Concept and Meaning
The Rule of Promissory Estoppel is an equitable doctrine in contract and constitutional law. It prevents a promisor from withdrawing a promise once the promisee relies on it. The law enforces such promises to avoid injustice, even without formal consideration. In Indian law, the doctrine finds support in Section 115 of the Indian Evidence Act, 1872, which deals with estoppel. Promissory estoppel focuses on reliance rather than representation of fact. It applies when a person makes a clear and definite promise intending legal relations. The promisee must act upon that promise and change his position. Courts apply this rule to uphold fairness and honesty. The doctrine plays a crucial role when powerful authorities, especially the State, make assurances. Equity does not permit a person to act unfairly after inducing reliance.
Legal Basis and Essential Conditions
Indian courts developed the Rule of Promissory Estoppel through judicial interpretation. The doctrine closely relates to Article 14 of the Constitution of India, which requires fairness in State action. Although the Indian Contract Act, 1872 does not expressly codify it, the doctrine operates as an exception to Section 25, which requires consideration. Certain conditions must exist for its application. A clear and unambiguous promise must be made. The promisor must intend that the promisee should act upon it. The promisee must rely on the promise and alter his position. The court must find injustice if the promisor withdraws the promise. However, the doctrine cannot override statutory provisions. Courts also reject its application when public interest demands otherwise.
Scope, Limitations, and Judicial Approach
Courts in India have widened the scope of promissory estoppel over time. They often apply it in cases involving government policies, tax exemptions, and administrative assurances. The Supreme Court has held that the doctrine can bind the State. However, it cannot restrict legislative powers. Promissory estoppel also fails when the promise violates statutory law. Courts strike a balance between equity and legality. A mere change in policy does not justify withdrawal of a promise. The doctrine protects legitimate expectations and commercial certainty. It strengthens public trust in governance. Courts treat promissory estoppel as a remedial principle. Its purpose is not punishment but fairness. Through this approach, the judiciary ensures responsible decision-making by authorities.
Real-Time Example
A common real-time example appears in industrial incentive schemes. A State Government announces tax exemptions for new industries. An entrepreneur relies on this promise. He invests money, buys land, and sets up a factory. Later, the government withdraws the exemption. The entrepreneur suffers financial loss. In such a case, courts allow him to invoke promissory estoppel. He changed his position based on the government’s assurance. Courts usually prevent the State from withdrawing the benefit. They do so unless public interest clearly demands it. This approach promotes economic stability. It also protects citizens from arbitrary government actions.
Mnemonic to Remember
A simple mnemonic helps students remember this doctrine. Use “PRAISE”.
P stands for Promise clearly made.
R stands for Reliance by the promisee.
A stands for Alteration of position.
I stands for Injustice if the promise is withdrawn.
S stands for State or private party bound.
E stands for Equity enforces the promise.
This mnemonic helps during exams. It also improves answer structure. Students can recall conditions quickly. It suits jurisprudence, contract law, and constitutional law answers.
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