Application Of Promisory Estoppel

  • Post category:Blog
  • Reading time:12 mins read

Application Of Promisory Estoppel: A Critique (With Special Reference To Review Of Administrative Descretion)

Written By: Meghna Prusty

Introduction

The notion of equity, fairness, and moral conscience underpins the doctrine of promissory estoppel. The doctrine of Promissory Estoppel states that when an individual makes a clear promise to another individual with the goal of forming a legal relationship and the later individual acts on it, the promise becomes an obligation for the individual who made the promise. As a result, turning back on its statements is not permitted. Returning to the words will be a violation of equality. It is not necessary for the promise to experience any harm while acting in reliance on the promise in order for the law of promissory estoppel to apply. The most important factor is that the promise’s status must have changed as a result of the assurance.

Although the scope of this theory is broad, in its 108th report, the law commission proposed that a new section be added to the Indian Contract Act as Section 25A. There are no provisions in this doctrine that guarantee the availability of redress, but it can be used to defend the injured person on the ground of equity. In India, the doctrine of estoppel is an evidentiary rule codified in Section 115 of the Indian Evidence Act of 1872. “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 on such notion, neither that individual nor his consultant would be allowed, in any shape or proceeding between himself and such individual or his representative, to disclaim the reality of that type of element,” the section says. Future promises are covered by promissory estoppel, whereas claims about actual facts are covered by Section 115. The application of Promissory Estoppel may invalidate the constitutional provision of Article 299, which deals with exemption from personal liability for a person who makes a pledge. Equitable Estoppel, Quasi Estoppel, and New Estoppel are all terms used to describe promissory estoppel. The correct principle is that when one party makes a clear promise to the other party by his words with the intent of forming a lawful relationship, knowing that the other party to whom the promise is made may act on it and, in fact, is acted upon by the other party on the basis of the assurance, the promise becomes an obligation, and the party who made the promise cannot back out of his words. As this would be the source of both injustice and unfairness to the promise. The principle and rule have been applied in English law in the case of an explicit and not an unequivocal promise where one party, without a new consideration, makes a deal to avoid enforcing his rights, because it is inequitable for the promisor to backpedal on such guarantee because the promisee has most likely adjusted his position independent of the guarantee made, which need not be inconvenient. The promisor can back out of his guarantee by giving the promisee reasonable notice, which may or may not be formal, and allowing the promisee a reasonable chance to keep his job. If the promise is unable to remain in his post, the promise will become final and irreversible. The law applies not only to contractual relationships, but also to statutory rights and a connection between neighbouring landowners, and serves to postpone rather than completely terminate the current responsibility.

Components

Lawful Relationship: There must be a lawful relationship between the two parties, or a relationship that is expected to exist.

Assurance: It must be clearly demonstrated that the two parties made a promise that led the aggrieved party to believe that some sort of action was required. A reasonable and trustworthy promise is required.

Dependence: The offended party’s reliance on the promise made must be clearly indicated, and the aggrieved party must take action as a result.

Harm: The aggrieved party who relied on the other party’s promise must suffer some type of loss or damage, putting the other party in the worst possible situation.

Unconscionability: It must be proven that the promisor’s breach of the promise was unjust.

Most courts will apply the theory to the circumstance if all of the above-mentioned elements are present. However, certain courts may still apply the doctrine only if the circumstances that give birth to it are explicit. One such example of a specific circumstance is the one involving real estate.

Reference to administrative discretion

The Calcutta High Court recognised that the principle of estoppel was not restricted distinctly to the law of evidence, but that an individual could be estopped from committing acts or relying on specific contentions or contentions, sometime before the doctrine of promissory estoppel was defined. In a later case, the Bombay High Court empowered the municipality to oppose the Secretary of State’s case to be launched out starting from the earliest stage the municipality had levelled, and raised numerous claims, in the conviction that they had a flat outright that should not be turned out unless other reasonable grounds were outfitted, a conviction that was preferable to a desire made by the administrative authority that the legislature recognised.

UOI vs Anglo Afghan Agencies (1)

The most articulate statement of the doctrine of promissory estoppel was discovered. The writ-applicant had relied on the fare advancement plot issued by the Central Government, which had sent out woollen products, and then guaranteed the import qualification authentication for the entire benefit under the plan. The solicitor built a case for dependency, while the administration argued for official need.

The Supreme Court rejected the protection of official necessity, stating that it did not relieve the legislature of its obligation to respect the guarantee it had made if the native acting in reliance on the guarantee had changed his position, and that this was true even though the guarantee had not been recorded in the structure required by Article 299 of the Constitution.

Century spinning and manufacturing Co Ltd vs Ulhasnagar Municipality (2)

The doctrine was used to implement a guarantee of exemption from a metropolitan organization’s octroi duty instalment. The court drew a narrow line between depicting current reality and describing what will be done in the future, and it was scrupulously observed.

Finally, in, the Supreme Court dealt with the doctrine of promissory estoppel at great length, concluding that it provided a justification for the conduct.

Motilal Padampat Sugar Mills vs. State of UP (3)

For a long time in the press, the Government of Uttar Pradesh announced a plan exempting all new modern units from the deals charge. The appealing party sugar organization received confirmation from the Secretary, Industries Department, the Director of Industries, and the Chief Secretary, stating that in light of the administration’s business charge exemption, a hydrogenation factory for vanaspati is likely to be built.

The administration will undoubtedly complete the portrayal and exclude the litigant from the instalment of offers charge in regard to produced merchandise for a period of three years, based on the all-out portrayal contained in the letters for the benefit of the Government of Uttar Pradesh, based on which the appealing party acquired cash from money related organisations and set up a plant.

The Supreme Court has recognised that the doctrine of promissory estoppel is a guideline developed by value to avoid foul play, and while it is not in the domain of agreement nor in the realm of estoppel, it is a doctrine advanced by value to avoid bad form where a guarantee is made by an individual knowing that it will be followed up on by the individual to whom it is made, and it is actually followed up on.

Conclusion

It is often believed that if the Government of India or any State in India makes a promise to an individual that is not in conflict with the law and regulation that must be followed and is not against public interest, it cannot refuse to keep that promise a short time later. The Indian Supreme Court has ruled that following up on affirmations or portrayals is sufficient, and that the hardship, harm, or bias generated as a result does not need to be shown.

It also makes little difference whether such portrayal was entirely or partially responsible for the change in the position. It can also be claimed that if the government or any commercial body promises to fulfil any contractual commitments and then fails to do so without fully committing to the obligation, it will result in arbitrariness on one party’s right.

Citation

(1) 1968 AIR 718, 1968 SCR (2)366

(2) 1971 AIR 1021, 1970 SCR (2) 854

(3) 1979 AIR 621, 1979 SCR (2) 641

Reference

Meghna Prusty - The Law Communicants

Meghna Prusty

Student at The Law College, Utkal University

Previous Posts

Emergency: The Darkest Chapter In Indian Constitutional History

Legal Issues Relating To Electronic Contract Under The Information Technology Act, 2000

Environmental Impact Assessment in India

Privatization Of Natural Resources: A Critical Threat To Sustainable Development

A Socio-legal study of the rights of traditional forest dwellers