Professional Documents
Culture Documents
Facts: on 26 feb 1996 the CM of punjab addressed the farmers and announced that this time the
govt is not going to assess the purchase tax of milk for nestle (and indirectly the dairy farmers who
are employed by nestle) from the year 1996 to 97. Newspapers published this widely. Later, the
finance minister while presenting the budget emphasised that the dairy farmers are backbone of the
economy and since no tax is being imposed on Nestle and indirectly the farmers the inflow of tax to
the govt account would reduce. He sent a memo to tax commissioner saying the same. The tax
commissioner circulated this among the employees, field officers etc. To exempt the dairy farmers
from tax collection. Later, in june 1997 a meeting was convened by the CM. The finance minister and
tax commissioner were also there. The COM decided that there would be no abolition of tax from
96-97 and took a U-turn. A notice was sent to the respondent to pay tax. The respondent showed
the correspondence with the F.M and tax commissioner.
Resp:
1. There is promissory estoppels and the govt made promisesmanifested through the memos,
circular etc. Thus, tax can’t be collected later on. Govt is estopped from doing so.
Here, the COM took the decision before the notification was issued. Just because the govt’s
representative said something we don’t become bound by it by going against the statute.
Promissory estoppels cannot be applied.
The SC looked into other cases of P.E (we have already done these cases in TEF. I am just
giving what he discussed in the class. These are peripheral cases, they don’t need that much
depth like std chartered bank for e.g.)
Facts: land given to MCB by the Bombay govt allowing MCB to develop modern market on
this new land. MCB spent lacs on it and leter the govt said that only a resolution was passed.
The statute wasn’t followed and so P.E is not applied. Resolution was not sufficient to
establish the promise.
S.115 of the evidence act is the only place where estoppels is defined. This case referred to
this definition.
Held: the respresentation was made to MCB. The grant being invalid doesn’t wipeout the
existence of these representations nor the fact that it was acted upon by MCB. The invalidity
of the grant doent lead to the obliteration of representation. If the govt is allowed to go back
on the representation it would be a legal fraud.
Strength: The doctrine is not ltd. To cases. It applied to any pre-existing relationship b/w
parties. It is applied even where the intention is to create legal relations.
Weakness: doctrine must yield only when:
a. equity requires
b. Court requires
c. Public interest requires so
d. If statute doesn’t contain the power of representative to make a promise then promise
cannot be made by the representative.
Based on this it was held that govt is equally susceptible to this doctrine irrespective of the
field of contractual, statutory, administrative relations. Consideration is immaterial even if
arti.299 needs it in this case. If justice demands it the court must follow it.
What was stated in sugar mills (executive functions having P.E) held to be negated in this
case. This case held that executive functions are not subject to P.E.
Present law: where the govt makes a promise, knowing it’d be acted upon, its actually acted
upon, there P.E exists.
Held: here, public interest actually favours the resp. (nestle) as it favours the farmers. They
are the backbone of the country. Any benefit to them is in the public interest.
It upheld sugar mills where it was said:
1. No representation can be enforced if it is prohibited by law
2. Person/authority making the prmise must have the authority to carry out the promise
3. If there is power the limitations and pre conditions will apply. Eg. Public interest.
4. If statute doesn’t contain provision to enable the grant of exemption the govt cant act
contrary to it.
Thus, the govt here is liable under P.E and has to exempt nestle from tax between 1996-97.