M/S Motilal Padampat Sugar Mills v. State of Uttar Pradesh and Ors

PetitionerM/S Motilal Padampat Sugar Mills
RespondentState Of Uttar Pradesh And Ors
Equivalent Citations1979 AIR 621, 1979 SCR (2) 641
Date of Ruling12/12/1978  
ForumSupreme Court of India
JudgesP.N. Bhagwati V.D. Tulzapurkar  

Facts of the case

In the instant case, the appealing party was a restricted organization. He was mainly in business of manufacturing and selling of sugars. On October 10th, 1968, a piece of news showed up expressing that the respondent-State of Uttar Pradesh had chosen to give exception from deals charge for a time of three years under Section 4-A, Uttar Pradesh Sales Tax Act, 1948 to all new modern units in the State of Uttar Pradesh.

On October 11th, 1968 the appealing party kept in touch with the Director of Industries expressing that taking into account the business charge occasion reported by the administration, the litigant wanted to set up a plant for the production of vanaspati and looked for affirmation of the exception. The Director of Industries affirmed the position. An affirmation to a similar impact was given by the Chief Secretary, Government of Uttar Pradesh.

Taking into account these confirmations, the appealing party proceeded with the setting up of the processing plant. In May 1969, the State administration of Uttar Pradesh reconsidered on the topic of exclusion and mentioned the litigant to go to a gathering. At the gathering, the appealing party’s agent said that on the affirmation and assurance of the respondent (the legislature of Uttar Pradesh) the litigant had continued setting up the manufacturing plant. In this belief that the Government has exempted him from tax, he took a huge loan and started to work on it.

However, after sometime, the Government gave a second thought to its tax exemption policy. It called for a meeting regarding this issue and called the petitioner to attend the meeting. Petitioner sent his representative to attend the meeting. The State Government of Uttar Pradesh, in any case, on January 20th, 1970, took a strategy choice that new vanaspati units which went into business creation by September 30th, 1970, would be given a fractional concession of deals charge.    

The litigant’s factor went into creation on July 2nd, 1970, yet the State Government indeed changed its arrangement, and on August 12th, 1970 suggested its choice to cancel the concessions. [1]  

Articles, Acts and Rules which were the issues in this case

  • Doctrine of Waiver
  • Promissory Estoppel
  • Article 32 of the Indian Constitution
  • Article 226 of the Indian Constitution
  • Section 4 A of the Uttar Pradesh Sales Tax Act, 1948

Cases which were referred to in this case

  • Earl of Darnley v. London, Chatham and Dover Rly. Co (1900) (002 H.L.Cas 0043)

    In this case the Lord Chemslford explained the concept of the doctrine of waiver saying that a person can wave no right unless the person who waived it has all information and knowledge about his right and waiver of the same.
  • Hughes v. Metropolitan Railway Co. (1876-77) LR 2 App Cas 439

    In this case, the Court was of the view that doctrine of promissory estoppels would be applicable with a limited scope and it can be applied only on those cases where the contractual obligation exists.
  • Century Spinning and Manufacturing Co. Ltd. and Anr.  v. The Ulhasuagar Municipal Council and Anr. (1971 AIR 1021)

    The Court through this case held that promissory estoppels are applicable against a public authority such as a Municipal Corporation.
  • Grundt v. The Great Boulder Pty. Gold Mines Ltd.[ (1937) HCA 58]

    It was an Australian case in which the classical exposition of detriment is found.

Issues

  1. Whether the plaintiff waived his right to have a cause of action by accepting partial exemption?
  2. Whether the plaintiff can have a cause of action on the grounds of promissory estoppel?
  3. Whether any such action against the Government acting in governmental, sovereign or administrative capacity can lie?
  4. Whether in the present case, the doctrine would be applicable because the plaintiff did not suffer any detriment?

Analysis 

  1. Whether the plaintiff waived his right to have a cause of action by accepting partial exemption?

    Judgment: The High Court was of the view that the Government would be liable if the petitioner did not accept the concessional rates of tax. But, he did waive his right to have a cause of action by accepting the partial exemption.

    However, the Hon’ble Supreme Court did not agree with this view saying that any party cannot demand plea of the waiver unless it is properly pleaded and proved because the waiver is a question of fact. It was raised for the first time at the hearing of the writ petition. The parties did not even mention them in affidavits, not even vaguely. It also said that the High Court was not right in allowing the plea of waiver to be raised against the appellant.

    Analysis: The decision given by the Supreme Court is justifiable. There can be no waiver of the rights unless the person who waived it has all information and knowledge about his right and waiver of the same. The Court has also said that waiver should be an intentional act with knowledge. There was no reason to believe that appellant was aware that his right would be waived due to partial exemption.  Lord Atkin also supported this view, saying that there is not and never has been a presumption that everyone knows the law. [2]

  2. Whether the plaintiff can have a cause of action on the grounds of promissory estoppel?

    Judgment: The Court analyzed the English cases as well as cases of USA. It has found that in olden times, the presence of a contractual relationship was a mandate to bring the case. But in recent judgments, the Courts did not adopt this narrower view and adopted a wider view. The Supreme Court also adopted the modern view and held that there is no need for any contractual obligations before bringing a cause of action on the grounds of promissory estoppels. The Court also held that action could be brought in those cases where no contractual obligation exists, but the same is intended for the future.    

    Analysis: The approach adopted by the Supreme Court appears to be correct because it is supporting the principle of equity. It is also a soft approach to the doctrine of promissory estoppels. Many of the jurists do not support this view that without any contractual obligation, the plaintiff can bring a case on the ground of promissory estoppels. The main reason behind this thought is that if the same is done, it would affect the doctrine of consideration.

  3. Whether any such action against the Government acting in governmental, sovereign or administrative capacity can lie?

    Judgment: The Court said that as a general rule, action against the Government could not be brought against the Government acting in governmental, sovereign or administrative capacity. However, the Court also held that this doctrine would be applied against the Government, where it is necessary to prevent fraud and manifest justice. The Court also held that where the Government owes a duty to the public to act differently, promissory estoppel cannot be invoked to prevent the Government from doing so. [3]

    Analysis: The Court’s approach seems to be correct because if action cannot be brought against the Government for the same, it would cause injustice to society. It would also encourage corruption because the person acting for the Government will get immunity from further actions.

  4. Whether in the present case, the doctrine would be applicable because the plaintiff did not suffer any detriment?

    Judgment:  The Court held that in order to invoke the doctrine of promissory estoppels, it is not necessary for the promise to show that he suffered detriment as a result of acting in accordance with promise.

    Analysis:  The Court was of the view that the detriment in such a case will not be some prejudice suffered by the promisee by acting on the promise, but the prejudice which would be caused to the promisee, if the promisor were allowed to go back on the promise.   

Judgment

The High Court of Uttar Pradesh excused the writ and dismissed the supplication of promissory estoppel against the legislature of Uttar Pradesh.

The Supreme Court of India held that where one gathering made an unequivocal guarantee by his words or action (which is expected to make lawful relations or influence a legitimate relationship to emerge later on) and the other party on that belief changed their situation, and then the first party will be liable to any loss occurred.  The necessity for summoning the rule must be available, in particular, that the verifiable circumstance ought to be to such an extent that “shamefulness can stay away from just by the requirement of the guarantee”.   

The convention of promissory estoppel isn’t generally founded on the standard of estoppels. However, it is a regulation developed by value to forestall shamefulness. There is no motivation behind why it ought to be given just a restricted application by the method of safeguard. It very well may be the premise of the reason for the activity. [4]

Significance of the case

The case proved to be of significant importance in further cases. In this case, the Court tried to explain the concept of promissory estoppels. This case well explained that promissory estoppel could be used as a shield. However, to be applied as a sword, it must be applied with the doctrine of consideration. This case proved very helpful in society to prevent fraud and injustice.   

Frequently Asked Questions

  1. Explain the significance of the case of M/S Motilal Padampat Sugar Mills v. State Of Uttar Pradesh And Ors?
  2. What were the issues involved in the case of M/S Motilal Padampat Sugar Mills v. State Of Uttar Pradesh And Ors.?

References

[1] <https://lawzmag.com/2017/06/03/motilal-padampat-sugar-mills-vs-state-of-u-p-air-1979-sc-621/#:~:text=SUGAR%20MILLS%20vs.-,STATE,AIR%201979%20SC%20621&text=In%20this%20case%20the%20appellant%20was%20a%20limited%20company.&text=The%20State%20Government%20of%20Uttar%20Pradesh%2C%20however%2C%20on%20January%2020,partial%20concession%20of%20sales%20tax.> accessed on 31/07/2020

[2] [Evans v. Bartlem]

[3] https://indiankanoon.org/doc/871220/

[4]<https://lawzmag.com/2017/06/03/motilal-padampat-sugar-mills-vs-state-of-u-p-air-1979-sc-621/#:~:text=SUGAR%20MILLS%20vs.-,STATE,AIR%201979%20SC%20621&text=In%20this%20case%20the%20appellant%20was%20a%20limited%20company.&text=The%20State%20Government%20of%20Uttar%20Pradesh%2C%20however%2C%20on%20January%2020,partial%20concession%20of%20sales%20tax.> accessed on 31/07/2020

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