INTRODUCTION AND CONTEXT
In an earlier post, we had discussed the doctrine of
waiver wherein it was observed that though Waiver and Estoppel are two
different concepts, still the essence of a Waiver is an estoppel and without
Estoppel, there cannot be any Waiver (Municipal Corporation of Greater
Bombay v. Dr. Hakimwadi Tenants' Association & Ors.).
In the present post, we shall discuss what the
doctrine of promissory estoppel actually means and how the same has been
interpreted by the Indian Courts. In this regard, the Hon’ble Supreme Court of
India in a very recent judicial pronouncement of State of Jharkhand &
Ors. v. Brahmputra Metallics Ltd. & Anr., reported at (2020) SCC OnLine
SC 968, has comprehensively discussed the doctrine of promissory estoppel
wherein the core issue before the Court was whether the Respondent (Brahmputra
Metallics) is entitled to claim a rebate or deduction of 50% of the amount assessed
towards electricity duty for the period 2011-14. The Respondent (Brahmputra
Metallics) claimed its entitlement of rebate/deduction on the basis of the
Industrial Policy, 2012.
In order to adjudicate the above-stated issue, the
Court discussed the doctrine of promissory estoppel at length. The Court started
by discussing the case of Motilal Padampat Sugar Mills Co. Ltd. v. State
of U.P., (1979) 2 SCC 409, and State of Punjab v. Nestle India
Ltd., (2004) 6 SCC 465, wherein it was opined that non-exercise of such
discretionary power is itself an arbitrary act which is vitiated by
non-application of mind to relevant facts thereby attracting the doctrine of promissory
estoppel.
DICTIONARY MEANING OF PROMISSORY ESTOPPEL
Black’s Law Dictionary (8th
Edn.) defines promissory estoppel as under: -
“The principle that a promise made without
consideration may nonetheless be enforced to prevent injustice if the promisor
should have reasonably expected the promisee to rely on the promise and if the promisee
did actually rely on the promise to his or her detriment.”
ORIGIN OF DOCTRINE OF PROMISSORY ESTOPPEL
The Hon’ble Court in Brahmputra Metallics (supra)
discussed the case of Crabb v. Arun DC, [1976] 1 Ch. 179
(Court of Appeal), wherein following observations were made: -
“The basis of this proprietary estoppel - as
indeed of promissory estoppel - is the interposition of equity. Equity comes
in, true to form, to mitigate the rigours of strict law. The early cases did
not speak of it as “estoppel”. They spoke of it as “raising an equity” If I may
expand that, Lord Cairns said: “It is the first principle upon which all Courts
of Equity proceed”, that it will prevent a person from insisting on his legal
rights - whether arising under a contract or on his title deed, or by statute -
when it would be inequitable for him to do so having regard to the dealings
which have taken place between the parties.”
The Court further perused the famous book of Chitty
on Contracts as under: -
“4.086. For the equitable doctrine to operate
there must be a legal relationship giving rise to rights and duties between the
parties; a promise or a representation by one party that he will not enforce
against the other his strict legal rights arising out of that relationship; an
intention on the part of the former party that the latter will rely on the
representation; and such reliance by the latter party. Even if these
requirements are satisfied, the operation of the doctrine may be excluded if it
is, nevertheless, not “inequitable” for the first party to go back on his
promise. The doctrine most commonly applies to promises not to enforce
contractual rights, but it also extends to certain other relationships.”
However, Chitty cautioned by stating that the doctrine
of promissory estoppel should be applied only in cases where a legal
relationship exists and to apply where there was no such relationship would
contravene the rule that the doctrine creates no new rights.
DIFFERENCE BETWEEN DOCTRINE OF LEGITIMATE
EXPECTATION AND PROMISSORY ESTOPPEL
Hon’ble Justice D.Y. Chandrachud distinguished the
purport of the doctrine of promissory estoppel in the Indian and the English context
and opined that the Indian Courts have given an expansive interpretation to the
doctrine in order to remedy the injustice being done to a party who has relied
on a promise.
The Court also distinguished the doctrine of promissory
estoppel from the doctrine of legitimate expectation and laid down the
following points: -
|
Doctrine
of Promissory Estoppel |
Doctrine
of Legitimate Expectation |
|
This is generally applicable in the domain of
private law. |
This is generally applicable in the domain of
public law requiring public officials to honour their undertakings irrespective
of whether the loss has been incurred by the individual concerned. |
|
It must be shown that a detriment has suffered
by a party due to the reliance placed on a promise. |
It can constitute a cause of action in itself. |
|
It must be shown that some prejudice or detriment
caused to the Promisee. |
It is not required to be shown that prejudice or
detriment has been caused. |
|
The basis of the doctrine of promissory estoppel
in private law is a promise made between two parties |
The basis of the doctrine of legitimate
expectation in public law is premised on the principles of fairness and
non-arbitrariness surrounding the conduct of public authorities. |
CONCLUSION
In Brahmputra Metallics (supra), the Court relied upon the doctrine of legitimate expectation as well as promissory estoppel and
went on to hold that the Respondent (Brahmputra Metallics) is
entitled to a rebate/deduction from the electricity duty between 2012-2014 and
would not be entitled to a rebate/deduction for 2011-12 as the production by
the Respondent commenced from the year 2012 and according to the Industrial Policy,
the entitlement ensues post commencement of production.
Overall, I find it to be a great judgment that clears the air of confusion between the doctrine of legitimate expectation and promissory estoppel in the Indian context. These doctrines are one of the ways to bind the state to their promises and to protect the rights of the weaker individuals/organizations.
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