Promissory Estoppel

By Dr. Y.Srinivasa Rao, Judicial Officer.

The principle of promissory estoppel may be stated thus: Where one party has by his words or 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 of whether there is any pre-existing relationship between the parties or not. Of course the basic requirement for invoking this principle must be present namely, that the fact-situation should be such that “injustice can be avoided only by enforcement of the promise”. The doctrine of promissory estoppel is not really based on the principle of estoppel, but it is a doctrine evolved by equity in order to prevent injustice. There is no reason why it should be given only a limited application by way of defence. It can be the basis of a cause of action. For attracting the doctrine of promissory estoppel what is necessary is only that the promisee should have altered his position in relying on the promise. It is not necessary that he should suffer any detriment as well, Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., AIR 1979 SC 621: (1979) 118 ITR 326: (1979) 44 STC 42. 

The definitions of “estoppel” and “promissory estoppel” in Black’s Law Dictionary which are based on decided cases, relied on by Supreme Court which indicate that before the rule of “promissory estoppel” can be invoked, it has to be shown that there was a declaration or promise made which induced the party to whom the promise was made to alter its position to its disadvantage. In order to invoke the doctrine of promissory estoppel it is not necessary for the promisee to show that he suffered detriment as a result of acting in reliance on the promise. The detriment in such a case is not some prejudice suffered by the promisee by acting on the promise, but the prejudice which would be caused to the promisee, if the promisor were allowed to go back on the promise, Ashok Kumar Maheshwari v. State of U.P., 1998 SCC (L&S) 592.

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