Promissory Estoppel

Introduction

When two or more parties enter into a contract, there arises some obligation. Sometimes , the promisor becomes bound to his promise, not on the basis of contract, it may on the basis of the application of law of estoppel. The rule of promissory estoppel is that whenever a person with a contractual right against another and reveal to whom the promise has made that he will not enforce the right during a period of time, or that he will keep the right in abeyance, he will not be obligated to enforce the right during that period of time. When a person makes a promise, assurance or representation to another, with the intention of forming a legal relationship in the future, and the latter acts upon it, the promise, assurance or representation becomes an obligation to the promisor, who cannot go back on it and he must honour it. In this case, it is not important whether the promisee suffers damage while acting on the promise. A future promise is therefore estoppel.

Application Of Doctrine Against The Government 

 There are some cases in which promissory estoppel is not applicable to the government due to the “doctrine of executive necessity”, in which the state is empowered to act according to the needs of the community without being hindered in doing so. In Motilal padampat sugar mills v. state of up, the court held that the application of estoppel wound applied against the government to carry out the representation made by it. The supreme court rejected the government’s plea, holding it liable for fulfilling its promises. In this regard, the observation of Shah.J The observation of Shah. J. in the case Union of India v Anglo Afghan Agencies may be noted that “Under our jurisprudence the government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen.”

The application of doctrine of promissory estoppel is relevant when there is a promise made by the promissor to the promisee and the latter acted upon it. When there is no promise, this application cannot be relevant. It is illustrated in the case P.C. Wadhwa v. State of Punjab, the appellant got selected in the forest department of Punjab and his training starts from 20.11.1951 extends to 17.03.1952 and there is free education from 1-04-1952. After completing the training successfully he was to be appointed as P.F.S Class 1 Officer. The candidates who are selected after training need to sign a bond regarding service for at least 5 years after training , if they fail to perform this, they will refund the amount, which the government spent in their training and education period. The appellant couldn’t sign this bond. Thereafter he was selected in IPS and he left the college in september, 1952 without the consent of the Punjab Government. The Government claimed the amount that was spent for him during the training. The appellant counterclaimed the Government that there was a settlement with him and Government and the Government had introverted the appeal therefore the principle of estoppel should apply against Government. The court held that the State had never given a promise by words or conduct therefore the principle of estoppel did not apply in this case.  

Consideration And Promissory Estoppel

The section 2 (d) of Indian Contract Act clearly defines consideration as follows, 

“When at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing something, such act or abstinence or promise is called a consideration for the promise.”

The definition requires the essentials following for a valid consideration;

  1. Consideration must move at the desire of the promisor
  2. Consideration to be given by a promisee or any other person.
  3. Consideration may be past, present or future
  4. It should be an act of abstinence or promise by the promisee, which constitutes consideration for the promise

In the Durga Prasad v Baldeo [(1880) 3 AII 221] case, the plaintiff constructed a market in the local area at the desire of the District Authority of Etawah. The defendant took some shops and promised to pay 5% commission on all the commodities that he is going to sell through this shop in return of the immense money that he expended for the construction of the building. Thereafter the defendant did not pay the commission and the plaintiff sued the defendant to recover the commission which the defendant was promised. But the defendant contended that the building was constructed without the prior consideration of him and he has never indicated any intention to construct that building. The Allahabad High Court rejected the plaintiff’s claim and dismissed the case on the basis of the fact that Indian Contract Act, 1872 clearly specifies that any agreement without consideration is void.

conclusion

Promissory Estoppel is also known as Equitable Estoppel, Quasi Estoppel and New Estoppel. Law commission suggested introducing a new section in the 108th report as Section 25A in the Indian Contract Act based on this doctrine. In India, this doctrine 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.” Section 115 deals with description regarding existing facts while promissory estoppel related to future promises. Promissory estoppel’s application can overturn Article 299, which talks about immunity from personal liability granted to an individual making a promise.

References

Contract-1,Dr. R.K.Bangia,pp 71,72,73,74

Law of Contract I & II,Dr.S.S.Srivastava,pp 56,57

Law of Contract and Specific Relief, Avtar Singh,9th Edition,pp85,86

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