High Court Rejects State's Appeal, Upholds Promissory Estoppel; State Cannot Retroactively Change Raw Material Terms.

The appeal was dismissed by the High Court, which upheld the principle of promissory estoppel against the State of Orissa. The Court ruled that the State could not revise the terms for raw material supply retroactively, as it had previously assured the respondent of stable terms, leading the respondent to make business decisions. The absence of a written contract did not negate the applicability of promissory estoppel, as the respondent relied on the State's representations. The State's argument for revision based on error correction and public interest was rejected. The State was directed to implement the High Court's judgment promptly.

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Issues involved:
The appeal concerns the revision of terms for raw material supply by the Government of Orissa, challenged by the respondent on grounds of promissory estoppel.

Details of the Judgment:

Issue 1: Promissory Estoppel and Revision of Terms
The State of Orissa proposed a revision of terms for raw material supply in 1989, affecting the respondent adversely. However, after the respondent's protest, a decision was made not to alter the terms in 1989. Subsequently, in 1993, the State proposed a revision with backdating, which was challenged by the respondent in a writ petition. The High Court struck down the 1993 revision, citing the principle of promissory estoppel. The State argued that the revision was to correct an error in calculation and for public interest, but the Court found no grounds for interference. The Court emphasized that the State cannot take advantage of its own omission after persuading the respondent to establish an industry based on a solemn promise. The appeal was dismissed, and the State was directed to implement the High Court's judgment promptly.

Issue 2: Applicability of Promissory Estoppel
The respondent contended that the absence of a written contract negated the applicability of promissory estoppel. However, the High Court rightly rejected this plea, stating that a written contract is not necessary to invoke estoppel. The Court found that the State's representation led the respondent to act and make business decisions based on the State's promises. The State's attempt to revise terms retrospectively was deemed inequitable and not permissible under the circumstances. The High Court's decision was upheld, emphasizing the importance of honoring commitments made to induce actions by the other party.

Separate Judgment:
In a related matter, the State Government's appeal against a similar decision in a previous case was also dismissed, upholding the High Court's judgment based on the same principles of promissory estoppel. The State was directed to implement the High Court's decision promptly in this case as well.

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