Doctrine of Promissory Estoppel

Introduction
The doctrine of Promissory Estoppel means when an individual with an intention of
forming a relationship which is lawful makes a clear promise to another individual and the
latter individual acts on it, that promise becomes an obligation for the individual who made
the promise. Hence, then going back from its words is not permissible. Going back from the
words will be in contradiction of equity. Just in order to pull the applicability of the doctrine
of promissory estoppel it is not important for the promisee to suffer any damage while acting
on dependence of the promise. The most important thing is that the promisee must have
changed the position in dependence on the assurance. The arena of this doctrine is vague but
the law commission recommended suggestions to form a new section as Section 25A in the
Indian Contract Act in the 108th report. No provisions as such are there which ensures
availability of relief under this doctrine but at the same time it can be implemented on the
basis of equity, to defend the aggrieved party. The doctrine of estoppel in India is a rule of
evidence included into Section 115 of The Indian Evidence Act, 1872. The sections says
“When an individual has, by his declaration, act or omission, intentionally prompted or
accredited every other individual to accept as true with this type of element to be real and to
act upon such notion, neither that individual nor his consultant would be allowed, in any
shape or proceeding among himself and such individual or his representative, to disclaim the
reality of that issue.” Promissory estoppel is related to future promises whereas Section 115
talks about representations regarding existing facts. Promissory Estoppel’s application can
invalidate the constitutional provision provided under Article 299, which talks about
immunity granted against the personal accountability of an individual making the promise.

Definition
The doctrine of promissory estoppel is an equitable doctrine evolved by equity to
prevent injustice. The doctrine estops the promisor to retract from his promise in case while
acting on the promise of the promisor, the promisee alters his/ her position.

Promissory estoppel is a moderately new advancement. To follow the development of

teaching in England, we have to allude to a portion of the English choices. The early cases
did not talk about this tenet as estoppel. They discussed it as ‘raising equity’. Lord Cairns
expressed the regulation in its most punctual structure in the accompanying words in Hughes
v. Metropolitan Railway Company.

“It is the main rule whereupon all courts of equity continue, that if parties who have gone into
clear and unmistakable terms which includes certain lawful outcomes for a short time later by
their own demonstration or with their own consent enter upon a course of exchange which
has the impact of driving one of the parties to assume that the severe rights emerging under
the agreement won’t be enforced, or will be kept in anticipation, or held in hold, the
individual who generally may have enforced those rights won’t be permitted to uphold them
where it would be inequitable having respect to the dealings which have along these lines
occurred between the parties.”

The doctrine of Promissory Estoppel was also based on obiter dicta of Justice Denning in
Central London Property Trust Ltd vs. High trees House Ltd wherein the court ruled that after
promising to reduce the rent of flats and then again increasing it, would affect the intended
legal obligations of the parties. It was also held in Combes vs Combes that where one party
by his words or conduct made an offer to another party to which any promise and assurance

1
was intended to affect relations between them and to be acted upon accordingly, then one
party has taken him on his word and then acted upon it.

Evolution of the doctrine of promissory estoppel

Estoppel talks about rules of equity, fairness and justice. And in recent years that rule
expanded its dimensions. One of the classifications of estoppel was Promissory Estoppel that
was acknowledged by courts in the country. In 1880, the concept of Promissory Estoppel was
originated in the Indian Law System through Ganges Manufacturing Co. V. Soorajmull,
when Calcutta High Court upheld that a promise without consideration was enforceable
merely on the basis of interest and reliance. In 1892, judgement of Calcutta High Court was
not followed as Madras High Court dismissed the basis of interest and reliance and returned
back to the traditional approach that consideration is necessary in Schoulank V. Mulhunaryan
and examined the application of estoppel under provisions of Indian Evidence Act. During
the developing period, the promisee cannot appeal the doctrine of promissory estoppel unless
any damage was suffered by the party. One thing that is mandatory is the other party’s
reliance on the promise and acting upon the assurance given by the promisor. The only
crucial requirement of this doctrine is the change of position by the party. The doctrine of
promissory estoppel found its complete explanation in the case of Union of India V. Anglo
Afghan Agencies. Earlier promissory estoppel was never applied against the government. But
with time, this case changed the position.

Fundamental components of promissory estoppel

Following five components existence are very much crucial for the doctrine to be enforced
properly-

 Lawful Relationship: There must be an existence of a lawful relationship or a

relationship anticipated to exist between the two parties.
 Assurance: It must be clearly displayed that a promise was made between the two
parties which ultimately led the aggrieved party to presume that some kind of action
needs to be taken. Such a promise must be reasonable and reliable.
 Reliance: Aggrieved party’s reliance on the promise made must be displayed clearly
and because of which the aggrieved party took some action.
 Damage: The aggrieved party who relied upon the promise made by the other party
must suffer some sort of damage or loss which ultimately lands the other party in the
worst position.

Promissory Estoppel in India

Sometime before the doctrine of promissory estoppel was defined, the Calcutta High Court
perceived that the principle of estoppel was not kept distinctly to the law of evidence,
however, that an individual might be estopped from doing acts or depending on specific
contentions or contention. In a later case, the Bombay High Court empowered the
municipality to oppose the case of the Secretary of State to be launched out starting from the
earliest stage the municipality had levelled, and raised versatile claims, in the conviction that
they had a flat outright which should not be turned out except if other reasonable ground was
outfitted, a conviction which was preferable to a desire made by the administrative authority
which the legislature realized that the municipality would act upon.

Much later, the Supreme Court connected the standard (with one judge really utilizing the
term promissory estoppel) to block the administration from evaluating land income in

2
connection to a market site, when it had prior settled not to charge any lease on business
sectors for business sectors would resemble other open buildings.

The court in UOI vs Anglo Afghan Agencies ruled that the doctrine of promissory estoppel
discovered its most articulate exposition. For this situation, the writ-applicant had depended
on the fare advancement plot issued by the Central Government which had sent out woollen
products, and after that guaranteed the import qualification authentication for the full an
incentive under the plan. The solicitor put together its case with respect to dependence, and
the administration argued official need.

The Supreme Court negatived the protection of official need, and brought up that it didn’t
discharge the legislature from its commitment to respect the guarantee made by it, if the
native acting in dependence on the guarantee, had adjusted his position, and that as well,
despite that the guarantee was not recorded in the structure required by article 299 of the
Constitution.

Afterwards, in Century spinning and manufacturing Co Ltd vs Ulhasnagar Municipality, the

doctrine was connected to implement a guarantee of exception from the instalment of octroi
obligation given by a metropolitan organisation. The court drew the refinement between the
portrayal of the current actuality and description that something would be done in future was
spelt out, and it was thus carefully observed.

At last, in, the Supreme Court managed the doctrine of promissory estoppel at the incredible
length and held that it afforded a reason for the activity. For this situation in Motilal
Padampat Sugar Mills vs. State of UP, wherein the Government of Uttar Pradesh proclaimed
a plan exempting all new modern units from deals charge for a long time in the paper. The
appealing party sugar organisation got the portrayal affirmed from the Secretary, Industries
Department, the Director of Industries, and the Chief Secretary, expressing that in perspective
on the business charge exception declared by the administration, is expected to set up a
hydrogenation plant for vanaspati.

Applicability of Promissory Estoppel in India

On account of Motilal Padampat Sugar Mills the Supreme Court, after a review of Indian,
English and American cases, held that:

 The rule can outfit a reason for the activity.

 The pertinence of the doctrine isn’t limited to parties as of now authoritatively bound
to each other or having a prior legitimate relationship.
 The doctrine did not depend on estoppel, nor can its task be shackled by
consideration. It isn’t essential to demonstrate any consideration for the materialism
of the doctrine of promissory estoppel.
 The rule would be connected where the actualities are with the end goal that foul play
can stay away from just by the requirement of guarantee.
 It is unimportant if no hindrance is appeared to have been caused, it is sufficient if
there is a difference in position.
 The state isn’t resistant from obligation for promissory estoppel and it can’t depend
on the doctrine of official need not to shackle its future official activity. It might be
connected against the state, even in its legislative or open or sovereign limit, if its
application is essential to avert extortion or show unfairness. The official authority is
no safeguard.
3
Promissory Estoppel in a contractual relationship
The rule of promissory estoppel applies, when it does, just without a finished up contract. It
couldn’t be conjured where a particular term in the agreement engaged a bank to end the
advance agreement or the organization dropped the permit to run pay phones on expiry of the
term or where the court would not expand the mining permit past the concurred time of a half
year or wherein regard of office understandings for working pay telephones, rate of
commission was decreased and the measure of security store upgraded, and the understanding
gave such powers to the phone division.

The rule has been connected to force of the civil law to execute a rent deed, where ensuing
upon a correspondence from the load up about distribution, the solicitor had spent sums on
getting water and power associations and set up development on the plot or to avoid the
power load up from pulling back the refund guaranteed, despite the fact that the standard
concurrence with the power shopper explicitly given that the buyers will pay such rates as
might be updated by the Board every once in a while.

Applicability of doctrine on public and private entities

In the case, the court observed,Public bodies are as much bound as private individual to
complete portrayals of certainties and guarantees made by them, depending on which
different people have adjusted their situation to their preference, in this way declining to
make a refinement between the private individual and a public body as respects the utilization
of the doctrine of promissory estoppel. It was recommended that the commitment could
emerge as legal action, and if the law requires the agreement to be in a specific structure, it
could be authorised in equity.

The case after examining the doctrine of promissory estoppel by and large, chose to what
degree the doctrine was pertinent against the administration. The judgment nonetheless,
insinuates the utilisation of the doctrine to private gatherings observing.

It is valid that promissory estoppel can’t be summoned to urge the administration or even a
private gathering to complete a demonstration denied by law or promissory estoppel can’t be
conjured to constrain the legislature or even a private gathering to complete a demonstration
restricted by law and keeping in mind that it alludes with endorsement to the perceptions in
41 public bodies or the State is as much bound as private people to complete commitments
brought about by them.

In all the Indian cases alluded over, the portrayals comprising the guarantees were made by or
for the benefit of the state or public bodies. The doctrine has from there on created in India
for the most part in the field of authoritative law.

Exceptions to the doctrine

Some immunities and limitations have been given wherein the doctrine of promissory
estoppel would not apply. Some of the exceptions of the Doctrine of promissory estoppels are
as follows.

 The doctrine must respect equity when required. The promise may not be upheld
against the administration if it is biased to expect the legislature to remember. On the
4
 off chance that the administration fights that public intrigue would endure by
requirement, the legislature should demonstrate the realities and conditions to the
court, and it would be for the court to choose whether those would render it unjust to
uphold risk against the government.
 Mere supplication of the progress of strategy isn’t sufficient, it would need to be
legitimised. It is just if the court is fulfilled on appropriate and adequate material set
by the administration that superseding and overpowering public intrigue necessitates
that the legislature ought not to be held bound by the promise (the weight of
indicating it lies on the legislature), the court would decline to authorise it.
 No portrayal or promise made by an officer can block the legislature from upholding a
statutory restriction. The doctrine can’t be profited to allow or excuse a rupture of
law. Nor can the legislature or public bodies be constrained to complete the portrayal
if it is in opposition to the law, or past their position or power.21 Nor would it be able
to be conjured against the activity of administrative authority. The governing body
additionally can’t be blocked by this doctrine from practising its capacity.

Promise
The portrayal or assurance depended upon must be unambiguous and unequivocal, and not a
matter of induction, or a negligible expectation or possibility. But simple demonstrations of
extravagance, especially in business exchanges, don’t make rights. While an aim to influence
lawful relationship must be set up, such an objective might be found impartially, i.e., it might
be demonstrated that the promisor as far as he could tell proposed to influence lawful
relationship or that he deliberately so acted that he can’t be heard to state that he didn’t plan
this to be the outcome.

At the point when promissory estoppel is conjured, the promise or confirmation essential to
help it is definitely not exactly a promising official on the gatherings in the contract. It would
not be necessary to summon the doctrine of promissory estoppel at all if the promise held
contractual power.

Impediments
To pull in the applicability of the doctrine, it isn’t essential that the promisee, acting in
dependence on the promise, ought to have endured any weakness. What is just vital is that the
promisee ought to have modified his situation in reliance on the promise, only that he more
likely than not been directed to act uniquely in contrast to what he would somehow or another
have done.

The altering position should mean such modification in the situation of the promisee as it
causes it to appear to the court that holding the promisor to his portrayal is essential to do
equity between the parties. The change of position need not include any disadvantage to the
promisee except if by drawback, treachery to the promisee, which would result if the
promisor was to subside from his promise.

Promise irrevocable
The promisor may deny his promise except if it is unjust for him to backpedal on it. It would
be unfair if the promisee, having acted in dependence on the promise, can’t be re-established
to the situation where he was before he made a move. If the promisee can be re-established to
that position, the promisor may backpedal on his promise. It has been held that even where
there is no abrogating public intrigue, the promisor may resile from the obligation by giving
reasonable notice, giving the promisee reasonable open door for continuing his position, if it

5
is feasible for the promisee to reestablish the present state of affairs risk. Be that as it may, if
the promisee can’t continue his position, the promise ends up last and irrevocable.

Cures
The doctrine depends on dependence, and it produced for anticipating unfairness. Any cure
should, in this way, be formed for the reasons for counteracting it.

The promise can be authorised by explicit authorisation, directives and obligations. A

fundamental inquiry emerges about the premise of conceding pay rather than the
abovementioned when the idea of the exchange requests or when the above cures are
insufficient.

When cures in the contract are worried to put the plaintiff in as high a situation as he would
have involved had the litigant played out his promise they are said to satisfy the desires
caused and to ensure the desire intrigue of the plaintiff. Then again, the assurance of
dependence intrigue is worried about putting the plaintiff in as high a situation as he was in
before the promise was made, i.e., to put the plaintiff in the status quo.

No Estoppel against Minors

Assume that a minor by distorting his age incites another to contract with him, will there be
any estoppels against him, or, as it were, will he be blocked from unveiling his actual age in
case coming about because of the contract?

Indeed, even this inquiry had at one time made a debate. Yet, it is currently settled by the
dominance of power that there are no such estoppels against a minor.

The infant isn’t ceased from setting up the resistance of outset. The reason is exceptionally
straightforward. There can be no estoppel against a resolution. The strategy of the law of
contract is to shield people underneath age from contractual risk and usually, the doctrine of
estoppels can’t be utilised to overcome that approach. In this manner, for a situation under the
steady gaze of the Bombay High Court, Beaumont CJ audited the previous specialists and
closed by saying:

Landmark judgement: Motilal Padampat Sugar Mills V. State of Uttar Pradesh and
Ors. (1979)

FACTS

There was an announcement made by the Uttar Pradesh government that all new industrial
units of the state will be relieved from the sales tax for the upcoming three years. After this
announcement, the plaintiff went for confirmation to the Director of Industries who restated
the announcement made by the government earlier. Chief Secretary of Government, on behalf
of the UP government, gave clear assurances to the plaintiff about the same. After getting
definite assurance the plaintiff thought of setting up a new plant in Uttar Pradesh and for this,
he took a large amount of money on credit from monetary organizations.

ISSUES

6
  By giving consent to limited concession did the plaintiff surrender his right to have a
cause of action?
 On grounds of promissory estoppel, can the plaintiff have a cause of action?
 Whether any action taken against the government while acting in administrative
capacity can lie?
 Can a plaintiff’s action be destined to succeed in this case?

HELD

The writ was dismissed by the High Court of Uttar Pradesh and also rejected the plea against
the government of Uttar Pradesh of promissory estoppel. The Supreme Court heard the plea
and held that appellant on the assurance made by the government took a loan. The
government by his words made a clear promise which created a lawful relationship between
both the parties and the appellant relied on that assurance and acted upon it. Therefore, the
promise would be obligatory on the party who made it and cannot back off from his words.
The appellant suffered detriment because of the assurance given by the government

Critical analysis of doctrine of promissory estoppel

Nothing in this world can go smoothly perfect without a glitch. Where on one hand
promissory estoppel acts as a shield on the promisee but on the other it also gives rise to
problems of financial ones. In a country, even if there exists a well settled administration
problem still arises as citizens have some expectations from specific departments to act in
compliance with the assurances they have made and procedures they have instituted. Some of
the problems that aroused because of this doctrine but with time have settled down are:

 Can promissory estoppel be allowed to be used as a cause of action?

 Is it necessary for the promisee to go through any damage before he appeals for the
doctrine?.

Promissory estoppel is considered to act as a shield as it is used as defence in general. It is not

used as a course of action. Promisor can use this defence to recover the damages suffered by
him because of the reliance on the promise. Even if consideration does not exist promissory
estoppel will act as a shield as this doctrine is the exception to ‘consideration is a required’
rule. In contract, consideration is required to make the agreement a valid contract as a
contract without consideration is considered void. So, for promissory estoppel to act as a
sword consideration will be required and somewhere in this doctrine lacks consideration

Conclusion
It tends to be said that if the Government of India or of any State in India makes a promise to
any individual and the promise isn’t conflicting with the law and regulation that must be
adhered to and isn’t against the public intrigue, at that point a short time later it can’t decline
to maintain its promise.

It is likewise insignificant whether such portrayal was completely or halfway in charge of

such adjustment in the position. It can be also said that wherein the Government or any
private entity has promised to fulfil any contractual obligations and then that entity backs out
without committing the obligation to its entirety then it would lead to arbitrariness on one
party’s right and therefore rights of one party would be lynched if every party is allowed to
back from their obligations. Thus the same was also ruled in Pournami Oil Mills Case,
wherein the court directed the government to fulfil the promise done by it.