Holding

The doctrine of promissory estoppel fully applies, obligating the Bihar State Electricity Board to regularise the appellants’ appointments and grant them the seniority as directed.

Summary

The Bihar State Electricity Board (BSEB) recruited a group of engineers as apprentice/trainee engineers in 1977, promising that after completing a one‑year training they would be absorbed as regular Assistant or Junior Engineers on a provisional basis, with a two‑year probation and seniority based on inter‑se ranking. Despite these representations, the Board failed to regularise their appointments and continued to treat them as ex‑cadre staff without seniority. The High Court dismissed writ petitions upholding the Board’s stance. On appeal, the Supreme Court held that the doctrine of promissory estoppel applies to a statutory authority and that the Board is bound by its promises, directing it to regularise the appellants’ appointments within three months, granting them seniority above recruits appointed after 1983 but below earlier permanent and temporary engineers. The Court reversed the High Court’s decision and ordered the Board to comply.

Issues considered

The applicability of the doctrine of promissory estoppel to a statutory authority in the context of employment promises.
Whether the Board’s representations created an enforceable right to regular appointment and seniority for the trainee engineers.
Whether the Board could rely on its own rules under the Electricity (Supply) Act, 1949, Section 79 to defeat the estoppel claim.
The appropriate ranking of seniority for the appellants relative to other engineers recruited before and after 1983.

Legislation cited

Electricity (Supply) Act, 1949s. 79

Subjects

promissory estoppelservice lawstatutory authorityseniorityregularisation of employmentstate employeeequitypublic body liabilityemployment promotion programmeBihar State Electricity Board

Judgment

605

SYRY A NARAIN YADAV & ORS.
A
v.

BIHAR STATE ELECTRICITY BOARD & ORS.

May 8, 1985
B
[S, MURTAZA F~ZAL ALI. A. VARADARAJAN AND RANGANATH
MISRA, JJ.)

Service Law-Right to absorption in serrice on the basis of representations
made-Applicability of the tqultabfe doct1 ine of promissory estoppel to State 0
tmp/oyees who, relying on representations and promises made by ihe public body
have altered their position to their prejudice and detriment-Seniority Assign"1ent
of, c/arifitd.

Pursuant to the Respondent Board's advertisement for selection of
electrical engineers under the "Employment Promotion Programme", the D
appellants and many others joined as Apprentice Engineers with effect from
April 1, 1977. Though in March 1977 i.e. before their appointments, the
Board had indicated that the training of six months did not guarantee employ-
ment under the Board, in view of its resolution in August 1977 to fiU on the
basis of chain system 200 vacant posts of Junior Engineers the·appellants were
asked to continue as Junior Engineers! Assistant Engineers a5 the case may be
on existing stipends and were posted to Thermal Power Stations. Since no E
regular appointments were made representations were made to the Board to
implement the August 1977 resolution without loss of time since some of them
would become averaged for employment under Government. On March
8, 1979 at a high level meeting it was decided that (i) After completion of one
year's training (which is October 1979) they will be appointed in the post of
Assistant Electrical Engineers/Junior Engineers on provisional regular basis;
(ii) that they will remain on probation for two years and (iii) that during the F
period of probation, if their conduct is found satisfactory and on availability
of permanent posts and on the basis of inter se seniority in the C'...adre they
shall be confirmed. The aforesaid decision was published on March 13, 1979
pointing out further that those trainees who had left training should also
join at the places of their respective postings latest by March 18, 1979 failing
which they would not be considered for regular appointments.
G
In the meantime, some unemployed Engineers approached the High
Court at Patna challenging the continuity of the trainee Engineers in the
employment of the Board. The Board took the stand before the High Court
that the trainee engineers belonged to a separate class and held ex cadre
appointme.nts as Assistant Engineers and Junior Engineers. The High Court H
took the view that their continuity on ex cadre basis was not open to challenge
on the ~ro~nd of non-compliance of Rules. In May 1980, these writ petitions
were dISmissed. llmboldened by the acceptance of their stand by the High
606 SUPREME COURT REPORTS (1985) SUPPL. S.C,R.

Court, the Board started exhibiting a negative approach in its treatment
A towards the trainee engineers. Ultimately, the appeliants moved the High
Court for a direction to the Board to encadre them but failed. Hence the
appeals by special leave against the decision of the High Court.

Allowing the appeals, the Court

HELD : I.I The Bihar State Electricity Board is a statutory authority
B and is •State' within the meaning of Article 12 of the Constitution. [612 EJ

2.1 The principle of promissory estoppel has full application to the
facts of the case. The Board has tried to seek shelter under a set of rules
framed by it In exercise of the powers vested under section 79 of the Electricity
(Supply) Act of 1949. The defence of the Board that the trainee Engineers
c continue to serve as Assistant Engineers/Junior Engineers on ex cadre basis
without seniority and stability of service is ill placed and cannot hold as a
shield against the application of the equitable doctrine of promissory estoppel.
The records clearly show; (i) the Board did represent to the trainee engineers
from time to time that after their training was completed, they would be
absorbed in regular employment of the Board; (2) when some of the engineers
were getting age-barred for Government employment and had left the Board,
D they were told to come back under the temptation of getting permanently
en1ptoyed under the Board; (3) when the Board was reeling a strike of its
employees, these trainee engineers had stood by the Board to keep up the
generation and distribution of electricity and had been assured of absorption;
and (4) the Board had decided to absorb thein on permanent basis but
initially on a probation of two years without conducting any further
E examioatioo.[612 E-F; 609 E-C]
•
Union of India v. lndo-Afghan Agencies [1968] 2 SCR 366; Collector of
Bombay v. Municipal Corporation, [1952] SCR 43: Century Spinning & Manu-
facturing Co. Ltd. v. The Ulhasnagar Municipal Council & Anr. (1970] 3 SCR
854; Molilal Padampat Sugar Mill Co. Ltd. v. State of Uttar Pradesh & Ors.
[1979] 2 SCR 409 followed.
F
[The Court directed that the appellants being already in employment of
the Board much prior to 1983 on being taken into regular appointment of the
Board have to rank above the recruits of 1983 and in the years thereafter; and
rank below the permanent and temporary recruits to regular posts of engineers
held under the Board prior to 1983.] [613E-FJ
G
C1vIL APPELLATS JURISDTCTION : Civil Appeal Nos.268 & 269·
273 of 1984.

From the Judgment _and Order dated J.9.1983 of the Patna
H High Court in C.W.J.C. Nos. 4472/82, 2562/83, 2558/83,
4472/82 and 3558/83 respectively.
s.N. TADAV '· BIHAR ST. ELC1Y. BOARD (Ranganath Misra, J.) 607

Raju Ramachartdran and Mrs. S. Ramachandran for the
Appellants in C,A. No. 268/84, 271/84 and 272/84 and B.B. Singh A
for the Appellants in C.A. No. 269/84.

A, Sharan, Suleman, Khursid and Gopol Singh for the Appellants
in C.A.No. 270/84 and 273/84.
B
B.P. Singh and Ranjit Kumar for the Intervener.

Parmod Sawup for the Respondents in C.A. Nos. 268/84, 269
270, 271 and 272 of 1984.

B.P. Singh and Ranjit Singh for the Respondents in C.A. No. c
273 to 1984.

The Judgment of the Court was delivered by

RAN'1ANATH MISRA, J. These appeals are by special leave D
and two of these are by Junior Engineers while the other four are
by Assistant Engineers working under the respondent- Bihar State
Electricty Board. In September, 1975, the Board advertised in local
newspapers that selection of Electrical Engineers would be made
under an "Employment Promotion Programme" and Engineers with
50 per cent marks in the degree examination would be eligible for
E
consideration. In due course, such selection was made and a group
of Apprentice Engineers also called Trainee Engineers came to serve
under the Board. These selected engineers had already completed
their training for the purpose of obtaining the degree in engineering.
The graduate trainees were called upon to report for a period of six F
months' training with effect from April I, 1977. In March 1977, the
Board had indicated that the training does not guarantee employment
under the Board but in August, 1977, the Board resolved that 200
vacant posts of Junior Engineers would be filled on the basis of chain
system and the existing trainees would be cont ainued as trainees on
existing stipends. As time elapsed and no appointment were made G
as represented by the Board, representation was made by some of
the trainee engineers pointing out that unless the Board's decision of
Auguest, 1977, was implemented without loss of time, some of them
would become overaged for appointment under Government. Soon
after the said representation, the Board exteneded deputation of the
H
trainee engineers and indicated that the deputation to Thermal Power
Stations under the Board woµl<I be of permanent nature. The Boar<!
608 SUPREME COURT REPORTS (1985] SUPPL. s.c.R.

published a notice on March 13, 1979, to the effect that a decision
A regarding regular employment of degree and diploma trainee
engineers of the Board for the post of Assistant Electrical
Engineers and Junior Electrical Engineers has been taken by the
State Government and on completion of their training in October,
1979, regular appointment would be made. It was further pointed
B out therein that those trainees who had left training should join at
the places of their respective posting latest by March 18, 1979,
failing which they would not be considered for regular appointments.
As the Board did not give eff•ct to its respreseutations and decisions,
the graduate engineers employed as A~sistant Engineers or Junior
Engineers started agitating for implementation of the Board's deci-
c sions from time to time. Ultimately, on March 8, 1979, at a high eve!
meeting where the Speaker of the Legislative Assembly presided, the
Chief Minister was present and among others participating in the
meeting were the Commissioner of Irrigation and Electricity, the
Chairman of the Board and the Secretary of Irrigation and
Electricity, it was decided :
D
"After completion of one years's training (which is
October 1979) as decided by the Board they will be
appointed in the post of Assistant Electrical Engineer
and Junior Electrical Engineer on 'provisional regular
E basis'. After appointment they will remain on probation
for two years. During probation the period if their
conduct is found satisfactory and on the availability of
permanent posts and on the basis of inter se seniority in
the cadre they shall be confirmeo."
F
"They will be appointed on regular basis after the
completion of training period and examination as propo-
sed vide office order No. 1548 dated 26.1O.78 will not be
taken."

G The Board communicated the aforesaid decision to the Project Mana-
gers and Thermal Power Stations of the Board, yet the decision was
not implemented and the apprentice engineers continued to serve
as Assistant Engineers and Junior Engineers on ex cadre basis, with-
out security and stability of service. Some unemployed Engineers
B approached the High Court at Patna challenging the continuity of
the trainee Engineers in the employment of the Board. The Board
took the stand before the High Court that the trainee engineers
P.N. YADAV v. BIHAR ST. ELCTY. BOARD (Ranganath Misra, J.) 609

belonged to a separate class and held ex cadre appointments as
Assistant Engineers and Junior Engineers. The High Court took the A
view that their continuity on ex cadre basis was not open to challege
on the ground of non-compliance of Rules. In May, 1980, these
writ petitions were dismissed. Emboldened by the acceptance of
their stand by the High Court, the Board started exhibiting a negative
approach in its treatment towards the trainee engineers. Ultimately B
the appellants moved the High Court for a direction to the Board to
encadre them but failed. These appeals directed against the
decision of the High Court.

A few important aspects emerge from the record-( t) the Board
did represent to the trainee engineers from time to time after their C
training was completed, they would be absorbed in regular employ·
ment of the Board; (2) when some of the engineers were getting age·
barred for Government employment and had left the Board. they
were told to come back under the temptation of getting permanently
employed under the Board; (3) when the Board was reeling under D
a strike of its employees, these trainee engineers bad stood
by the Board to keep up the generation and distribution of
electricitly and bad been assured of absorption; and (4) the Board bad
decided to absorb them on permanent basis but intitally on a proba-
tion of two years without conducting any further examination.
E
On March 13, 1979, a notice was i>sued by the Board to the
following effect :

"A decision regarding regular employment of degree
and diploma trainees of Bihar State Electricity Board in
the posts of Assistant Electrical Engineer and Junior F
Electrical Engineer has been taken by the State Govern-
ment. On completion of their training in October, 1979,
their regular appointments will be made. Therefore, those
trainees who have left their training are informed to join

-- at the places of their respective postings latest by 18.3.1979
Those trainees who will not present themselves by the
said date will be neither considered for being taken
G

in training nor their regular appointments will be
considered."
H
On April 26, 1979, the Board approved the proposal contained in the
proceedings of a meeting relating to absorption of the appellant
910 ivPllBMll 00111.T l.llelTi (1'UJ IVPPL. 1.C.ll.

engineers in which the Speaker of the Legi•lative Assembly presided
A and the Chief Minister, the Commissioner of Irriaation and Electri-
city, the Chairman of the Board and the Secretary of Irrigation and ....
Electricity participated. The proceeding, inter a/ia, itated :

"(1) It was decided that after completion of one year'&
B training (which is October, 1979) as decided by the Board,
they will be appointed in the posts of Assistant Electrical
Engineers and Junior Electrical Engineers on provisional
basis. After appointment, they will remain on probation
for two years. During probaiton period of their conduct
is found satisfactory and the availablity of permanent
c posts and on the basis of inter se seniority in the cadre,
their appointments will be confirmed.

(2) They will be appointed on regular basis after the
completion of the training period and the examination
D proposed vide office order No. 1548 dated 26.10.IP78 will
not b0 taken.

(9) It is also decided that the benefit of regular
E appointment is being given to the trainees under special
circumstances which will not be an example for the future
and when either under the Apprenticeship Act or under
any other scheme anyone is taken as apprentice, he will
be discontinued after the period of apprenticeship. In any
F circumstance, neither period of apprenticeship will be
extended nor will they have any claim for appointment
under the Board."

We have referred to these two documents out of several of them
available on the record to show that the Board was aware of tho
G position that these trainee engineers formed a special class and very
peculiar circumstances warranted a definitely special treatment
in regard to them. Yet it is unfortunate that a statutory body
like the Board bas failed to stand up to its representations made
from time to time to a group of engineers who had spent years of
ff their valuable life for qualifying themselves as engineers and who
believing the representation of the Board and acting upon the same
continue\! to remain in the employment of the Board as trainee
S.N. YADAV v. BIHAR ST. ELCTY. BOAhD (Ranganath Misra, I.) 611

engineers foregoing opportunities available to seek other employ-
ments and in the process have become age-barred for any public A
employment. This Court almost a score of years back in clear
language indicated in Union of India v. Indo·Afghan Agencies(') :

Under our jurisprudence, the Goverment is not
exempt from liability to carry out the representation B
made by it as to its furture conduct and it cannot some
undefiend and undisclosed ground of necessity or expc·
diency fail to carry out the promise solemnly made by it,
nor claim to be the judge of its own obligation to the
citizen on an ex parte appraisement of the circumstances
in which the obligation has arisen." C
Shah, J. as the learned Judge then was, quoted with approval
what Chandrasekhrar Aiyar, J. had in Collector of Bombay v.
Municipal Corporation(') :

"Whether it is the equity recognised in Ransden's D
case, or it is some other form of equity, is not of much
importance. Courts must do justice by the promotion
of honesty and good faith, as far as it lies in their power."

The legal position was reiterated by this Court in Century Spinning E
& Manufacturing Co. Ltd. v. The Ulhasnagar Municipal Council &
Anr.( 3 ), where it was said :

"Public bodies are as much bound as private indivi-
duals to carry out representations of facts and promises
made by them, relying on which other persons have F
altered their position to their prejudice. The obligation
arising against an individual out of his representation
amounting to a promise may be enforced ex contractu by
a person who acts upon the promise; when the law requi·
res that contract enforceable at law against a public body G
shall be in certain form or be executed in the manner
prescribed by statute, the obligation may be, if the cont·
ract to be not in that form, enforced against it in appro-
priate cases in equity ... "
H
(I) (196812 S.C.R. 366.
(2) (1952] S.C.R. 43.
<Jl [1970J 3 s.c.R. 854.
612 SUPREME COUllT llBPOllTS . [1985) SUPfL, S,C.R,

This Court added:a pithy observation :
A
"If our nascent democracy is to thrive different stan-
dards of conduct for the people and the public bodies
cannot be permitted. A public body is, in our judgment,
not exempt from liability to carry out its obligations
B arising out of representations made by it relying upon
which a citizen has altered his position to his prejudice."

In Motial Padampat Sugar Mill Co. Ltd. v. State of Uttar Pradesh
& Ors. (1) this Court went ahead to state that the doctrine of pro·
missiory estoppel is not really based on the principle of estoppcl,
c but it is a doctrine evolved by equity in order to prevent injustice
and it can be the basis of cause of action.

In our view, the principle relid upon in these cases has full
application to the facts before us, The Board is a statutory autho·
D rity and is 'State' within the meaning of Article 12 of the Constitu·
tion. The Board has tried to seek shelter under a set of rules framed
by it in exercise of the powers vested under section 79 of the Blee·
tricity (Supply) Act of 1948. In the peculiar facts of the case we are
of the view that the defence is ill-placed and cannot bold as a shield
against the application of the equitable doctrine. Admittedly, the
E trainee engineers before us formed a specific class and from time to
time the Board treated them as members of class and in its resolution
of April 26, 1979, recognised this fact and swore to the position
that such treatment should never be repeated even if apprentic
engineers were appointed.
F
Learned counsel appearing for the Board indicated to us that
the Board was prepared to regularise the employment of the appel-
lants belonging to the category of the Assistant Engineers or Junior
Engineers subject to their qualifying in the examination and being
formally recruited as required under the rules. They further em-
G phasised that the appellants would not be entitled to seniority above
those who have already been regularly employed under the Board.

So far as the first aspect is concerned, we have sufficiently
H pointed out already that the Board had waived the requirement of
examination and had, while taking advantage of the ~ervices of the

(I) [1979].2 S.C.R. 409.,
8.i4. YADAV v. BIHAR ST. ELCTY. BOARD (Ranganath Misra, J.) 613

appellants when it was in need, delayed the implementation of its
representations. But it appears that several engineers have also A
been recruited either on permanent or temporary basis against
regular vacancies and they are not parties to these appeals. The
appellants, therefore, cannot have seniority above those people and
we would not be justified in making any direction which would pre•
judice their seniority behind their back. It appears that there have 8
been requirements even during the pendency of these appeals. While
granting leave and while disposing of miscellaneous petitions for
directions, this Court has already made it clear that appointments
pendente lite would be subject to the result of the appeals. Therefore,
the recruits of 1983 are bound to be subject to our directions. We
are inclined to take the view that the appellants being already in C
employment of the Board much prior to 1983 on being taken into
regular appointment of the Board have to rank above the recruits
of 1983 and in the years thereafter.

Tbe Board in our view is, therefore, bound to regularise the D
appointments of the appellants who had been taken as trainee
engineers initially and have continued to be in the employment of
the Board. In tbis view of the matter after the hearing was over
we issued a mandamus to the Board to offer regular appointment to
the appellants within three months from that day, i.e. May 3, 1985,
in the appropriate cadre of Assistant Engineer or Junior Engineer, E
as the case may be, and such appointments were to be on probation
for a period of two years as required under the rules. In regard to
seniority the appellants have to rank below permanent and temporary
recruits to regular posts of engineers held under the Board prior to
1983 and they shall be assigned seniority above such recruits pendente F
lite. We have now indicated the reasons by our judgment. The
appeals are allowed and the judgment of the High Court is reversed
and the Board is directed to give effect to the directions indicated
above within the specified time.

We hope and trust that the Board will not conduct itself in G
such an embarra~sing way in future and land itself in difficulty
again.

The appellants shall have their costs throughout. One set of H
hearing fee assessed at Rs. 5,000 shall be id 11i1sible in this Court.

S.R. Appeal allowed.