Promissory estoppel and writ maintainability upheld where a statutory lender induced reliance and then refused loan disbursement.

A statutory corporation could not refuse to disburse a sanctioned loan merely on allegations of false or misleading information where the loan sanction itself contemplated non-availability of refinance and alternative terms, and the materials did not show suppression of material facts. Promissory estoppel applied because the corporation induced the borrower to alter its position by obtaining title clearance, creating an equitable mortgage, incurring expenditure, and commencing construction, so it could not arbitrarily resile from its promise. The writ petition was maintainable because the transaction was governed by a statutory framework and public law obligations, not a purely private contract.

---

---

Issues: (i) whether the Corporation was justified in refusing to disburse the sanctioned loan on the ground of alleged false or misleading information and refusal of refinance; (ii) whether the respondent could invoke promissory estoppel to compel disbursement after altering its position on the faith of the Corporation's promise; (iii) whether a petition under Article 226 of the Constitution of India was maintainable notwithstanding the contractual form of the transaction.

Issue (i): Whether the Corporation was justified in refusing to disburse the sanctioned loan on the ground of alleged false or misleading information and refusal of refinance.

Analysis: The loan sanction itself contemplated the possibility of non-availability of refinance and fixed alternative terms in that event. The Corporation had already entered into the loan arrangement and taken the security with full knowledge of the allegations against the promoter-director. The materials relied on did not establish that the respondent had suppressed material facts so as to attract the statutory principle relied on by the Corporation. The refusal to disburse was therefore not supported by the contractual terms or the statutory scheme.

Conclusion: The Corporation was not justified in withholding disbursement on that ground.

Issue (ii): Whether the respondent could invoke promissory estoppel to compel disbursement after altering its position on the faith of the Corporation's promise.

Analysis: The Corporation, acting under statutory powers, promised to advance the loan and induced the respondent to obtain title clearance, create an equitable mortgage, incur expenditure, commence construction, and continue compliance with the mortgage conditions. The respondent materially altered its position to its detriment. In these circumstances, the Corporation could not arbitrarily resile from its promise after securing the benefits of the arrangement and leaving the respondent unable to raise alternative finance.

Conclusion: Promissory estoppel applied in favour of the respondent and the Corporation was bound to honour its commitment.

Issue (iii): Whether a petition under Article 226 of the Constitution of India was maintainable notwithstanding the contractual form of the transaction.

Analysis: The transaction was not a mere private contract. It was embedded in a statutory framework under which the Corporation exercised public powers, imposed conditions, nominated a director, and retained special enforcement rights. Where statutory duties and public law obligations permeate the transaction, the dispute is not confined to the contractual field alone. In such a case, the constitutional remedy is available.

Conclusion: The writ petition was maintainable.

Final Conclusion: The appeal failed on all substantial grounds. The Corporation's refusal to disburse the loan was held unjustified, the respondent was protected by promissory estoppel, and the exercise of writ jurisdiction was upheld.

Ratio Decidendi: A public authority acting under a statutory framework cannot, after inducing detrimental reliance and securing contractual benefits, arbitrarily resile from a promised advance; where statutory powers and obligations substantially govern the transaction, writ jurisdiction is maintainable.

---