Introduction

The purpose of this project is to study the concept of

promissory estoppel and its evolution, which is a good relief for
the suffered party which was not at fault at all. There is no
provision as such which clears availability of relief under this
principle but it is enforceable and based on equity, to protect the
innocent party as a shield. The doctrine itself, its evolution and
jurisprudence behind this principle is dealt with in this project.
Various cases in which this principle is followed and these
are precedents to assure the availability of this principle in
Indian law are mentioned in this project. The realm of this
principle is ambiguous, the law commission suggested
recommendation to make new section as 25A in the Indian
contract act in the 108th report. These recommendations are
mentioned in the project.

Doctrine of Promissory Estoppel

The doctrine of promissory estoppels is based on the
principles of justice, fair play, and good conscience. It was
evolved by equity to prevent injustice. It neither comes under
contract nor under estoppels proper.

The principle is that when one party with the intention of

creating or affecting legal relationship makes a promise with
another party and that party acts on it, that promise should be
binding for the party who is making it. It will not be allowed to go
back from its words. Because reverting from the words will be
against equity.

In Motilal Padampat Sugar Mills vs State Of Uttar

Pradesh And Ors, the Chief Secretary of Govt. made an
assurance that in order to establish industries firmly the total tax
exemption will be given to the new industrial units for next 3
years based on this assurance M.P. sugar mill started hydro
generation plant taking huge amount of money as loan.
Afterward govt. makes some changes in the tax policy saying that
industries will be taxed at a varying rate.
Applying the doctrine of promissory estoppels the SC held
that appellant took a huge loan relying on the assurance made by
govt. so no tax should be imposed for the period of 3 years from
the date of production as the promise was made. And there is
nothing like to make that promise enforceable one party should
suffer harm or damages, in absence of detriment also the promise
is binding.

Jurisprudence Behind The Doctrine

The doctrine of promissory estoppel is an equitable doctrine. Like

all equitable remedies, it is discretionary, in contrast to the
common law absolute right like the right to damages for breach
of contract. It is a principle evolved by equity to avoid injustice
and though commonly named ‘promissory estoppel’, it is neither
in the realm of contract nor in the realm of estoppel.

In India, however, as the rule of estoppel is a rule of evidence, the

ingredients of Section 115 of the Indian Evidence Act, 1872,
must be satisfied with the application of the doctrine. The
doctrine of promissory estoppel does not fall within the scope
of Section 115 as the section talks about representations made
as to existing facts whereas promissory estoppel deals with future
promises. The application of the doctrine would negate the
constitutional provision, as under Article 299, which affords
exemption from personal liability of the person making the
promise or assurance.

The History of the doctrine of promissory estoppels in India can

be traced to the case of Ganges Mfg Co. v. Sourajmul, in this
case, C entered into a contract to purchase a particular number
of gunny bags from the appellant for the respondent and 107,500
bags remain undelivered as R was unable to pay for them. When
C represented that arrangements had been made for the payment
for 87,500 bags, delivery orders were given to C for delivery
against payment. C’s representative took a letter from C to the
appellant requesting the appellant to direct delivery of bags to the
representative of the R who went along with the representative of
the C because the R had agreed to advance the necessary money
to C. The officer in charge of the appellant did so. Then A
delivered 50.000 bags to the representative of R but refused to
deliver the rest because of C’s failure to pay.
Thereupon the R sued the A for delivery of the remaining bags
alleging that they had advanced the money to C on the A’s
representation that the goods will be delivered. HC decreed that
the appellant was estopped from denying and Calcutta High
Court observed that “the doctrine of estoppels was not only
limited to the law of evidence but that a person may be prevented
from doing any act or relying upon any particular argument or
connection, which the rules of equity and good conscience
prevent him from using as against the opponent.’’

In Municipal Corporation of the City of Bombay v. Secretary

of State appellant surrendered its own land in favor of the Govt.
in consideration of a lease of government lands in favor of the
appellant on a nominal rent. After getting possession, the
appellant spent enormous sums in making constructions. 27
years later, the respondent filed a suit claiming a large amount
as arrears of rent. HC allowed the parties to redefine their rights,
namely, the appellant’s right to leasehold and the R’s right to
reasonable rent. It was observed by the Bombay High Court that
even though there is no formal contract as required by the
statute, the Govt. should be bound by a representation made by
it.
The term ‘promissory estoppel was used for the first time by the
Supreme Court in the case of Collector of Bombay v. Bombay
Municipal Corporation. In this case the govt. of Bombay called
upon the predecessor in the name of MC of Bombay to remove
old markets from a certain site and vacate it on the application of
MC in 1865. MC gave up that site and spent a sum of Rs. 17
lacks in erecting and maintaining markets on the new site. The
collector of Bombay assessed the new site to land revenue in
1940 and the MC thereupon filed a suit for a declaration that it
was entitled to hold the land even without payment of any
assessment. SC held that C has the right to hold the land in
perpetuity free of rent. Chandrasekhar Iyer J. while concurring
with the majority rested his decision on promissory estoppels
that the govt. could not be allowed to go back on its
representation.
The doctrine found a complete and eloquent exposition in the
cases of U.O.I v. Anglo-Afghan Agencies the Government of
India made an announcement regarding certain concessions with
regard to the import of certain raw materials in order to
encourage export of woolen garments to Afghanistan.
Subsequently, only partial concessions were allowed and not full
concessions were extended as promised. The Supreme Court held
that the Government was estopped by its promise. And after this
case, the courts have applied the doctrine of promissory estoppel
and Motilal Padampat Sugar Mills Co. Ltd. v. the State of
U.P.

Applicability of the Doctrine of Promissory Estoppel

For the application of the doctrine of promissory estoppel, the

requirement is that the party asserting the estoppels must have
“changed or altered the position’’ by relying on that
representation.

In Maxey Charan v. Rohilkhand Uni, Bareilly the petitioner

appeared in an examination conducted by the university and
declared to have passed. Subsequently, she got the admission for
next year on the basis of the defected mark sheet. Later the
mistake was found out and her admission got canceled. Court
held that there was no mistake of petitioner and hence she is not
responsible for such a mistake. In view of the conduct of the
University, it was a fit case in which the principles of promissory
estoppel should be applied to the respondent University.

Areas where the doctrine of promissory estoppels is not

applicable:
1. There are no estoppels against the settled principle of law.

2. It is not applicable in case of concluded commercial contract.

3. The doctrine of promissory estoppels cannot be invoked if the

assurance is held out but not incorporated in the agreement
between parties.

4. For applying the principles of promissory estoppels, alteration

of the position by the plaintiff is the only requirement.

Ingredients Of The Doctrine Of Promissory Estoppel

In Union Of India & Anr vs Wing Commander R.R. Hingorani,

where a Govt. Servant retained accommodation 2 months after
the concessional period. The liability to pay damages equivalent
to the market rent for the period of such unauthorized
occupation was claimed in the court of law. The Government has
failed to serve the respondent with a notice that he would be
liable to pay market rent for the period of such unauthorized
occupation, the doctrine of promissory estoppel precluded the
Government from claiming damages equivalent to the market
rent. The principle was laid down that to invoke the doctrine of
estoppels, there are three conditions which must be satisfied;
1. Representation by a person to another

2. The other should have acted upon the said representation and

3. Such action should have been detrimental to the interests of

the person to whom the representation has been made.

In the case of Central London Property Trust v High-trees

House, High-trees leased a block of flats from CLP at a fixed
amount of rent later at the time of war it was not getting tenants
other flats were unoccupied because The defendant had difficulty
in getting tenants for all the flats during wartime. CLP agreed to
reduce the rent amount until the war prevails.
Then war was over, all the flats got occupied on the normal rent
amount. The defendant asked high trees for the normal rent for
the present time and for the earlier time also. High trees went to
court; court held that high-trees acted upon the words of CLP
that during the wartime rent will be reduced, after the end of war
amount cannot be claimed after the war they should continue
with the normal rent only. In this case, Denning J established the
doctrine of promissory estoppel. Here all the three ingredients are
fulfilled.

In S Ramabhadran v State of TN, the petitioner appeared in the

test for the post of stenographer in Raj. Secretariat Services, but
could not get an appointment as vacancies did not exist. The
petitioners were given the option to join the subordinate services
with the clear understanding that if vacancies were available
before the expiry of the selection list, they would be absorbed in
secretariat services and the petitioners did join the subordinate
services. After the expiry of the selection list, fresh vacancies
were available and fresh posts were advertised. It was held that
the govt. was not bound to appoint the petitioners after the expiry
of the period of selection list; the principle of promissory
estoppels did not apply in this case. There is no promise as such
denial of which causes detriment.

Promissory Estoppel – Only A Shield, Not A Sword

Promissory estoppel is used as a defense only not as a course of

action so in general, it is available as a shield. Defense of
promissory estoppel can be used by promise only against the
promiser to enforce the promise, not by promise. For using
promissory estoppel as a sword the doctrine of consideration
should be followed. In Combe v Combe earlier maintenance was
given Denning LJ overruled the decision stating that the estoppel
could only be used as a “shield” and not a “sword”. In
the Motilal Padamat case, Justice Bhagwati said if the doctrine
of promissory estoppel can be used as a sword the floodgates will
be opened.

In Waltons Stores (Interstate) Ltd v Maher, Maher owns a

property. WS wanted that to take it on the lease, demolish the
building, and erect a new one. WS acted on the negotiation and
constructed new building, Maher acted that it consented for the
negotiation. When WS’s solicitor prepared lease paper according
to the negotiation Maher denied. The Court held that Maher is
bound by the contract. Promissory estoppel, it has been said, is
defensive equity and the traditional notion has been that estoppel
could only be relied upon defensively as a shield and not as a
sword High Trees’ case itself was an instance of the defensive use
of promissory estoppel.
Law Commission Recomme
Law Commission Recommendations

In the 108th report of law commission submitted in 1984

suggested Section 25 A in ICA. As follows:
25A.
(1) where
(a) A person has, by his words or conduct made to another person,
an unequivocal promise which is intended to create legal relations
or to affect a legal relationship in arise in the future; and
(b) Such person knows or intends that the promise would be acted
upon by the person to whom it is made; and
(c) The promise is, in fact, so acted upon by the other person, by
altering his position. When notwithstanding that the promise is
without consideration if shall be binding to the person making it. If
having regard to the dealings which have taken place between the
parties, it would be unjust not to hold him to be so bound.
(2) The provision of this section shall not apply:-
(a) Where the events that have subsequently happened show that
it would be unjust to hold the promisor to be bound by the promise;
or,
(b) Where the promisor is the Govt. and enforcing the promise
would be inconsistent with an obligation or liability imposed on the
Govt. by law,

Legal Provisions

There is no provision of promissory estoppel in Indian

law. Section 25 of ICA talks about contracts made without
consideration (in other words the enforceability of promises)
and Section 115 of IEA deals with estoppels only.

Conclusion

A man cannot live in isolation when we are living in a society;

everyone is dependent on each other. It brought contractual and
commercial relationship. The promise of one person, when
becomes important for another and cause for profit and loss, if it
is denied it may cause harm to another one, for their protection
the doctrine of promissory estoppels is available as a shield.
Promissory estoppel is a good defense and a good principle to
avoid injustice. The judiciary in India has played a very
significant role in making the promise responsible and
accountable and made it abide by its promise.