Brogden v Metropolitan Railway (1877) 2 App Cas 666

Facts

The complainants, Brogden, were suppliers of coal to the defendant,

Metropolitan Railway. They completed business dealings regarding the coal
frequently for a number of years, on an informal basis. There was no written
contract between the complainant and the defendant. However, the parties
decided that it would be best for a formal contract to be written for their future
business dealings. The Metropolitan Railway made a draft contract and sent this
to Brogden to review. The complainant made some minor amendments to this
draft and filled in some blanks that were left. He sent this amended document
back to the defendant. Metropolitan Railway filed this document, but they never
communicated their acceptance of this amended contract to the complainants.
During this time, business deals continued and Brogden continued to supply
coal to the Metropolitan Railway.

Issues

When a dispute arose, the issue in this case was whether there was a contract
between Brogden and the Metropolitan Railway and if the written agreement
they had was valid.

Held

The House of Lords held that there was a valid contract between suppliers,
Brogden and the Metropolitan Railway. The draft contract that was amended
constituted a counter offer, which was accepted by the conduct of the parties.
The prices agreed in the draft contract were paid and coal was delivered.
Although there had been no communication of acceptance, performing the
contract without any objections was enough.

Bhagwandas Goverdhandas Kedia v. M/S. Girdharilal Parshottamda

Facts: On July 22nd 1959, Kedia Ginning Factory and Oil Mills (appellant) of
Khamgaon entered into a contract over telephone to supply cotton seed cakes to
M/s. Girdharilal Parshottamdas and Co. (respondents) of Ahmedabad. The
respondents commenced an action against the appellant in the City Civil Court of
Ahmedabad for failing to supply cotton seed cakes as per the aforementioned
agreement. The respondents contended that the cause of action for the suit arose
at Ahmedabad as the appellant’s offer to sell was accepted at Ahmedabad and the
appellant was to be paid for the goods through a bank in Ahmedabad. The
appellant contended that the respondents’ offer to purchase was accepted at
Khamgaon; the delivery and payment of the goods were also agreed to be made
in Khamgaon and the City Civil Court of Ahmedabad did not have jurisdiction to
try the suit. The City Civil Court of Ahmedabad held that it had jurisdiction as
the acceptance of the offer was intimated to the offerree at Ahmedabad and that
is where the contract was made. The appellants filed a revision application in the
High Court of Gujarat which was rejected. Then, the appellants preferred an
appeal to the Supreme Court with special leave.
Contentions of appellant:
In the case of a contract by telephone, only the court within whose territorial
jurisdiction the acceptance of offer is spoken into telephone has jurisdiction to try
any suit regarding the contract
Contentions of defendant:
The contract is formed where the acceptance of offer is intimated to the offerree.
Hence, the court in whose territorial jurisdiction such acceptance of offer was
intimated can try such suit.
Judgement:
The court held that the contract act does not expressly deal with the place where
a contract has been made. As against cases of correspondence by post or telegram,
in the present case of correspondence by a telephone, a contract was formed when
acceptance was duly communicated to the offeror and hence at Ahmedabad.

Union of India & Ors Vs. M/s. Indo-Afghan Agencies Ltd

Facts:

The Textile Commissioner published a scheme called the Export Promotion

Scheme providing incentives to exporters of woollen goods on October 10,
1962. It was extended by a Trade Notice dated January 1, 1963 to exports of
woollen goods to Afghanistan. M/S Indo-Afghan Agencies -hereinafter called
the respondents- a firm dealing in woollen goods at Amritsar exported to
Afghanistan in September, 1963,

woollen goods

The Deputy Director in the office of the Textile Commissioner Bombay issued
to the respondents an Import Entitlement Certificate. Representations made by
the respondents to the Deputy Director and to the Union Government that they
be granted Import Entitlement Certificate for the full f. o. b value of the goods
exported failed to produce any response.
In a petition under Art. 226 of the Constitution before the Punjab HC by the
respondents for a writ or the Union of India, the Textile Commissioner and the
Joint Chief Controller of Imports and Exports, Bombay, to issue a license
“permitting import of wool-tops, raw wool, wool waste and rags of the value of
Rs. 3,04,012.73 nP”, the orders of the Textile Commissioner and the Central
Government were set aside.

The High Court held that the Expert Promotion Scheme specifically provided
for granting certificates to import materials of the “value equal to 100 per cent
of the f.o. . value of the goods exported”, and the respondents were entitled to
obtain import licenses for an amount equal to 100 per cent of the f. o. b. value,
unless it was found on enquiry duly made under Cl. 10 of the Scheme that the
respondents had by “over- involving” the goods disentitled themselves to the
import licenses of the full value: that no such enquiry was made by the Textile
Commissioner and that officer merely

proceeded upon his “subjective satisfaction” that-the respondents had “over-

invoiced” the goods exported: and that the Union Government acted on
irrelevant grounds.
The Union of India, the Textile Commissioner and the Joint Chief Controller of
Imports and Exports have appealed to this Court with certificate granted by the
High Court.

The genesis of the export control scheme may first be noticed.

Issue:

Whether the Export Promotion Scheme was administrative in character

Whether the Textile Commissioner in the present case made his order without
informing the respondents

Judgment:

The defence of executive necessity was not relied upon in the present case 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 exported if they deem it inexpedient to
grant the certificate.
The Bench are unable to accede to the contention that the executive necessity
releases the Government from honouring its solemn promises relying on which
citizens have acted to their detriment.
Under the constitutional set-up, no person may be deprived of his right or
liberty except in due course of and by authority of law: if a member of the
executive seeks to deprive a citizen of his right or liberty otherwise than in
exercise of power derived from the law – common or statute – the Courts will
be competent to, and indeed would be bound to, protect the rights of the
aggrieved citizen

MOTILAL PADAMPAT SUGAR MILLS vs. STATE OF U.P. AIR 1979 SC 621

FACTS

In this case the appellant was a limited company. On October 10, 1968, a news
item appeared stating that the respondent-State of Uttar Pradesh had decided to
give exemption from sales tax for a period of three years under Section 4-A,
Uttar Pradesh Sales Tax Act, 1948 to all new industrial units in the State
of Uttar Pradesh.

On October 11, 1968 the appellant wrote to the Director of Industries stating
that in view of the sales tax holiday announced by the government, the
appellant desired to set up a plant for manufacture of vanaspati and sought
confirmation of the exemption. The Director of Industries confirmed the
position. An assurance to the same effect was given by the Chief Secretary,
Government of Uttar Pradesh.

In view of these assurances the appellant went ahead with the setting up of the
factory. In May 1969, the State government of Uttar Pradesh had second
thoughts on the question of exemption and requested the appellant to attend a
meeting. At the meeting the appellant’s representative reiterated that the
respondent- government of Uttar Pradesh of the assurance, the appellant had
proceeded with the work of setting up the factory.

The State Government of Uttar Pradesh, however, on January 20, 1970, took a
policy decision that new vanaspati units which went into commercial production
by September 30, 1970, would be given partial concession of sales tax.
The appellant’s factor went into production on July 2, 1970 but the State
Government once again changed its policy and on August 12, 1970 intimated
its decision to rescind the concessions.

The basic requirement for invoking the principle must be present, namely,
that the factual situation should be such that “injustice can be avoided only
by the enforcement of the promise”.

JUDGMENT

The High Court of Uttar Pradesh dismissed the writ and rejected the plea of
promissory estoppel against the government of Uttar Pradesh.

The Supreme Court of India, allowing the appeal, held that where one party has
by his words or conduct made to the other a clear and unequivocal promise
which is intended to create legal relations or affect a legal relationship to arise
in the future, knowing or intending that it would be acted upon by the other party
to whom the promise is made, and it is in fact so acted upon by the other party,
the promise would be a binding on the party making it and he would not be
entitled to go back upon it, if it would be inequitable to allow him to do so
having regard to the dealings which have taken place between the parties, and
this would be so irrespective of whether there is any pre-existing relationship
between the parties or not. Of course, the basic requirement for invoking the
principle must be present, namely, that the factual situation should be such that
“injustice can be avoided only by the enforcement of the promise”.

The doctrine of promissory estoppel is not really based on the principle of

estoppel, but it is a doctrine evolved by equity in order to prevent injustice.
There is no reason why it should be given only a limited application by way of
defence. It can be the basis of cause of action.