Antonio Buttigieg v. Captain Stepheti H. Cross and Ors. AIR
1907
PC;
Adants v. London Improved Motor Coach Builders, [1821) 1 K.B. 495,
York
Corporation v. Henry Lcethani ant! Sons Ltd., [1924] 1 Ch. 551; 1¥illiatn Cory
and Sons Ltd. v. London Corporation, [1951] 2 K.B. 476; Howell v. Faln1outh
Boat Consttuctiou Co. Ltd., [19511 A.C. 837; Comrnissioner of Crown liznds v.
Page, [1960] 2 K.B. 274; South-e11d-01t-Sea Corporation v. H0<lgson (Wickford)
Ltd., [1962] 1 Q.B. 416; Federal rnsurance Corpn. v. Morril, 382 U.S.
380;
quoted with approval.
·
Robt?rtson 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 Fi.tltermen Cooperative Society v. Sipuhl Sing1i
& Ors. AIR 1977 SC 2149; applied.
Union of India v. lndo Afghan Agencies, [1968] 2 SCR 366; Ce111ury Spinning cl Manufacturing Co. Ltd. and Anr. v. Ulhas Nagar Municipa~ 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 tire City of Bombay and
Ors., [1952] SCR p. 43; E.xcise Commr. U.P., Allahabad v. Ram Ku111111', (1976]
Supp. SCR 532; M. Ramanatlra Pillai v. State of Kera/a, [1974] 1 SOR 515;
StQte of Kerala and Anr. v. Tire Gwalior Manufacturing
(Wvg.)
Co.
Ltd.,
[1974] 1 SCR 671; followed.
E
(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 bis au1hority, the plea of promissory estoppel is not available. The doctrine of ultra
vires will come into operation and the Government cannot be held bound bt' the
unauthorised acts of its officers. [721 G-HJ
F
(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 aCtigg
on that representation puts himself in a disadvantageous position, the Court is
entitled to require the officer to act according to the scheme artd 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 auch
G
representation and put himself in a disadvantageous position. [721 G-H, 122
A·B]
'
· Union of .fndia v. lndo Afghan Agrncies Ltd., [1968] 2 SCR 366; diScussed
"!"'
and followed.
(e) The officer would be justified in changing'the tertns of the agreement to
the prejudice of the other party on special considerations such as difficult! foreign
H
exchange position or other rnattdrS \Vhich have a bearing on general interest of
the State. [722 B-Cl
Union of Indio v. ·Mis lndo Afgl1an Agencies Ltd., [1968] 2 SCR 366 applied.
T
,JIT RAM V. HARYANA
693
5. It is only in public interest that it is recognised that an authority acting
A
on behalf of the Government or by virtue of statutory pow'ers cannot exceed
his ~uthority. Rule of ultra vires "Will become applicable when he. exceeds his
authority an<l the Government would not 'be bound by such action. Any person who enters into an arrangement \Vith the Government has to aticertain and
satisfy himself that the authority who purports to :ict for the Government, acts
within the scope of h'.s authority and cannot urge that thp Government iS in the
posiiion of any other litigant liable to be charged with liability. [705 G-H,
B
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 nov;
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 whole1 debt becomes discharged is
<11
wide departure from the E.nglish law as laid down in Jordan v. Mor1e:i.
The
doctrine of estoppel referred to in lligh Trees case is tO' some extent taken care
of by section 65 and 70 of the Indian Contract. Section 65 provic:)es that when
a contract bec~mes void, any person who has. received ainy advantage undc~ such
ngreen~ent or contract is bound to restore it or to _make compensation for it, to
the person from whom he received it. Under section iO of the Contract Act. an
ob!igation is cast' on the person enjoyi!ng benefit of a non~gmtutious act to com·
pe!l!iafe the person Who lawfully performed the Act. [707 A, 708 B, D-F]
Fqake.s v. Beer, [1884] 9 A.C. 605; Jordan v. Money, [18541 5 H.L.
Cas
IRS; Fenner v. Blake, [1900] 1 Q.B. 426; Woodhouse Ltd. v. Nigerian Produce
Ltd., [1932] A.C. 431, IN Re. Wick/lam Will/am Porter and Co. Ltd., [1937) 2
All E.R. 361; Central London Property Trust Ltd. v. High Trees House Ltd.,
fl9S6l I All. E.R. 256; referred to.
7. 1"he provisions of-Section 70 of the Indian Contrac~ Act are applicable to
contract '"'hich is not according to Section 175 of the Goverrunent of Iildia Act,
and Article 299 of the Constitution of India.
[708 G-H]
State of West Bengal v. B. K. Monda/ and Ors., [1962] Supp. SCR p. 876;
New Marine Coal Co. Ltd. v. Union of illdia, [1964] 2 SCR 859; referred to.
c
I)
E
F
8._ All that the lndo-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 a1ter the conditions accepted by him to the prejudice of
the other side. The decision in temlS. accepts that after taking into considera ..
tion the exigencies and change of circumstances the authority can modify the
conditions in exercise of his powers as a public: policy. Apart from not notic ..
ing Howell's Case, the Court in lndo Afghan's case did not say that the 1aw as
extracted from the judizrnent in Robertson's case by Denning J. was applica.ble
to India. [719 D-E, 721 Al
G
9. The Judgment in Mis Moti/al Padampat Sugar Mills Co. (P) Ltd.
y,
Star,,· of TJt(ar Pradesh, [1979] 2 SCR p. 641 is not in accordance with the view
consistantly taken by the Supreme Court in following respects : [722 F]
. n: The decision in the case-of Union of ln~ia v. Mis lndo Afvlian APP'1·
ciea Ltd., (1968] 2 SCR 366 cannot be constructed in the manner in which it was
H
694
SUPREME COURT REPORTS
[1980) 3 S.C.R.
A
done. All that the Inda Afghan case, purports to lay down is that the Court
can enforce an obligation 1ncurred by an authority on which another has acted
upon and put himself in ai disadvantageous position. when the authority re6iles
arbitrarily or on mer'e whim or on some undefined
and undisclosed grounds
of necessity. [722 F-G]
(ii) 'fhe decision of this Court in Century Spinning and 1lfa1111fac:uring Co.
s:
Ltd and Anr. v. The Ulhasnagar Municipal Council and Anr., [1970] 3 SCR
854 was understood as refusing to make a distinction bet\Veen t·he private· lli.dividuaJ and public body so far as the doctrine of promissory estoppel is concerned. !723 F]
(iii) The three decisions of this Court, two by c·onstitution
Benches
M.
J
Ranianatha Pillai v. State of Kerala, State of Kera/ti v. The Gwalior
Ril,yi;n
-jl
C
Silk Mfg. (Wvg.) Co. Ltd. and th~ third by a Bench of four judges in Eici5''
Conzmissioner, [T.P. Allahabad v. Ram Kumar cannot be ignored on the ground
that the observations are in the nature of obiter dicta and that it cainnot be
insisted as intending to have la-id down any proposition of law different from
that enunciated in the lndo Afghan Agencies case. It was not necessary for
this Court in the three cases to refer to Union of India & others v. Inda-Afghan
Agencies. If properly understood it only held that the authority cannct go back
D
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. Faflnouth Boat Construction Co. Ltd. canont 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]
E '.
( v) Tue 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
F·
Motilal Padampat, Sugar case doubted. [724 E, F, G]
(vii) Tue Indian Contract Act regulates the right of parties and expressly
---,
ins'ists on the necessity for lawful consideration which cannot be diSpe:naed
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 COD!lid'eration
and Section 25 of the Contract Act provides that an agreement made withont
G
consideration is, void unless it satisfies one of the conditions mentioned in fhat
section. [725 B-C, DJ
H
(viii) Sankaranarayan v. State of Kerala, [1971] 2 S.C.C. 361; Narendra
chand I/em Ram and Ors. v. Lt. Governor Administration, Union Te"itory of
Himac/wl Pradesh, [1972] 1 SCR 940; State of Tamil Nadu and Ors. etc. v.
S. K. Kr;,;hnamurthi etc., [1972] 3 SCR
104; and M /s Andhra
Industri•i
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 Fl
•
.JlT RAM v. HARYANA (Kai/asam, !.)
695
10. What are the moral values of the society is a c.omplex question becauae
the cencept of moral values amongst different persons and classes of persons
is not always the same. Being not a static 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
11closing 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 ju.r 4are to interpret fhc law, and not to make l~w ori give law". [727 F, G,
728 A-CJ
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 conditions
of the people and their requirements and to make Jaws that would be mo~t
apprQPriate. 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. 1728 G-H, 729 A]
Shri Gurbaksh Singh Sibbia etc. v. State of U.P., [1908) 3 SCR p. 383
followed.
CML 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
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KAILASAM, J. These two appeals are by certificate granted by the
Pu,njab and Haryana High Court at Chandigarh in C. W. No.444/1968
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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
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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
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improve trade in the area. The Municipal Committee decided that the
purchasers of the plots for sale in the Mandi would not be required
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to pay octroi duty on goods imported within the said Mandi. In pur-.
suance 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
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they may withdraw from the purchase".
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Of course, it is unlikely that Octroi will be imposed."
On receipt of this letter, the Presid~nt 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 opini0n
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 conside1 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 Dep11ty Commissioner on 24-2-1954. The Municipal Committee again passed another resolution No. I dated 2-3-1954 that the
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JIT RAM v. HARYANA (Kailasam, !.)
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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. I 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 94-1956 informed the President of the
Municipal Committee that the Government's action in confirming
the resolution No. I of 2-3-1954 of the Municipal Committee, Baha·
durgarh 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.
I dated 2-3-1954. The State of Haryana Respondent No. I which came
into exi•tence 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. I of 2-3-1954. As a result of the decision of the Government, tbe Municipal Committee started charging octroi duty on the
goods imported into the Mandi. On these facts, the petitioners sub·
milted 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 Fu!l 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 ade·
quate facts.
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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.
(l) 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 it' letter dated 9-4-1956
(Ann. F) that the Government's action confirming the resolution No.
I dated 2-3-1954 of the Municipal Committee exempting Goods imported into Patch 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 re.solution 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
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JIT RAM v. HARYANA (Kailasam, !. )
699
Act. It exempted the petitioners from payment of Octroi Duty for a
particular period and ultimatelyjwithdrew the exemption. The action
of the Goverment 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 tha*hey 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
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levied and it was [only in pursuance of such representation, the
petitioners purchased the property. We feel this plea should also fail . o
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
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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 proF
missory 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
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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 promiss9ry 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 upder 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 tor
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,(I) has
(!) [1962] 2 S.C.R. 880.
JIT RAM v. HARYANA (Kailasam, J.)
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.,(1) 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 \)f 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,(2) 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 uot 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.(l) 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 andlvacate 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 rtated 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 speut 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/-
(1) [1968] 3 S.C.R. 214.
(2) [1964] 6 S.C.R. 984.
(3) [1952] S.C.R. 43.
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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.