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Promissory Estoppel

Doctrine of Promissory Estoppel is premised on the conduct of the party making a

representation to the other so as to enable him to arrange his affairs in such a manner as if the
said representation would be acted upon. The core of the doctrine is faith of the people in
governance which has assumed tremendous importance in this era of global economy.
Estoppel is a rule whereby a party is precluded from denying the existence of some state of
facts which he had previously asserted and on which the other party has relied or is entitled to
rely on. The doctrine of promissory estoppel has been evolved by courts, on the principle of
equity, to avoid injustice. A person who himself misled the authority by making a false
statement, cannot invoke this principle, if his representation myself the authority into taking a
decision which on discovery of misrepresentation is sought to be cancelled. Doctrine of
promissory estoppel applies also to Government and public authorities however it would yield
where equity so demands. The principle of promissory estoppel is that where one party has by
his words or conduct made to the other, a clear and unequivocal promise or representation
which is intended to create legal solutions or affect a legal relationship to arise in the future,
knowing or intending that it would be acted upon by the other party to whom the promise or
representation is made and it in fact so acted upon by the other party, the promise or
representation would be binding on the party making it and he would not be entitled to go back
upon it, if it would be inequitable to allow him to do so, having regard to the dealings which
have taken place between the parties.
It is now settled that doctrine of promissory estoppel applies equally to government and public
authorities. But it is equally settled that this doctrine cannot be used to compel the government
or public authority to carry out a representation or promise which is prohibited by law or which
was beyond the power of the officer making it. It will not apply to government or public
authority if larger public interest so demands. Judicial behavior clearly indicated that, in India,
estoppel would not be available against the government in violation of a statute. In Thakur
Amar Singhji vs. State of Rajasthan, the Supreme Court refused to apply estoppel against the
government where the Collector had given an assurance that the jagir of the petitioner would
not be acquired during his lifetime under the Rajasthan Land Reforms Act, 1952, because the
assurance was in clear violations of the provisions of the statute. In the same manner in
Mathura Prasad & Sons vs. State of Punjab and Narinder Chand vs. Lt. Governor, the Supreme
Court held that estoppel is not available against the government if the representation is in
violation of the tax law.
The doctrine of promissory estoppel is not really based on the principle of estoppel, but it is a
doctrine evolved by equity in order to prevent injustice. There is no reason why it should be
given only a limited application by way of defence. It can be the basis of cause of action.
For attracting the doctrine of promissory estoppel what is necessary is only that the promise
should have altered his position in relying on the promise. It is not necessary that he should
suffer any detriment as well. The law of consideration as applicable in contracts cannot be
attracted in this area. No doubt, under English Law, still the doctrine of consideration continues
to inhabit the judicial mind which has thwarted the full development of this new equitable
principle and realization of its vast potential as a juristic technique for doing justice.
As the doctrine of promissory estoppel is an equitable doctrine, it must yield when equity so
requires. If it can be shown by the government that, as they have transpired, it would be
inequitable to hold the government to the promise made by it, the court will not raise equity in
favour of the promise and enforce the promise against the government. Therefore, if the
promise is statutorily prohibited or is against public policy the Court will not enforce it against
the Government. Thus the doctrine of Promissory Estoppel cannot be invoked to enforce a
promise contrary to law. If representation made by the government though bonafide but it not
legally enforceable, the court would not enforce it.