UNIVERSITY OF PETROLEUM & ENERGY STUDIES

SCHOOL OF LAW

SEMESTER-1

ACADEMIC YEAR 2018-19 SESSION: JULY-DECEMBER

RESEARCH PROJECT

FOR

LAW OF CONTRATCS I

UNDER THE SUPERVISION OF MR. SAKET KUMAR

NAME: ANADI KUMAR TAYLOR

SAP ID: 500070328

ROLL NO.: R450218008

NAME: MINNA JAASIR AHAMED

SAP ID: 500070340

ROLL NO.: R450218036

 INDEX

S. No. Chapter Page No.

1. Introduction 4
2. What is Estoppel? 5
3. Promissory Estoppel with regard to Indian Contract Act 5
4. Application of Promissory Estoppel to government 8
5. Promissory Estoppel: Only a shield not a sword 11
6. Conclusion 12
7. Bibliography 13
 LIST OF ABBREVIATIONS

S. No. Full Form Abbreviations

1 Indian Law Reports ILR
2 Supreme Court SC
3 High Court HC
4 All India Reporter AIR
5 Supreme Court Cases SCC
6 Fundamental Rights FR
7 Uttar Pradesh UP
8 Section Sec
9 Article Art
10 Versus v
11 Company Co.
12 Limited Ltd.
13 Private Pvt.
14 Example e.g.
15 Rupees Rs.
16 Supreme Court Reporter SCR
DOCTRINE OF PROMISSORY ESTOPPEL

INTRODUCTION

The motivation behind this task is to think about the idea of promissory estoppel and its
development, which is a decent alleviation for the endured party which was not to blame by
any stretch of the imagination. There is no arrangement in that capacity which clears
accessibility of relief under this rule however it is enforceable and dependent on value, to secure
the blameless party as a shield. Convention itself, its development and law behind this guideline
is managed in this undertaking. Different cases in which this main is pursued and these are
points of reference to guarantee the accessibility of this chief in Indian law are specified in this
venture. The domain of this standard is vague, the law commission proposed suggestion to
make new segment as 25A in the Indian contract act in 108th report. These suggestions are
made reference to in the project. The Doctrine of Promissory Estoppel is an equitable doctrine.
This principle is commonly invoked in common law in case of breach of contract or against a
government. The principle of estoppel in India is a rule of evidence incorporated in Section
115 of The Indian Evidence Act, 1872.1 The section reads as follows:

When one person has, by his declaration, act or omission, intentionally caused or permitted
another person to believe such a thing to be true and to act upon such belief, neither he nor his
representative shall be allowed, in any suit or proceeding between himself and such person or
his representative, to deny the truth of that thing.2

Like all equitable remedies, it is discretionary, in contrast to the common law absolute right
like right to damages for breach of contract. The doctrine has been variously called 'promissory
estoppel', 'equitable estoppel', 'quasi estoppel' and 'new estoppel'. It 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.

1
The Indian Evidence Act, 1872
2
Section 115, The Indian Evidence Act, 1872
WHAT IS AN ESTOPPEL?

Estoppel is a judicial device in common law legal system whereby a court may prevent, or
"estop" a person from making assertions or from going back on his or her word; the person
being sanctioned is "estopped"Estoppel may prevent someone from bringing a particular claim,
particularly if a promise unsupported by consideration is being relied on by the other party.
The doctrine of promissory estoppel is an equitable convention. Like every equitable remedies,
it is optional, rather than the common law total right like right to damages for breach of
contract. It is a guideline advanced by value to stay away from bad form and however ordinarily
named 'promissory estoppel', it is neither in the domain of contract nor in the domain of
estoppel. In India, be that as it may, as the standard of estoppel is a standard of proof, the
elements of segment 115 of the Indian Evidence Act3, must be fulfilled for the use of the
precept. The principle of promissory estoppel does not fall inside the extent of area 115 as the
segment discusses portrayals made as to existing realities while promissory estoppel manages
future guarantees. The utilization of the convention would discredit the protected arrangement,
as under Article 299, which bears exclusion from individual risk of the individual making the
guarantee or confirmation.

PROMISSORY ESTOPPEL WITH REGARDS TO INDIAN CONTRACT ACT

The History of doctrine of promissory estoppels in India may be traced to the case of Ganges
Mfg Co. V. Sourajmul4 , in this case C entered into a contract to buy a specific number of
gunny baggage from the appellant for the respondent and 107,500 luggage stay undelivered as
R became unable to pay for them. When C represented that preparations had been made for the
fee for 87,500 luggage, shipping orders were given to C for delivery against price. C’s
representative took a letter from C to the appellant requesting the appellant to direct shipping
of luggage to the consultant of the R who went together with the consultant of the C due to the
fact the R had agreed to enhance the important cash to C. The officer in charge of the appellant
did so. The A deliver 50.000 baggage to the representative of R however refused to deliver the
relaxation because C didn't pay. Thereupon the R sued the A for shipping of the closing luggage
alleging that they had advanced the cash to C at the A’s representation that the goods could be
brought. High Court decreed that the appellant became stopped from denying and Calcutta

3
Indian Evidence Act, 1872
4
Ganges Mfg Co. V. Sourajmul, (1880) ILR 5 Cal 669
High Court determined that “the doctrine of estoppels turned into no longer only restrained to
the law of evidence, but that someone may be avoided from doing any act or depending upon
any specific argument or connection, which the rules of fairness and appropriate judgment of
right and wrong save him from the usage of as against the opponent.’’

In Municipal Corporation of the City of Bombay v. Secretary of State Appellant surrendered

its own land in favour of the Govt. In attention of a rent of presidency lands in favour of the
appellant on a nominal lease. After getting possession, the appellant spent widespread sums in
making buildings. 27 years later, the respondent filed as fit claiming a massive quantity as
arrears of rent. High Court allowed the parties to redefine their rights, specifically, the
appellant’s right to leasehold and the R’s proper to reasonable rent. It turned into observed
through the Bombay High Court that even though there's no formal agreement as required by
the statute, the Govt. Must be sure by an illustration made with the aid of it.

The term ‘promissory estoppel changed into use for the first time by the Supreme Court in the
case of Collector of Bombay v. Bombay Municipal Corporation . In this example the
government Of Bombay called upon the predecessor in the name of Municipal corporation of
Bombay to cast off old markets from a certain web site and vacate it at the application of
Municipal corporation in 1865.M Municipal corporation gave up that web page and spent a
sum of Rs. 17 lacks in erecting and retaining markets on the new web site. The collector of
Bombay assessed the new website online to land sales in 1940 and the Municipal Corporation
thereupon filed a fit for a declaration that it turned into entitled to hold the land even without
charge of nay assessment. Supreme Court held that C has proper to preserve the land in
perpetuity free of lease. Chandrasekhar Iyer J. whilst concurring with most of the people rested
his decision on promissory estoppels that the government. Couldn't be allowed to go returned
on its representation.

The doctrine found an entire and eloquent exposition in the cases of U.O.I v. Anglo Afghan
Agencies the Government of India made declaration concerning sure concessions with regard
to the import of positive raw substances a good way to encourage export of woolen clothes to
Afghanistan. Subsequently, simplest partial concessions were allowed and now not full
concessions have been prolonged as promised. The Supreme Court held that the Government
became estopped by its promise. And after this example the courts have applied the doctrine
of promissory estoppel and Motilal Padampat Sugar Mills Co. Ltd. V. State of U.P
The actual principle of promissory estoppel is wherein one birthday celebration has by way of
his phrases or behaviour made to the opposite a clear and unequivocal promise that is meant
to create criminal members of the family or effect a criminal dating to get up in the destiny,
understanding or proceeding that it'd be acted upon by way of the other celebration to whom
the promise is made and it's miles in fact so acted upon with the aid of the opposite birthday
celebration, the promise might be binding at the birthday celebration making it and he might
no longer be entitled to move back upon it. It is not important, so that it will entice the
applicability of the doctrine of promissory estoppel that the promisee appearing in reliance of
the promise, have to go through any detriment. The only element vital is that the promisee
should have altered his position in reliance of the promise.

Hence, because the doctrine is a principle of fairness, the courts have taken a prerogative to
lay emphasis on equity and justice and feature defined the doctrine of promissory estoppel in
India. The essential components to prove the doctrine are:

 That there has been an illustration or promise in regard to something to be executed

inside the destiny,
 That the illustration or promise was intended to have an effect on the prison dating of
the events and to be acted upon for that reason, and,
 That it is, one on which, the alternative aspect has, in reality, acted to its prejudice.

The doctrine of estoppel does now not apply to statutes. In different words, a person who
makes a statement as to the life of the provisions of a statute isn't estopped, in the end, from
contending that the statutory provision isn't the same as what he has formerly said. An
individual won't represent the actual popularity of a statute or regulation, but the different
person who relies on one of these illustration is at liberty to find out the placement of law one
the problem and as the maxim says, lack of understanding of law is no excuse. So a person
cannot take recourse to the defence of estoppel to plead that a false illustration has been made
concerning the provisions of a statute or law. The principles of estoppel cannot override the
provisions of a statute. Where a statute imposes a duty by way of tremendous movement,
estoppel can't prevent it. The doctrine cannot also be invoked to save you the legislative and
executive organs of the Government from acting their responsibilities.

In Jit Ram Shiv Kumar v. State of Haryana, a municipality granted exemption from octroi for
developing a mandi, however ultimately is revoked the exemption. Later it once more granted
the exemption in keeping with the phrases of the original sale of plots, but levied taxes once
more. Even so, a claim of estoppel in opposition to its legislative electricity became not
allowed.

So is the case with the tax laws. If the law requires that a positive tax be accrued, it can't take
delivery of up, and any assurances via the Government that the taxes would no longer be
gathered could now not bind the Government, while it chooses to acquire the taxes. Thus it
was held that when there has been a clean and unambiguous provision of regulation that
entitles the plaintiff to an alleviation, no doubt of estoppel arises.

The following conditions had been laid down as vital to invoke the maxim of 'No estoppel
against a statute':

 The parties ought to bilaterally conform to settlement irrespective of statutory

provisions of the relevant Act.
 The agreement entered into by using the events need to be expressly prohibited
through the Act.
 The provision of regulation ought to be made for public interest and no longer pertain
to a selected elegance of humans.
 The agreement of the events ought to no longer had been merged into an order of the
court docket which Application of Doctrine of Promissory Estoppel to Government

APPLICATION OF DOCTRINE OF PROMISSORY ESTOPPEL TO GOVERNMENT

The doctrine of promissory estoppel has additionally been applied against the Government and
the defence based on government necessity has been categorically negative. The Government
is not exempted from liability to carry out the representation made by way of it to its future
behaviour and it cannot on some undefined and undisclosed grounds of necessity or expediency
fail to carry out the promise made, solemnly by means of it. The Supreme Court has refused to
make any distinction among a private individual and public frame to this point because the
doctrine of promissory estoppel is concerned. But if the promise is on behalf of the Government
is unconstitutional, in opposition to any statute or against public coverage the query of
promissory estoppel against Government does no longer practice. Thus, the Government its
officials is bound the doctrine and can't invoke any defence for their inactivity, unless
sponsored via statutory authority. Statute imposes a public responsibility even as the
obligations imposed by means of a promise are owed by using the Government now not to the
public but to personal individuals. Thus estoppel does now not apply to contravention of a
statute but applies to the breach of a promise by means of the Government. Where the
Government makes a promise knowing or intending that it would be acted upon by means of
the promisee and, in truth, the promisee acting in reliance of it, alters his position, the
Government may be held sure by using the promise and the promise would be enforceable in
opposition to the Government at the example of the promisee, notwithstanding that there is no
consideration for the promise and the promise is not recorded inside the shape of a proper
settlement as required Article 299 of the Constitution of India.

It is essential in a republic, ruled by way of a rule of law, no one howsoever excessive or low,
is above the regulation. Everyone is subjected to the regulation as absolutely and completely
as another and the Government is no exception. It is indeed the pride of constitutional
democracy and the rule of thumb of regulation that the Government stands on the same footing
as a non-public individual thus far as responsibility under the law is involved. The Government
cannot declare immunity from the applicability of the rule of thumb of promissory estoppel
and repudiate a promise made by way of it at the floor that such promise can also fetter its
destiny executive movement. Since the doctrine of promissory estoppel is an equitable doctrine
it must yield while the fairness so requires. If it could be proven by using the Government that
having regard to the records as they have got subsequently transpired, it would be inequitable
to the Government to abide the promise made by means of it, the court docket might no longer
increase an fairness in desire of the promise and put in force the it towards the Government.
The doctrine of promissory estoppel might be displaced is this type of case because fairness
could now not require the Government to be sure by the promise. When the Government is in
a position to reveal that because of the records that have transpired subsequent to the promise
being made, public interest might be prejudiced if the Government had been required to
perform the promise made, the courtroom would need to stability the public hobby inside the
Government wearing out the promise made to a citizen which has brought on the citizen to
modify his role to his prejudice and the public hobby in all likelihood to go through if the
Government have been to perform the promise, and decide which manner the fairness lies. The
doctrine of estoppel cannot be invoked for stopping the Government from acting in discharge
of its responsibilities beneath the law. The doctrine of cannot be implemented in tooth of a
responsibility or legal responsibility imposed with the aid of the law. It can't be used to compel
the Government or maybe a personal party to do an act prohibited through regulation. There
can be no promissory estoppel in opposition to the exercising of legislative energy. The
legislature can by no means be precluded from workout its legislative capabilities by way of
resort to the doctrine of promissory estoppel. An insight into judicial behaviour similarly
suggests that estoppel cannot be carried out against the Government if it jeopardizes the
constitutional powers of Government. In the case of C. Sankaranarayanan v. State of Kerala5,
the courtroom rejected the contention of estoppel and held that the strength conferred by means
of the Constitution can't be curtailed by using any agreement.

The court additionally did no longer permit the plea of estoppel against the Government if it
had the effect of repealing any provision of the Constitution. In Mulamchand v. State of
Madhya Pradesh6, the Supreme Court did no longer practice estoppel against the Government
in instances of contracts no longer entered into in accordance with the shape prescribed in
Article 299 of the Constitution. The court docket held that if the estoppel is permitted it would
mean the repeal of a critical constitutional provision, supposed for the safety of the majority.

Announced that sales tax exemption may be given at various prices over 3 years. The appellant
contended that they installation the plant and raised massive loans handiest because of the
warranty given by using the Government. The Supreme Court held that the Government was
certain by means of its promise and turned into liable to exempt the appellants from income
tax for a period of three years starting off from the date of production.

Further, in Century Spinning and Manufacturing Co. V. Ulhasnagar Municipality7, the

municipality agreed to exempt positive existent business issues within the location from octroi
responsibility for a duration of seven years. However, in a while it sought to impose obligation.
This was challenged and the Supreme Court, even as remanding the case to the High Court,
held that in which the non-public party had acted upon the representation of a public authority,
it could be enforced in opposition to the authority at the grounds of equity in suitable cases
despite the fact that the representation did now not result in a settlement attributable to the
dearth of proper form.

However, the case of Jit Ram Shiv Kumar v. State of Haryana8, forged a shadow at the Motilal
case in which it changed into held that the doctrine of promissory estoppel is not to be had
against the workout of government features of the State. The Supreme Court in Union of India

5
C. Sankaranarayanan v. State of Kerala, 1971 AIR 1997
6
Mulamchand v. State of Madhya Pradesh, 1968 AIR 1218
7
Century Spinning and Manufacturing Co. V. Ulhasnagar Municipality, 1971 AIR 1021
8
Jit Ram Shiv Kumar v. State of Haryana, 1980 AIR 1285
v. Godfrey Phillips India Ltd.9 Soon removed this doubt. The court held that the regulation laid
down in Motilal case represents the best regulation on promissory estoppel.

There is any other landmark judgment given by using the Supreme Court in Express Newspaper
Pvt. Ltd. V. Union of India10 in which the doctrine turned into used to preclude the Government
from quashing the movement of a minister for approval of a rent because it became inside the
scope of his authority to furnish such permission. Thus the fraud on strength changed into
checked. But if there may be misrepresentation via the birthday celebration itself to gain the
promise then the State isn't bound by using the promissory estoppel as held in Central Airmen
Selection Board v. Surender Kumar11. The court docket said that a person, who has himself
misled the authority by means of creating a fake statement, couldn't invoke this principle, if his
misrepresentation misled the authority into taking a decision, which on discovery of the
misinterpretation is sought to be cancelled by the behavior of the events were dissuaded from
acting its statutory obligations

PROMISSORY ESTOPPEL: ONLY A SHIELD, NOT A SWORD

Promissory estoppel is utilized as a barrier just not as a game-plan so when all is said in done
it is accessible as shield. Protection of promissory estoppel can be utilized by guarantee just
against the promiser to implement the guarantee, not by guarantee. For utilizing promissory
estoppel as a sword the convention of thought ought to be pursued. In Combe v Combe prior
support was given Denning LJ overruled the choice expressing that the estoppel must be
utilized as a "shield" and not a "sword". In the Motilal Padamat case equity Bhagwati said if
the principle of promissory estoppel can be utilized as a sword the conduits will be opened.

In Waltons Stores (Interstate) Ltd v Maher12, Maher owes a property, WS needed that to go up
against rent and devastate the building and erect new one. WS followed up on the transaction
and built new building, Maher acted that it assented for the arrangement. At the point when
WS's specialist arranged rent paper as indicated by the transaction Maher denied. Court Held
that Maher is bound by the agreement. Promissory estoppel, it has been stated, is a protective

9
Union of India v. Godfrey Phillips India Ltd., 1986 AIR 806
10
Express Newspaper Pvt. Ltd. V. Union of India, 1985 SCR Supl. (3) 382
11
Central Airmen Selection Board v. Surender Kumar, AIR 2003 SC 240
12
Waltons Stores (Interstate) Ltd v Maher, HCA 7, (1988) 164 CLR 387
value and the customary idea has been that estoppel must be depended upon protectively as a
shield and not as a sword High Trees' case itself was an occurrence of the guarded utilization
of promissory estoppel.

CONCLUSION

A man can't live in isolation, when we are living in a general public; everybody is reliant on
one another. It brought legally binding and business relationship. Promise of a man, when
ends up essential for another and cause for benefit and misfortune, on the off chance that it is
denied it might make hurt other one, for their insurance the precept of promissory estoppels is
accessible as a shield. Promissory estoppel is a decent resistance and great guideline to dodge
bad form. The legal in India has assumed an exceptionally huge job in making the guarantee
dependable and accountable and influenced it to submit to its promise.
BIBLIOGRAPHY

Primary Sources

Statutes

 The Constitution of India, 1950

 Code of Criminal Procedure, 1974
 Code of Civil Procedure, 1908

Cases

1. Waltons Stores (Interstate) Ltd v. Maher

2. Century Spinning and Manufacturing Co. v. Ulhasnagar Municipality

Online Sources

A. SCC Online
B. Manupatra
C. Lexis Nexis
D. Westlaw India