State of Kerala v. West India Steel Company Limited

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE** ## **&** **THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN WEDNESDAY, THE 8[TH] DAY OF FEBRUARY 2023 / 19TH MAGHA, 1944** ## **WA NO. 1226 OF 2018** **WPC 18801/2011 OF HIGH COURT OF KERALA** ## **APPELLANTS/RESPONDENTS IN WP(C):** 1 STATE OF KERALA, REPRESENTED BY ITS SECRETARY TO THE DEPARTMENT OF REVENUE, SECRETARIAT, THIRUVANANTHAPURAM - 695 001. 2 THE DISTRICT COLLECTOR CIVIL STATION KOZHIKODE DISTRICT, KOZHIKODE - 20 3 THE DEPUTY TAHSILDAR, REVENUE RECOVERY, KOZHIKODE TALUK, KOZHIKODE - 673 001. 4 THE DISTRICT LABOUR OFFICER, KOZHIKODE-673 001. BY SRI.M.H.HANIL KUMAR, SPL.GOVT.PLEADER(REVENUE) ## **RESPONDENTS/PETITIONER IN WP(C):** M/S WEST INDIA STEEL COMPANY LIMITED A COMPANY INCORPORATED UNDER INDIAN COMPANIES ACT, 18/849, C KURIYAL LANE, P V SWAMI ROAD, CHALAPPURAM, KOZHIKODE-673 002,REPRESENTED BY ITS PRESENT MANAGING DIRECTOR,MR.P.V.ALI MUBARAK, S/O.LATE ALAVIKUTTY. BY ADVS. SRI.N.M.MADHU SMT.C.S.RAJANI THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 08.02.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA NO. 1226 OF 2018 ..2.. ## **JUDGMENT** ## A. MUHAMED MUSTAQUE, J. This writ appeal is filed by the State. 2. The writ petitioner was a defaulter of public revenue arrears and also had dues under the Workmen's Compensation Act. Revenue recovery proceedings were initiated under the Kerala Revenue Recovery Act. Ultimately, the properties belonged to the writ petitioner were auctioned and the Government purchased the properties in auction as bought-in-land for Rs.1/- on 04.07.2003. Thereafter, revenue recovery was initiated again. In that process, the writ petitioner discharged the entire liability as recoverable from him. The payment was effected on 13.08.2008. The writ petitioner, thereafter, approached the WA NO. 1226 OF 2018 **==> picture [31 x 8] intentionally omitted <==** authorities for re-conveyance of the land purchased by the State Government as bought-in-land, which was unsuccessful. Accordingly, the writ petitioner approached this Court with the writ petition. In the writ petition, the learned Single Judge ordered re-conveyance and restitution of the property. This is challenged in appeal by the State. 3. The learned Special Government Pleader, placing reliance on the decisions of the Division Bench of this Court in **State of Kerala** v. **George Jacob** [2010 (3) KLT 483] and **District Collector & Others** v. **N.C.Thomas** [2015/KER/10260], submitted that as a matter of right, a defaulter cannot seek re-conveyance. It is further submitted that the property having vested with the Government, it cannot be divested without there being any right recognized under law for re-conveyance. WA NO. 1226 OF 2018 **==> picture [31 x 8] intentionally omitted <==** 4. In **George Jacob** ( _supra_ ), the Division Bench opined that subsequent payment after the Government purchasing the property as bought-in-land, will not invalidate recovery proceedings already culminated in sale and confirmation of sale. However, having opined as above, the Division Bench ordered re-conveyance of the property by directing the defaulter therein to pay some more amount to the State. In **N.C.Thomas** ( _supra_ ), the Division Bench of this Court considered the similar issue and opined that in the absence of policy of the Government, as a matter of right, the defaulter cannot seek re-conveyance. 5. It is true, the Division Bench of this Court, held that in the absence of policy or any other statutory law in this regard, the defaulter cannot, as a matter of right, claim re-conveyance of bought-in-land. It is to be noted that in **Savithammal R.** v. **Tahsildar,** WA NO. 1226 OF 2018 ..5.. **Udumbanchola and Others** [2016 (3) KHC 335], one among us [AMM(J)] considered the legality of acceptance of revenue arrears after the purchase of the land by the Government as bought-in-land on principles of proprietary estoppel. It is appropriate to refer to paragraphs 4 to 15 in **Savithammal R** . _(supra)_ as follows; “4. The Government Order would apply if the petitioner seeks the re-conveyance of the land, which was purchased by the State in terms of Section 50 of the Revenue Recovery Act based on the conditions enumerated therein. The Government Order does not indicate the issue for re-conveyance of the land when the debtor has been allowed to discharge his debt, otherwise than in the mode as prescribed in the Government Order. Therefore, the only point, which has to be considered by this Court is the legal effect is of the payment effected by the debtor. 5. The restitutional claim would arise against the public authorities or State in numerous circumstances. One of such circumstances is on equitable ground. To allow any claim based on equitable ground, the Court has to look around the conduct of the parties in relation to the transaction. Therefore, the foremost point to consider is the reason for the Government to allow the debtor to discharge his liability. 6. When a sale would extinguish the liability of the debtor, any payment thereafter made towards the discharge of the liability and WA NO. 1226 OF 2018 ..6.. accepted by the creditor, certainly has to be treated as a separate transaction to determine the rights and liabilities of the parties. 7. Although there is a view that an estoppel can operate only as a shield not as a sword, there is an exceptional type, which is called equitable estoppel. This type of estoppel in fact was relied upon by the parties to prefer a claim. The extended version of the equitable estoppel is also known as promisory estoppel when a party has acted upon a promise of another. House of Lord in Ramsden vs. Dyson 1866 LR I HL 129, 170 explains the above Rules as follows: “ If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing under an expectation, created or encouraged by the landlord that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord and without objection by him, lays out money upon the land, a court of equity will compel the landlord to give effect to such promise or expectation.” Honourable Supreme Court A.P Transco vs. Sai Renewable Power Pvt.Ltd. (2011) (11) SCC 34 referred to use of promissory estoppel as a basis of cause of action. In Paragraph 83 it was held as follows: “It is a settled canon of law that doctrine of promissory estoppel is not really based on principle of estoppel but 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 also be the basis of a cause of action.” 8. Section 2 (h) of the Indian Contract Act defines a contract as an agreement enforceable by law. Under Section 2 (e) every promise and WA NO. 1226 OF 2018 ..7.. every set of promises, forming the consideration for each other, is an agreement. Section 2(d) defines consideration as follows: “When, at the desire of the promisor, the promise or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise.” 9. Therefore, the contract is legally valid if a promise is made and consideration is paid pursuant to the promise. 10. Some of the text books define promissory estoppel as follows: “Snell:Promisory estoppel:Where by his words or conduct on party to a transaction makes to the other a promise or assurance which is intended to affect the legal relations between them, and the other party acts upon it, altering his position to his detriment, the party making the promise or assurance will not be permitted to act inconsistently with it. Like estoppel at common law, promissory estoppel may provide a defence but it can create no cause of action. The difference between it and proprietary estoppel is that the effect of promissory estoppel may be only temporary whereas that of proprietary estoppel is not only permanent but is also capable of operating positively so as to confer a right of action. Halsbury: When one party has, by his words or conduct, made to the other a clear and unequivocal promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations as if WA NO. 1226 OF 2018 ..8.. no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualifications which he himself has so introduced.” 11. However, the question may arise, was there any representation on the part of the Government to direct payment. Nothing is seen from the record that any such representation has been made on behalf of the Government directing the petitioner to make payment. However, it is not necessary that there should be a representation on the part of the Government or promise to bind the Government to apply principles related to estoppel. As narrated as above, Principle of estoppel is a part of equity. The Court can resort to apply the estoppel to do substantial justice between the parties. 12. The doctrine of proprietary estoppel reinforces the equitable consideration as above. The Proprietary estoppel is defined as follows: “It has recently become fashionable to use the term 'proprietary estoppel” to signify the doctrine which we have been discussing above under the name of estoppel by encouragement or acquiesence, and so long as it is understood that this terminology does not produce a new estoppel, but is effective only to assign a new name to an old and well-established one, there can be no objection to the new term. It may easily enough come about, however, that a relaxation in the terminology of subject may induce a corresponding relaxation in the systematic thought of its philosophers; and it is already possible, in the estoppel cases, to find traces of a distinct tendency loosely to “lump together” the doctrines of acquiescence, or “proprietary estoppel”, and of promissory estoppel, as if they were one, or took their origin from the same source, or were regulated by the same principles. It is for this reason that the term has no been adopted in this WA NO. 1226 OF 2018 ..9.. treatise; by keeping to the old terms this book has been able, it is hoped, to adhere more clearly to the presentation of these two doctrines as two and not one.” (see Estoppel by representation, Spencer Bower and Turner, 3rd Edition Page 306) 13. The text quoted as above would indicate that any type of encouragement or acquiescence would also result in equity being applied, when a right is infringed on account of another party’s action. Though it can be separated from the promissory estoppel while expounding its doctrinal width and amplitude, nevertheless to give rise to a cause of action, the Court; need not separate it as a special form of estoppel for the purpose of granting any relief based on proprietary estoppel. 14. In this case the petitioner paid the amount. This was accepted without any demur. The sale was concluded in the year 1985. Therefore, the petitioner’s payment cannot be considered as the payment effected in the light of the Government order referred as above. There is no case that the petitioner has committed any fraud on the officials of the Government. No such case was espoused in the counter. Further, the official respondents also have no case that the petitioner made the payment by misrepresentation. It is to be noted that nobody has a case that remittance was under mistake or under compulsion. In such scenario, the only conclusion is possible is that the petitioner made the payment and he was encouraged to make such payment by the Government. 15. The stand in the counter that since the petitioner had cleared the entire liability, the Government can re-convey the land only if the petitioner remits the market value of the land. It is to be noted that the petitioner did not make any application. It is to be noted that the payment was not effected pursuant to the Government Order. The Government could not WA NO. 1226 OF 2018 **==> picture [37 x 8] intentionally omitted <==** have entertained such application after the outer limit prescribed referred in the Government Order. Therefore, the only irresistible conclusion that can be drawn is that the Government encouraged the petitioner to make the payment or the Government remains acquiesced when payments have been effected to discharge the liability. 6. The learned Special Government Pleader points out that the Government functionary, without knowing the legal consequence of accepting the revenue arrears, allowed the defaulter to remit the amount and it cannot be visited with a legal consequence to re-convey the land unless there is any promise made by the Government in writing to bind the Government. 7. We cannot now remain oblivious to the fact that the Government, while dealing with the property of a citizen, has to act fairly and their action must be concomitant with the principles flowing out of Article 14 of the Constitution of India. If there is any vacuum in regard to the business of the Government in modulating or streamlining such recovery, it WA NO. 1226 OF 2018 **==> picture [37 x 8] intentionally omitted <==** is for the Government to come out with guidelines or orders to bind all functionaries under the Government. The ignorance in administrative function cannot be taken as an advantage by the Government to wriggle out from the obligations, arising out of such fiduciary relationship that arose out of the act of acceptance of arrears of revenue after the purchase of the land as bought-in-land. The fairness eschews the arbitrariness. The Government, having accepted the entire defaulted arrears of revenue, cannot now be heard to say that they will not re-convey the land purchased as bought-in-land. 8. Based on the principles of fairness and principles of proprietary estoppel, we are of the considered view that the writ petitioner in this matter is entitled for re-conveyance of the land, provided he meets the entire expenses for re-conveyance of the land. We are WA NO. 1226 OF 2018 **==> picture [37 x 8] intentionally omitted <==** of the view that the District Collector or an authorized person of the District Collector shall execute the deed, re-conveying the land on meeting the entire expenses by the writ petitioner. Needful shall be done by the District Collector within a period of three months. With the above directions, the writ appeal is dismissed. ## **Sd/-** ## **A. MUHAMED MUSTAQUE** ## **JUDGE** **Sd/-** **SHOBA ANNAMMA EAPEN** **JUDGE** bka/- WA NO. 1226 OF 2018 ..13.. ## **APPENDIX OF WA NO. 1226 OF 2018** APPELLANTS' EXHIBITS ANNEXURE A1 COPY OF THE GOVERNMENT ORDER DATED 23.03.1996 ANNEXURE A2 COPY OF THE JUDGMENT OF THIS COURT IN WA 1275/2009 DATED 05.03.2015