Meaning and Legal Foundation
The Doctrine of Promissory Estoppel is an equitable principle that prevents a person from going back on a promise, even in the absence of a formal contract, when the other party has relied upon that promise and suffered a detriment. Though not expressly stated in the Indian Contract Act, 1872, it evolved from the principles of equity and justice under Section 115 of the Indian Evidence Act, 1872, which deals with estoppel. The doctrine ensures that a promisor cannot deny a promise made if the promisee has acted upon it in good faith. This principle aims to prevent injustice and uphold fairness in dealings, particularly between the government and individuals.
Judicial Recognition and Application
The doctrine of promissory estoppel was judicially recognized in Union of India v. Anglo Afghan Agencies (1968 AIR 718), where the Supreme Court held that even in the absence of a formal contract under Article 299 of the Constitution, the government could be bound by its promise if the other party had relied on it. Later, in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. (1979 AIR 621), the Court expanded its scope, stating that the government could not resile from its promise merely because it involved administrative convenience or change in policy. However, it cannot be applied to compel the government to act contrary to law or public interest.
Importance and Limitations
Promissory Estoppel plays a vital role in ensuring good governance, accountability, and fairness. It acts as a check on arbitrary administrative actions by binding authorities to their representations. However, the doctrine is not absolute — it cannot be invoked against the exercise of legislative functions or to enforce promises that are illegal or unconstitutional. The courts have clarified that public interest prevails over private interest in such cases. This balance between equity and legality ensures that the doctrine serves justice without undermining statutory or constitutional provisions.
Real-Time Example
A notable application occurred in the State of Punjab v. Nestle India Ltd. (2004) case, where the Supreme Court applied the doctrine to hold the government accountable for withdrawing a tax exemption promise given to industrial units. Since the industries had already invested based on that assurance, the State was estopped from reneging on its commitment. Similarly, in Motilal Padampat Sugar Mills, the Uttar Pradesh government was bound to its promise of tax exemption. These cases demonstrate that the doctrine promotes trust and fair dealings between citizens and the State.
Mnemonic to Remember – “PEARL”
P – Promise made by one party
E – Estoppel prevents going back
A – Acted upon in reliance
R – Relied by the promisee
L – Legal fairness and equity ensured
The mnemonic “PEARL” helps remember the essence of Promissory Estoppel — a Promise, Estoppel, Action in reliance, Reliance by promisee, and Legal fairness, capturing its equitable and protective nature.
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Explore the Doctrine of Promissory Estoppel in India at Lawgnan.in to understand how this equitable principle prevents injustice when promises are broken. Learn its legal foundation under Section 115 of the Indian Evidence Act, and study landmark judgments like Union of India v. Anglo Afghan Agencies (1968) and Motilal Padampat Sugar Mills v. State of U.P. (1979). Perfect for law students, UPSC aspirants, and judiciary candidates, this article explains how the doctrine ensures good governance, fairness, and accountability. Visit Lawgnan today to strengthen your understanding of this vital principle of administrative and contract law.
