Promissory estoppel and limitation defeated reimbursement claims; corporate power to guarantee tax liability was upheld.

Consistent conduct inducing another party to alter its position can found promissory estoppel, so a later reimbursement claim based on the same arrangement fails where the payer had long treated the tax outgoings as not recoverable and the other party had benefited from that position. An undertaking to discharge another company's tax liability was not ultra vires where the company's memorandum authorised guarantees, indemnities, and acts incidental or conducive to its business objects. A claim for money paid for another accrued on each payment and was subject to the three-year limitation period under Article 23; exclusion of time under the Limitation Act was unavailable, so the claim was time-barred.

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Issues: (i) Whether the appellant was estopped from claiming reimbursement by reason of its long course of conduct and the related pleas of waiver or abandonment; (ii) whether the appellant's undertaking to discharge the tax liability of the other company was ultra vires its powers; (iii) whether the claim was barred by limitation, including whether exclusion of time was available under the Limitation Act, 1963.

Issue (i): Whether the appellant was estopped from claiming reimbursement by reason of its long course of conduct and the related pleas of waiver or abandonment.

Analysis: The appellant had, over many years, resolved to discharge the tax liability and had in fact paid the taxes without treating those sums as recoverable debts. The other side altered its position on the footing of that representation and benefited from the arrangement by retaining working capital and avoiding distribution of dividends. The conduct therefore attracted the principle of promissory estoppel, and the appellant's later attempt to recover the amounts was inconsistent with its earlier representation and waiver of the lien.

Conclusion: The plea of estoppel succeeded and the appellant was not entitled to recover the amounts on that basis.

Issue (ii): Whether the appellant's undertaking to discharge the tax liability of the other company was ultra vires its powers.

Analysis: The memorandum empowered the company to carry on business, to give guarantees or indemnities, and to do acts incidental or conducive to its objects. The arrangement enabled the company to retain and use funds as working capital and was connected with its commercial interests. On that footing, the undertaking was not beyond the company's powers.

Conclusion: The undertaking was not ultra vires.

Issue (iii): Whether the claim was barred by limitation, including whether exclusion of time was available under the Limitation Act, 1963.

Analysis: Once the lien was waived, the claim, if any, was only a money claim for money paid for the defendant. Such a claim was governed by the three-year period under Article 23 of the Limitation Act, 1963, and the cause of action arose when each payment was made. The payments sued for had been made beyond that period. Section 15(5) did not assist because the defendant company could not be treated as absent from India in the statutory sense.

Conclusion: The claim was barred by limitation.

Final Conclusion: The appeal failed because the reimbursement claim was defeated by estoppel and limitation, and the company's undertaking was within its powers.

Ratio Decidendi: A party that, by a consistent course of conduct, induces another to act upon a promise and to alter its position cannot later resile from that promise to claim reimbursement, and a money claim for sums paid for another accrues when each payment is made and is barred after the prescribed limitation period.

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