Analysis of the Doctrine of Promissory Estoppel

    The principle of estoppel is based on equity and to protect the person in fundamental rule of law. Various judgments relating to the doctrine have been discussed in this article. The dimension of this principle is open to more than one interpretation in nature, in view of this, the Law Commission of India in its 108th report had put consideration in section 25 in the Indian Contract Act, 1872.

    This doctrine is evolved to avoid injustice and to provide equity. This principle is mainly applied in case when a party orally or through conduct, promises the other party, showing his/her intention to create a legal relationship with him/her, and the second party does something on behalf of that promise, then the first party cannot revert back because returning would be against the equity, justice and good consciousness. This doctrine is also known as equitable estoppel, quasi-estoppel, and new estoppel. 

    Judicial Definitions of Promissory Estoppel

    Central London Property Ltd v. High Trees House Ltd [1] set forth the principle of Promissory Estoppel as:-  “If a man promises or assures what he intends to be binding on him and to be acted on by the person to whom it is given, then once it is acted upon, he is bound by it.”

    In Evenden case[2] the court defined promissory estoppel as as: –

    “Promissory Estoppel applies whenever a representation is made, whether of fact or law, present or future, which is intended to be binding, intending to induce a person to act upon it and he does act upon it.”

    Evolution of Promissory Estoppel

    Estoppel is a rule which is based on judicial fairness and it is opposed to the nature of the strict and rigid rule of the common law. The evolution can be traced back to England where the rule of equity prevails and this concept is known as the Raising concept of equity, but in the contemporary period, this principle has gained a position in the dynamic nature of our society.

    Lord Cairns stated the principle in Hughes v. Metropolitan railway company[3]

    “It is the first principle upon which all courts of equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results afterward by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have taken place between the parties.”

    The history of promissory estoppels in India can be traced to the situation of  Ganges Mfg. Co. v. Sourajmull[4], where the appellants contended that Sections 115 to 117 as given in Chapter VIII of the Indian Evidence Act, 1872 set out the main guidelines of estoppel which are currently executed under the force of law in the then existing India under the British principle. They further contended that by excellence of section of the previously mentioned Act, all standards, and doctrine of the Evidence Law will be revoked aside from those that are in the Act itself. They held that the contention turns into an erroneous supposition that all principles of estoppel are likewise rules of proof. Yet, the court perceived the rule of estoppel being an aspect of the law of Evidence, by holding that “Where a man has made a representation to another of a particular fact or state of circumstances and has thereby wilfully induced that other to act upon that representation and to alter his own previous position, he is estopped as against that person from proving that the fact or state of circumstances was not true. In such a case the rule of estoppel becomes so far a rule of evidence, that evidence is not admissible to disprove the fact or state of circumstances which was represented to exist.”

    Promissory Estoppel: A Layout

    Lord Denning in “Central London Property Trust Ltd. v. High Trees House Ltd.,”[5]

    The most indicative part of this judgment is the principle of obiter dicta as through the fact of this case it is shown that the landlord did not make an attempt to find the repayment of the full rent during the outbreak of the second world war.

    There was an agreement made in 1937 which made a specification of rent £2500 a year but due to the eruption of the second world war in September, there was a decline in economic business as a result High Trees had to make forceful efforts to find resident for the property and in view of this, they requested the Central London Property Trust in January 1940 for the reduction of rent. A depletion to £1,250 per year consented in writing, which was fifty percent of the rent through the duration, and consideration was not specified. After the war was over, the residents came back to the place. Central London demanded the full amount of rent to which High trees disagreed in view of relying on the assurance. The past case of Hughes v. Metropolitan Railway Co. was reviewed and the court  held that though the plaintiff made a binding promise but on the basis of evidence, the promise only applied during the war and therefore,  the defendants were liable for the full rent after the war.

    Jurisprudence of  the doctrine

    Section 115 of the Evidence Act,1872 perhaps be the section of this doctrine but the essentials of this section do not deal with the future promises and this section is mainly used when there are disputes between the parties inconsistent with the existing promises which are against the law of this doctrine.

    https://legalreadings.com/repercussions-of-investigation-on-the-rights-of-accused/

    Essentials of the Doctrine of Promissory Estoppel

    The ingredients of this doctrine of promissory estoppel were laid down in Union Of India & Anr v. Wing Commander R.R. Hingorani.[6] In this case, a government servant continued in unauthorized occupation for nearly five years of the living quarter after the allowance period for the 2 months. The liability was to pay damages which seems to be equal as the market price for the time portion of unsanctioned employment was claimed. It was seen from the facts of the case that the government has neglected to give the respondent within a reasonable notice that he would be responsible by law to pay the price for the time interval of unsanctioned occupation, hence the principle invoked. 

    The three essentials of promissory estoppel established in this case are:-

    1. The promise should be made by a person to another,
    2. The other makes a move upon the said promise and,
    3. Such a move should have damaged the enjoyment of the person to whom the promise has been made.

    Implementation of Doctrine of Promissory Estoppel against Government.

    This principle has been implemented also in the case of government. The Supreme Court by various judgments has turned down to form any dissimilarity between the private and public bodies so the liability of the government cannot be exempted. But when the promise on behalf of the government is unconstitutional, against the statute or against the public policy the estoppel does not apply.

    In the case of Motilal Padampat Sugar Mills v. State of Uttar Pradesh[7], the chief secretary of the government announced the policy which states all new industrial units will be provided assurance for total exclusion from sales tax for the time interval of 3 years on the establishment of the firm. Taking action on this the appellant had set up a hydrogenation plant by lifting an enormous loan but subsequently, a new strategy was adopted by the government and declared a formal statement that sales tax exclusion will be there at varying rate for an initial period of 3 years. The supreme court held that the government was bound by its words and thus, the principle was applied.

    Conclusion

    The doctrine of estoppel is necessary for the maintenance of the law of land. In today’s era, one person is dependent on the declaration made by the government to any person, especially when it is a contractual basis. As the principle in itself describes that when there is a promise made by a person by his conduct or words to a person and he acts in the interest of such promises then it becomes the obligation of such promisor to fulfill such promise. The concept of this estoppel makes the judiciary responsible for the act of the government by making it accountable and making it obey by the promise.

    References:

    [1] [1947]  KB 130.

    [2] Evenden v. Guildford football Club, (1975) QB 917.

    [3] [1877] 2 AC 439.

     [4] (1880) ILR 5 Cal 669.

    [5] [1947] 1 KB 130.

    [6]  1987 SCR (2) 94.

    [7] 1979 AIR 621.


    BY DIKSHA RAJ | DELHI METROPOLITAN EDUCATION

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