Comprehension
The doctrine of promissory estoppel is by now well recognized and well defined by a catena of decisions of this Court. Where the Government makes a promise knowing or intending that it would be acted on by the promise and, in fact, the promise, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promise notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 229 of the Constitution. The rule of promissory estoppel being an equitable doctrine has to be moulded to suit the particular situation. It is not a hard-and-fast rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. This doctrine is a principle evolved by equity, to avoid injustice and though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. For application of the doctrine of promissory estoppel the promise must establish that he suffered in detriment or altered his position by reliance on the promise.
Normally, the doctrine of promissory estoppel is being applied against the Government and defence based on executive necessity would not be accepted by the court. However, if it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise an equity in favour of the promise and enforce the promise against the Government. Where public interest warrants, the principles of promissory estoppel cannot be invoked. The Government can change the policy in public interest. However, it is well settled that taking cue from this doctrine, the authority cannot be compelled to do something which is not allowed by law or prohibited by law. There is no promissory estoppel against the settled proposition of law. Doctrine of promissory estoppel cannot be invoked for enforcement of a promise made contrary to law, because none can be compelled to act against the statute. Thus, the Government or public authority cannot be compelled to make a provision which is contrary to law.
[Extract from the judgment of the Supreme Court in Shree Sidhbali Steels Limited v. State of Uttar Pradesh, (2011) 3 SCC 193, decided on January 20, 2011, hereafter ‘Shree Sidhbali Steels’].
Normally, the doctrine of promissory estoppel is being applied against the Government and defence based on executive necessity would not be accepted by the court. However, if it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise an equity in favour of the promise and enforce the promise against the Government. Where public interest warrants, the principles of promissory estoppel cannot be invoked. The Government can change the policy in public interest. However, it is well settled that taking cue from this doctrine, the authority cannot be compelled to do something which is not allowed by law or prohibited by law. There is no promissory estoppel against the settled proposition of law. Doctrine of promissory estoppel cannot be invoked for enforcement of a promise made contrary to law, because none can be compelled to act against the statute. Thus, the Government or public authority cannot be compelled to make a provision which is contrary to law.
[Extract from the judgment of the Supreme Court in Shree Sidhbali Steels Limited v. State of Uttar Pradesh, (2011) 3 SCC 193, decided on January 20, 2011, hereafter ‘Shree Sidhbali Steels’].
Question: 1
The decision in Shree Sidhbali Steels carves out the ‘public interest’ exception in cases of promissory estoppel against Government. To which kind of cases have courts routinely applied this exception in favour of Governments?
The decision in Shree Sidhbali Steels carves out the ‘public interest’ exception in cases of promissory estoppel against Government. To which kind of cases have courts routinely applied this exception in favour of Governments?
Updated On: Nov 7, 2024
- Fiscal matters
- Fiscal matters
- Labour matters
- All of the above.
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The Correct Option is A
Solution and Explanation
The courts have commonly applied the public interest exception in fiscal matters,
allowing the government to retract from promises when public welfare and financial stability
are at stake.
The correct option is (A): Fiscal matters
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Question: 2
Which of the following is a landmark decision governing the law on promissory estoppel against Governments?
Which of the following is a landmark decision governing the law on promissory estoppel against Governments?
Updated On: Nov 7, 2024
- Sarat Chander Dey v. Gopal Chander Laha, (1892) 19 IA 203
- Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409
- Carlill v. Carbolic Smoke Ball Company, [1892] EWCA Civ 1
- Tej Bhan Madan v. II Additional District Judge and Others, (1988) 3 SCC 137
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The Correct Option is B
Solution and Explanation
The case of Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. is a landmark
decision on promissory estoppel, setting a precedent for holding governments accountable to
their promises under certain conditions.
The correct option is (B): Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409
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Question: 3
Which of the following statements reflect the correct position of law for promissory estoppel against Governments?
Which of the following statements reflect the correct position of law for promissory estoppel against Governments?
Updated On: Nov 7, 2024
- Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, provided that there is consideration for the promise and the promise is recorded in the form of a formal contract as required by Article 299 of the Constitution
- Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution
- Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, provided that there is consideration for the promise, but notwithstanding that the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution
- Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise, but provided that the promise is recorded in the form of a formal contract as required by Article 299 of the Constitution.
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The Correct Option is B
Solution and Explanation
The correct position of law is that the government can be held to its promises under
promissory estoppel, even without formal consideration or a formal contract, as long as it
serves justice and is not contrary to law.
The correct option is (B): Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution
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Question: 4
Which of the following statements is accurate in light of the passage?
Which of the following statements is accurate in light of the passage?
Updated On: Nov 7, 2024
- The doctrine of promissory estoppel stands diluted where the Government claims that it is in the public interest to go back on its promise or actions
- The doctrine of promissory estoppel overrides any purported claims of public interest by the Government
- Permitting a public interest exception is against the interests of justice, equity and good conscience as it is a self-serving claim for the Government.
- Both (B) and (C).
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The Correct Option is A
Solution and Explanation
The doctrine of promissory estoppel may allow the government to withdraw its
promise if it is in the public interest, recognizing that public welfare can take precedence over
individual claims.
The correct option is (A): The doctrine of promissory estoppel stands diluted where the Government claims that it is in the public interest to go back on its promise or actions
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Question: 5
Which of the following statements does not reflect the correct position of law?
Which of the following statements does not reflect the correct position of law?
Updated On: Nov 7, 2024
- Promissory estoppel cannot be invoked so as to defeat the law
- Even if the representation is made by the Government itself, but it goes against the law, estoppel can be invoked to defeat the law
- If all conditions of promissory estoppel are met, a challenge can still be made to the vires of the law
- None of the above.
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The Correct Option is B
Solution and Explanation
Promissory estoppel cannot be invoked to defeat statutory provisions or laws, even
if the representation is made by the government. The doctrine is subordinate to existing law.
The correct option is (B): Even if the representation is made by the Government itself, but it goes against the law, estoppel can be invoked to defeat the law
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