The Doctrine of Promissory Estoppel

I. Introduction

The Doctrine of Promissory Estoppel is a legal principle which refrains the promisor to go back on their words. The main aim of this principle has always been to provide moral and justifiable rights to the parties. The principle of promissory estoppel has always been in question with regards to the applicability of the doctrine in the Common law and the Indian Law jurisdiction. The first and the second part of this doctrinal essay explains how the doctrine of promissory estoppel was evolved and applied to both common law and Indian Law, respectively. The third part of the essay deals with the question that how the principle of promissory estoppel is not only applied against the government but can also be applied against private parties and individuals.

II. History, origin and application of the doctrine under common law

Going back to 17^th century when law was not completely evolved, there was a saying that the promisee was not awarded any equity if they suffered any detriment due to the promisor. There was a case known as Jorden v. Money (1854)², where the House of Lords at common law held that this principle of estoppel can only be applied to cases of misrepresentation of facts and cannot be applied to promises which extends for future.³ Since then the law on this principle was not static until the landmark case of Central London Property Trust Ltd v. High Trees House Ltd (1947)⁴ which gave the origin to this principle of Promissory estoppel. Until this case the principle was referred to as Raising equity⁵ which was talked about in the case of Hughes v. Metropolitan Railway Company (1877)⁶.

The Doctrine of Promissory Estoppel is relatively a new development in common law and therefore it has a different set of applications and rules which needs to be followed. They are:

• When the Promisor has promised that it will not enforce a not contractual right and the promisee relies to this promise, in such situation promissory estoppel prevents the promisor to perform that non contractual right. This was ruled in the case of Central London Property Trust Ltd v. Trees House Ltd (1947)
• The doctrine of promissory estoppel does not reject the enforcement of original promise, but it merely suspends it due to unforeseen circumstances as it was held in the case of Tool Metal Manufacturing Co v. Tungsten Electric Co Ltd (1955).⁷
• This doctrine can also be applied in cases where there is no pre-existing relationship between the parties rather there should be equity of fairness and justice. The same was the case with Crabb v. Arun District Council (1975).⁸

Having looked the applications of the doctrine, it is important to set out some elements which needs to be looked in order to invoke the doctrine:

1. An unequivocal promise exists.

2. The promisee undergoes a detrimental reliance.

3. Inequitable for the promisor to go back on their words.

In common law country, this doctrine cannot be invoked by the promisee to bring a cause of action against the promisor because the judges and the scholars always believed that if this doctrine is used as a cause of action, it will defeat the provisions of the contract law and rather it is always used as defence in the court. Therefore, it was always referred to as shield and not a sword. [Combe v. Combe (1955)].⁹

III. History, origin and application of the doctrine under the indian law

The doctrine of promissory estoppel in India was largely carried from the common law, but the application and the procedure differed when compared to common law country. There was an important case known as Sourujmull and Ors v. The Ganges Manufacturing Co (1880)¹⁰, under which an important principle was laid down that, the doctrine of promissory estoppel can be applied as a cause of action and is not merely a defence under the Indian Law.¹¹ The doctrine of promissory estoppel is largely seen as an equitable principle and there is a need for the promise to not exist in the future, because then the principle of estoppel cannot be applied. There was a case of Union of India v. M/S Indo- Afghan Agencies Ltd (1967)¹²,

which although was based on the same principles but brought out a new category under the applicability of the principle, in this particular case the doctrine of promissory estoppel was applied even when there was no contract between the parties.

Though all these cases had already established the doctrine of promissory estoppel in India, but still it was not recognised by the courts until the landmark case of Motilal Padampat Sugar Mills v. State of U.P (1979)¹³, which finally gave rise to the doctrine in India, and was also regarded as a trendsetter case for the application of the doctrine against the government. Certain key elements were laid down by Justice Bhagwati, under which the doctrine could be applied in India, they are:

1. Existence of an unequivocal promise.

2. Intention to create legal relations.

3. Intending that the other party would rely on the promise and act upon it.

4. The other party acts upon it.

All the above-mentioned elements are required to invoke promissory estoppel and the doctrine has various applications wherein the parties can successfully apply promissory estoppel to get the rights and justice which they desire for. Following are the instances where the doctrine can be applied in India:

• It can be applied against the government.
• It can be used as a cause of action and the causation of detriment in immaterial.
• It can be applied to parties which have no pre-existing relationship.
• It can be applied in cases where there is no consideration.
• It cannot be applied against the legislature when they are under their duty.
• The doctrine is not tied up with the principles of consideration and estoppel and can be applied freely by the aggrieved parties.

IV. Is the doctrine available only against the state in india?

Promissory estoppel is a doctrine which was evolved to support the principles of equity, morality etc. It can be defined as a principle, wherein an individual with the intention to create legal relation makes a promise to other individual, to which the latter individual acts, then such a promise is binding on the individual who made the promise. In my opinion most of the cases of promissory estoppel in India are applied only against the government bodies, and the reason for this is explained by a scholar Shivprasad Swaminathan. He believed that had the courts in India applied the large definition of consideration under Section 2(d) which included induced reliance, then it would have sufficed to cover cases falling under modern heading of promissory estoppel which would have prevented the need to form a distinct doctrine of promissory estoppel.¹⁴

The decision in the case of Kedarnath Bhattacharji v. Gorie Mohammad (1886)¹⁵ was a starting point where the scope of Section 2(d) under this provision was decided, but the prevention to form the doctrine of promissory estoppel did not last long as the courts welcomed the distinct principle of promissory estoppel in the case of M.P Sugar mills v. State of UP where the doctrine was used against the government bodies. Though the doctrine in most of the instances were applied against the state but still there are instances where it can be applied to private entities. In the case of Century Spinning and Manufacturing Company Ltd v. Ulhasnagar Municipal Council (1970)¹⁶, the honourable Supreme Court of India in its judgement mentioned that “Public bodies are as much bound as private individuals to carry out the promises made by them relying on which the other person has altered his/her position”. The Court also held that if there is a representation to perform something in future which involves an intention to act in the future and the person has acted then such agreements will be enforceable before the law.

This doctrine of promissory estoppel is taken from the common law statute but is not codified in India, and hence there is no relevant section which defines the concept of promissory estoppel. Under the Indian law, the concept of promissory estoppel does not fit into the realm of both consideration and estoppel and hence it just exists to provide justice to aggrieved parties. When the doctrine was introduced in India, it was put under Section 115 of the Indian Evidence Act 1872¹⁷, because it dealt with doctrine of estoppels, however it did not fit into this section because the section largely talked about the existing facts whereas promissory estoppel was a principle which involved future promises.

V. Conclusion

The fact that promissory estoppel involves future promises negates the provisions of Article 299 of the Indian Constitution¹⁸ which grants exemptions to individuals who are accountable for the promises made by them.¹⁹

Lastly, in my opinion the doctrine of promissory estoppel has played a significant role under the Indian law, by protecting the aggrieved parties from both private individuals as well as government entities. Though the doctrine has not been codified in India, but still it is used as an important tool to ensure that parties do not refrain from their promises.

*****