Promissory estoppel - Indian Laws - General

Doctrine of Promissory estoppel In discussing the scope of the doctrine of promissory estoppel , and its applicability against the Government and Government Officers in their dealings with the subject, Lord Denning J. in Robertson v. Minister of Pensions observed :- The Crown cannot escape by saying that estoppels do not bind the Crown for that doctrine has long been exploded. Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so as to fetter its future executive action. That doctrine was propounded by Rowlett J., in Redariaktiebolaget Amphtrite v. The King but it was unnecessary for the decision because the statement there was not a promise which was intended to be binding but only an expression of intention. Rowlett, J., seems have been influenced by the cases on the right of the Crown dismiss its servants at pleasure, but those cases must now all be read in the light of the judgment of Lord Atkin in Reilly v. The King-(1954) A. C. 176, 179) *** In my opinion the defence of executive necessity is of limited scope. It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract. A passage in American Jurisprudence 2d. at page 783 paragraph 123 was extracted by Ray C. J. in Ramanathan Pillai s case and Jaswant Singh J. in Excise Commissioner s case. The passage at p. 123 is as follows :- Generally, a State is not subject to an estoppel to the same extent as an individual or a private corporation. Otherwise, it might be rendered helpless to assert its powers in Government. Therefore, as a general rule the doctrine of estoppel will not be applied against the State in its Governmental, Public or sovereign capacity. An exception however arises in the application of estoppel to the State where it is necessary to prevent fraud or manifest injustice. But the learned Judges did not include the last sentence : An exception however arises in the application of estoppel to the State where it is necessary to prevent fraud or manifest injustice. In Bihar Eastern Gangetic Fisherman Co-operative Society Ltd., v. Sipahi Singh Ors .- 1977 (9) TMI 114 - SUPREME COURT , this Court held that the respondent could not invoke the doctrine of promissory estoppel because he was unable to show that relying on the representation of the Government, he had altered his position to his prejudice. The Court accepted the view of this Court expressed in Ram Kumar s case and held that there cannot be any estoppel against the Government in the exercise of its sovereign, legislative or executive functions. The scope of the plea of doctrine of promissory estoppel against the Government may be summed up as follows :- (1) The plea of promissory estoppel is not available against the exercise of the legislative functions of the State. (2) The doctrine cannot be invoked for preventing the Government from discharging its functions under the law. (3) When the officer of the Government acts outside the scope of his authority, the plea of promissory estoppel is not available. The doctrine of ultra vires will come into operation and the Government cannot be held bound by the unauthorised acts of its officers. (4) When the officer acts within the scope of his authority under a scheme and enters into an agreement and makes a representation and a person acting on that representation puts himself in a disadvantageous position, the Court is entitled to require the officer to act according to the scheme and the agreement or representation. The Officer cannot arbitrarily act on his mere whim and ignore his promise on some undefined and undisclosed grounds of necessity or change the conditions to the prejudice of the person who had acted upon such representation and put himself in a disadvantageous position. (5) The officer would be justified in changing the terms of the agreement to the prejudice of the other party on special considerations such as difficult foreign exchange position or other matters which have a bearing on general interest of the State. JIT RAM SHIV KUMAR VERSUS STATE OF HARYANA - 1980 (4) TMI 303 - SUPREME COURT In Motilal Padampat Sugar Mills Co. (P) Ltd. v. State of U.P. and Ors.- 1978 (12) TMI 45 - SUPREME COURT , this Court observed as under: The true principle of promissory estoppel , therefore seems to be that where one party has by his words of conduct made to the other a clear and unequivocal promise which is intended to create legal relations 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 is made and it is in fact so acted upon by the other party, the promise 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, and this would be so irrespective whether there is any preexisting relationship between the parties or not. Thus the principle of promissory estoppel would certainly estop the Corporation from backing out of its obligation arising from a solemn promise made by it to the respondent.