Promissory Estoppel

Introduction

Estoppel the legal concept forbids a party from denying or declaring something that isn't
consistent with what they have previously represented or acknowledged as true. It is founded on
the ideas of justice and averting wrongdoing. Promissory Estoppel focuses on promises made
by one party to another.

Through judicial rulings and intellectual discussions, promissory estoppel emerged as a distinct
concept that needed to be developed and recognised. In the United Kingdom, Central London
Property Trust Ltd v. High Trees House Ltd (1947)1 was a significant case that helped it gain
reputation and grow. In this instance, the court acknowledged the concept of promissory estoppel
and determined that notwithstanding the absence of consideration, a pledge to accept reduced
rent during a period of war may still be upheld.

The Doctrine of Promissory Estoppel in India has its roots in English law, specifically the
doctrine of estoppel. Over time, Indian courts recognized the significance of this doctrine and
developed it further to address the requirements of justice and fairness in contractual
relationships.

Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh,2This case is frequently
cited as a turning point in India's Promissory Estoppel doctrine. According to Indian law,
promissory estoppel is a valid and enforceable principle, according to the Supreme Court of
India. The court ruled that a party cannot break a promise they made to another if doing so would
be unfair if they made the promise knowing or intending that the other party would rely on it,
and the other party did so to their cost. This ruling established the legal principles underlying
promissory estoppel in Indian law.

Types of Promissory Estoppel And Their Case Laws

1
Central London Property Trust Ltd v. High Trees House Ltd, [1947] KB 130.
2
Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, AIR 1979 SC 621.
 1. Defensive Promissory Estoppel: A promisee who wants to defend themselves against a
promisor who wants to break their promise uses defensive promissory estoppel. It stops
the promisor from breaking their pledge by claiming that there was no consideration. In
other words, the promisee uses it as a shield to stop injustice or unfairness when they
have placed undue reliance on the promise.

Case laws:

- Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh (1979)3: The notion of
promissory estoppel was acknowledged and used by the Supreme Court of India in this
case as a defensive tactic. The court ruled that the promissory estoppel principle can be
used when a promisee has taken action based on a promise that was made by the
promisor in a plain and unambiguous manner and it would be unfair to permit the
promisor to break their promise. The court emphasised that promissory estoppel shields
the promisee against injustice and forbids the promisor from profiting from their own
promise.

- Union of India v. Indo-Afghan Agencies Ltd. (1968)4: The defensive aspect of

promissory estoppel was brought to light in this case. The court ruled that a party cannot
retract a commitment made with the goal to establish legal relations if the other party acts
in reliance on it to their detriment. This is true even if doing so would be unfair. The court
ruled that if the promisor tries to act contrary to their pledge, promissory estoppel can be
used as a defence.

- Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council (1991)5:
In this decision, the Supreme Court of India recognised defensive promissory estoppel
and stated that a public authority cannot be allowed to break a promise it made when it
makes a representation or promise and a person relies on it to their detriment. The court
emphasised that the promisor must be prevented from breaking their commitment in
accordance with the principles of equity and fairness.

- State of Karnataka v. Shri Ranganatha Reddy (1978)6: The Supreme Court of India
addressed the defensive character of promissory estoppel in this case and determined that
the promisor is prohibited from breaking a promise when the promisee relies on it to their
disadvantage. The court emphasised that the promissory estoppel theory guards against
unfairness and guarantees that the promisor will be held accountable for their pledge.

3
Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, AIR 1979 SC 621.
4
Union of India v. Indo-Afghan Agencies Ltd., AIR 1968 SC 718.
5
Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council, AIR 1970 SC 1991.
6
State of Karnataka v. Shri Ranganatha Reddy, AIR 1978 SC 548.
 - Radha Bai v. Ramakrishna (1998)7: The Supreme Court of India reaffirmed the defensive
promissory estoppel rules in this case. According to the ruling of the court, the promisor
cannot break a promise they made to someone else if the promisee follows through on it
to their cost. The court emphasised that the promissory estoppel concept forbids the
promisor from unfairly profiting from their own commitment.

- Ashoka Marketing Ltd. v. Punjab National Bank (1990)8: In this decision, the Delhi High
Court addressed defensive promissory estoppel and concluded that a bank cannot back
out of a promise if someone relies on it to their disadvantage after it has been made. The
promisee's rights are safeguarded by promissory estoppel, which the court emphasised
serves as a defence against the bank's attempt to break its promise.

2. Offensive Promissory Estoppel: A promisee may bring an action or make a claim

against a promisor who breaches a promise by relying on offensive promissory estoppel.
Even in the absence of a written contract, it enables the promisee to enforce the promise
made by the promisor. The promisee may seek redress or relief based on their reliance on
the promise thanks to offensive promissory estoppel.

Case laws:

- DCM Financial Services Ltd. v. Union of India (1994)9: In this instance, the Supreme
Court of India recognised offensive promissory estoppel and declared that even in the
absence of a formal contract, a promisee may enforce a promise if they had relied on it to
their detriment. The promisee may use promissory estoppel as a cause of action to
enforce the promise rather than just as a defensive legal theory, the court emphasised.

- State of Andhra Pradesh v. Sree Rama Rao (1964)10: This case provided more evidence
in favour of using promissory estoppel improperly. The promisee may enforce the
promise against the promisor under the theory of promissory estoppel if they have acted
in accordance with the promise made by the promisor to their disadvantage. The court
acknowledged that promissory estoppel can be utilised by the promisee as an affirmative
right rather than just a defence.

7
Radha Bai v. Ramakrishna, AIR 1998 SC 1674.
8
Ashoka Marketing Ltd. v. Punjab National Bank, AIR 1990 Delhi 155.
9
DCM Financial Services Ltd. v. Union of India, AIR 1994 SC 1706.
10
State of Andhra Pradesh v. Sree Rama Rao, AIR 1964 SC 807.
 - State of Rajasthan v. Man Industrial Corporation Ltd (2015)11: The Indian Supreme Court
upheld the aggressive promissory estoppel rules in this instance. The court ruled that even
in the absence of a formal contract, a promisee can enforce a promise if they had relied
on it to their detriment. The court emphasised that promissory estoppel may be used as a
legal remedy in order to uphold justice and promote fairness.

- Hindustan Petroleum Corporation Ltd. v. Dolly Das (2000)12: In this decision, the
Supreme Court of India addressed offensive promissory estoppel and held that a promisee
may seek enforcement of the promise against the promisor if they have violated the
promisee's rights as a result of the promisor's actions. The promisee is competent to seek
appropriate redress based on their reasonable reliance on the promise thanks to
promissory estoppel, the court emphasised.

- United India Insurance Co. Ltd. v. Bheemavarapu Ramakrishna Reddy (2018)13: The
Supreme Court of India addressed offensive promissory estoppel in this case and decided
that if a promisee violated a promise made by a promisor by acting on it, the promisee
may still hold the promisor accountable. In order to uphold the pledge and ensure justice,
the court emphasised that promissory estoppel can be invoked as a cause of action.

- A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem (1989)14: In this case, the Supreme
Court of India discussed the offensive aspect of promissory estoppel. The court held that
if a party has acted on the representation or promise made by another party to their
detriment, the promisee can enforce the promise based on the principle of promissory
estoppel. The court emphasised that the promisee's reasonable reliance on the promise
forms the basis for invoking promissory estoppel.

3. Statutory Promissory Estoppel: A version of promissory estoppel that results from

statutory laws or legislation is known as statutory promissory estoppel. In cases when a
legislation or law expressly recognises and upholds the idea, it relates to the application
of promissory estoppel principles. This indicates that the statutory provisions themselves
establish a contract-like legal obligation or irrevocable promise.

Case Laws:

- Union of India v. Godfrey Phillips India Ltd (1986)15: The notion of statutory promissory
estoppel was considered by the Supreme Court of India in this case. The court ruled that a

11
State of Rajasthan v. Man Industrial Corporation Ltd., AIR 2015 SC 3492.
12
Hindustan Petroleum Corporation Ltd. v. Dolly Das, AIR 2000 SC 2140.
13
United India Insurance Co. Ltd. v. Bheemavarapu Ramakrishna Reddy, (2018) 16 SCC 527.
14
A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem, AIR 1989 SC 1239.
15
Union of India v. Godfrey Phillips India Ltd., AIR 1986 SC 806.
 person may use the theory of promissory estoppel to assert a claim against the
government or other public authority if a statutory provision results in a legal obligation
or promise that compels them to act against their interests. The court emphasised that
pledges that are enforceable and covered by promissory estoppel can result from statutory
provisions.

- State of Karnataka v. Shri Ranganatha Reddy,(1978)16: The Supreme Court of India

acknowledged statutory promissory estoppel in this case. The court ruled that the
promisor—typically the government or public authority—is obligated by the promise and
cannot renege on it if a statute or law establishes a promise or representation that is relied
upon by a person to their detriment. The court emphasised that promissory estoppel can
be used to create rights that are enforceable and protected by statute.

- State of Gujarat v. M/s. Motilal Hirabhai Spinning and Weaving Co. Ltd. (1977)17: The
Supreme Court of India talked about the use of statutory promissory estoppel in this case.
The court determined that the promisor (such as the government or public authority) is
estopped from breaking the promise if a statute or legislation creates an obligation or
representation that is relied upon by a person to their detriment. The court emphasised
that the law of promissory estoppel allows statute provisions to establish rights that are
enforceable.

- Indian Oil Corporation Ltd. v. State of Bihar (1987)18: In this case, the Supreme Court of
India recognized and applied statutory promissory estoppel. The court held that if a
representation or promise is made by a statutory authority and it is acted upon by the
promisee to their detriment, the statutory authority is bound by the promise and cannot go
back on it. The court emphasised that statutory provisions can create enforceable rights
under the doctrine of promissory estoppel.

- State of Punjab v. Nestle India Ltd (2004)19: In this case, the Supreme Court of India
discussed the application of statutory promissory estoppel. The court held that if a
representation or promise is made by a statutory authority and it induces a person to act to
their detriment, the statutory authority is estopped from retracting the promise. The court
emphasised that statutory provisions can create legitimate expectations and enforceable
rights through promissory estoppel.

16
State of Karnataka v. Shri Ranganatha Reddy, AIR 1978 SC 548.
17
State of Gujarat v. M/s. Motilal Hirabhai Spinning and Weaving Co. Ltd., AIR 1977 SC 722.
18
Indian Oil Corporation Ltd. v. State of Bihar, AIR 1987 SC 990.
19
State of Punjab v. Nestle India Ltd., AIR 2004 SC 3190.