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1983 (5) TMI 218 - SC - Companies LawWhether the sanctioning of the loan by the Corporation in favour of the respondent was conditional upon IDBI agreeing to and undertaking to re-finance the loan and as IDBI has declined, for the time being, to re-finance the loan, the Corporation cannot be compelled to undertake the onerous liability of financing a huge loan to one undertaking and therefore the appellant was discharged from performing its part of the contract? Whether there was a concluded contract between the parties about grant and acceptance of loan, the failure of the Corporation to carry out its part of the obligation may amount to breach of contract for which a remedy lies elsewhere but a writ of mandamus cannot be issued compelling the Corporation to specifically perform the contract? Held that:- The parties had envisaged a situation where the re-finance of the loan may not be available from IDBI. The obligation undertaken by the appellant to sanction the loan was independent of a re-financing of loan available from IDBI. In such situation, the first contention of Mr. Bhatt cannot be accepted. The true principle of promissory estoppel, therefore seems to be that where one party has by his words of conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any preexisting relationship between the parties or not. The High Court accordingly was fully justified in issuing a writ of mandamus to disburse the loan and therefore the appeal fails.
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