DOCTRINE OF PROMISSORY ESTOPPEL

Article submitted by Anukriti Sharma, UPES, Dehradun.

INTRODUCTION

The word estoppel is derived from the French word “estouppail” which means "stopper" or "plug".[1] In law, the doctrine of estoppel means where a person makes a statement to another person and the other believes it to be true and acts in that belief and suffers a loss, under this doctrine former shall be prevented to going backing to his own statements or promise. The doctrine of promissory estoppels is based on the principles of justice, fair play, and good conscience. It bars or prevents a person from making claims because they are contradictory with statements made earlier and works as a waiver and saves the time of Court. It was evolved by equity to prevent injustice and based on a maxim allegans contraria non audiendus est which means that a person alleging contradictory facts shall not be heard.

In Indira Bai v. Nand Kishore[2], it was held that estoppel is a rule of equity flowing out of fairness striking on behavior deficient in good faith.

According to Lord Denning’s it is based on the principal of justice and equity[3] and in his own words this doctrine means "when a man by his words or conduct, has led another to believe that he may safely act on the faith of them and he will not be allowed to go back on what he has said or done when it would be unjust and inequitable to do so”[4].

2). NATURE AND JURISPRUDENCE BEHINDTHIS DOCTRINE

The doctrine of promissory estoppels is based on the principal of "standing or sticking by its own word".

There is no provision of promissory estoppel in Indian law, this concept was borrowed from Britain. Section 115 of Indian Evidence Act[5] deals with estoppel and Section 25 of Indian Contract Act[6] deals with contracts made without any consideration.

In Southern Petrochemical Industries Co. Ltd. V. Electricity Inspector and ETIO[7] the court held that this doctrine can also be used in law of contracts.

This doctrine is also called "equitable estoppel", "cause estoppel" and "new estoppel"[8]. In order to trace this doctrine we need to refer English cases as this concept was borrowed from Britain. In Hughes v. Metropolitan Railway Company[9],doctrine is based on equity and justice, that if parties who have entered into definite and distinct terms involving certain legal results afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties.

In in the famous case of contracts case of Carlill V Carbolic Smoke Ball Company[10] the company made a product called smoke ball and claimed it to be a cure for influenza and many other diseases. It was a rubber ball with the tube attached with it. The company published advertisement in the newspaper undertaking that it would pay £100 to anyone who got sick after using this product according to the instruction provided with it. Mrs Carlill saw the advertisement and used it 3 times a day for two months and still got sick and sued company for £100.

In Central London Property Trust Ltd v. High Trees House Ltd[11], the court held that while the landlord was entitled to revise the rent for the future, the promissory estoppel applied to him with regard to it and as he promised to reduce the rent in future and acted upon the promise by taking reduced rent only. In this case, it was a landlord who acted upon his own promise by standing on its own words and not the tenant. Hence, the doctrine of promissory estoppel was applied in this case.

EVOLUTION OF DOCTRINE IN INDIA.

Prior to Anglo Afghan case, the position was that promissory estoppel did not apply against the Government. But the position altered with this case. In Union of India v. Anglo Afghan Agencies[12], the Supreme Court held that the Government can be estopped by its promise. Thereafter the courts have applied the doctrine of promissory estoppel even against the Government.

In Ganges Manufacturing Co. v. Souraj Mul[13] , the Calcutta High Court observed that “the doctrine of estoppels was not only limited to the law of evidence but that a person may be prevented from doing any act or relying upon any particular argument or connection, which the rules of equity and good conscience prevent him from using as against the opponent “and hence this doctrine was applied on appellant. The term promissory estoppel was used for the first time by the Supreme Court in the case of Collector of Bombay v. Bombay Municipal Corporation[14]. In this case the govt. of Bombay called upon the predecessor in the name of Municipal Corporation of Bombay to remove old markets from a certain area of Bombay in 1865. They gave up that area and spent a sum of Rs.17 lacks in maintenance of markets. The collector of Bombay assessed the new site to land revenue in 1940 and the Municipal Corporation thereupon filed a suit for a declaration that it was entitled to hold the land even without payment of any assessment. The apex court held that Collector has the right to hold the land in perpetuity free of rent. Chandrasekhar Iyer J. while concurring with the majority rested his decision on promissory estoppel and hence the government could not be allowed to go back on its words.

INGREDIENTS OF PROMISSORY ESTOPPEL

There are 5 ingredients of this doctrine, given under section 115 of Indian Evidence Act.

A. Where the person has by his statement, act or omission

B. Intentionally, caused another person.

C. To believe a thing to be true and.

D. Act on that belief

E. The former shall not be denying the truth of the statement, act or omission.

Therefore, the Estoppel applies only when the other person believes the representation to be true and act in that belief. In University of Madras v. Sundara Shetty[15], where the petitioner appeared for SSLC examination in 1952 and passed the examination and the record booklet issued the university showed that he is eligible to undertake the study of intermediate course and passed his first-year examination. After some time, University served him with a notice that he did not passed the examination and got his admission cancelled in the college where he was studying.

Madras High court, applied estoppel against the university as

a) The university by its statement informed that the petitioner has passed the examination and was eligible for intermediate.

b) Petitioner believed it to be true and acted on that belief to his determinant and hence the university are stopped from going back on their own statements.

c) The court granted the writ of mandamus directing the college and the university to permit him to take the intermediate final examination.

EXCEPTIONS OF DOCTRINE OF PROMISSORY ESTOPPEL.

1). No estoppel against State:

Promissory estoppel against the government must be distinguished from application of estoppel against the state or sovereign. The Supreme Court held that the estoppel cannot be applied as against the government for its exercise of sovereign legislative and executive function[16].

2). No estoppel against a statue or law:

There cannot be an estoppel to defeat the provisions of a statute or a law. A party can content that the law or is not valid or unconstitutional but once it is shown that it is valid, no estoppel can be pleaded against the statute. For example, a minor’s contract is void under contract act and even if the minor is misrepresented his age the contract cannot be enforced against him as such and estoppel would in effect estop the statue.[17]

3).Estoppel against Minor:

Section 11 of the Indian contract act of 1872 which deals with who are competent to contract provides every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject. In India the age of majority is 18 years and a contract made by a minor is void ab initio. In Dhurmo Dass Ghose vs Brahmo Dutt [18] the Calcutta court express the opinion that the word person in section 115 Indian evidence act means a person who has legal capacity to contract and hence a minor could not be estopped.

CONCLUSION

The Doctrine of Promissory Estoppel is based on a principal of person alleging contradictory facts shall not be heard. Though there is no provision of promissory estoppel in Indian law, this concept was borrowed from Britain but its trace can be found in ancient history of India. ‘Raghukul riti sada chali aai,Praan jaaye par vachan na jaaye’ is one if the famous proverb used in Ramayana which means Life will go, but words(we promised) will stand still. It is the indicator of determination towards the subject which are the components of a promise. Section 115 of Indian Evidence Act deals with estoppel and Section 25 of the Indian Contract Act deals with contracts made without any consideration.

In law, the doctrine of estoppel means where a person makes a statement to another person and the other believes it to be true and acts in that belief and suffers loss, under this doctrine former shall be prevented to going backing to his own statements or promise. In order to apply this doctrine, five conditions given under section 115 of the Indian evidence act must be fulfilled and there are 3 exceptions to this doctrine i.e. estoppel against Minor, Statute, and law. This doctrine is based on the principles of justice, fair play, and a good conscience and thus bars or prevents a person from making claims because they are contradictory with statements made earlier and works as a waiver and saves the time of Court.

[1]Andrew Robertson "Reliance and expectations in Estoppel Remedies" legal studies, vol 18, issues 3, Sept 1998. pp 460-368. [2] (1990) 4 S.S.C. 668 (India). [3]Moorgate Mercantile Co. Ltd. v. Twitchings (1975) 3 ALL E.R. 314. [4]Williams v Roffey Brothers (1990) 2 W.L.R. 1153. [5] When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe 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. Illustration A intentionally and falsely leads B to believe that certain land belongs to A, and thereby induces B to buy and pay for it. The land afterwards becomes the property of A, and A seeks to set aside the sale on the ground that, at the time of the sale, he had no title. He must not be allowed to prove his want of title. [6]Agreement without consideration, void, unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law.—An agreement made without consideration is void, unless— —An agreement made without consideration is void, unless—" (1) it is expressed in writing and registered under the law for the time being in force for the registration of 1[documents], and is made on account of natural love and affection between parties standing in a near relation to each other; or unless (2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless. (3) It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, such an agreement is a contract. [7]A.I.R. 2007 S.C. 1984 (India). [8]Motilal Padampat Sugar Mills v UP, (1979) 2 S.C.C .409 (India). [9] (1877) 2 A.C. 439. [10](1892) EWCA Civ (India). [11](1947) K.B. 130 (India). [12] A.I.R 1968 S.C. 718 (India). [13] (1880) ILR 5 Cal. 669. [14] A.I.R 1951 S.C. 469 (India). [15] A.I.R. 1956 Mad 309 (India). [16] BEG Fisherman Cooperative Society V. Sippahi Singh A.I.R. 2149 S.C. 1977(India). [17]A.I.R 1978 M.P. 86 (India). [18] Dhurmo Dass Ghose vs Brahmo Dutt (1898) ILR 25 Cal 616.