Promissory estoppel

Supreme Court on Promissory estoppel

My attention was drawn to the observations of the Supreme Court in the case of Ramana Dayaram Shetty Vs. International Airport Authority of India and Others [AIR 1979 SC 1628], as well as to observations of the Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh and Others, , where the Supreme Court explained the nature of promissory estoppel by saying :–

Doctrine of promissory estoppel has been variously called ‘promissory estoppel,’ ‘requisite 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 justice nor in the realm of estoppel.

The true principle of promissory estoppel seems to be that 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 effect 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 he would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties and he should be so irrespective of whether there is any pre-existing relationship between the parties or not.

The doctrine of promissory estoppel need not be inhibited by the same limitation as estoppel in the strict sense of the term. It is an equitable principle evolved by the courts for doing justice and there is no reason why it should be given only a limited application by way of defence. That is no reason in logic or principle why promissory estoppel should also not be available as a cause of action, if necessary to satisfy the equity. It is not necessary, in order to attract the applicability of the doctrine of promissory estoppel, that the promisee acting in reliance on the promise, should suffer any detriment.

What is necessary is only that the promisee should have altered his position in reliance on the promise. But if by detriment we mean injustice to the promisee which would result if the promisor were to recede from his promise, then detriment would certainly come in as a necessary ingredient. The detriment in such a case is not some prejudice suffered by the promise by acting on the promise, but the prejudice which would be caused to the promise, if the promisor were allowed to go back on the promise.

If this is the kind of detriment contemplated, it would necessarily be present in every case of promisory estoppel, because it is on account of such detriment which the promise would suffer if the promisor were to act differently from his promise, that the Court would consider it inequitable to allow the promisor to go back upon his promise. In India not only has the doctrine of promisory estoppel been adopted in its fullness but it has been recognized as affording a cause of action to the person to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise

Cases where Ramana Dayaram Shetty was mentioned

1 STATE OF ODISHA Vs PRATIMA MOHANTY ETC. – [2021] 9 S.C.R. 335

2 THE VICE CHAIRMAN & MANAGING DIRECTOR, CITY AND INDUSTRIAL DEVELOPMENT CORPORATION OF MAHARASHTRA LTD.& ANR. Vs SHISHIR REALTY PRIVATE LIMITED & ORS. ETC – [2021] 13 S.C.R. 190

3 MODIFIED VOLUNTARY RETIREMENT SCHEME OF 2002 OF AZAM JAHI MILL WORKERS ASSOCIATIONNATIONAL TEXTILE CORPORATION LIMITED & ORS. Vs NATIONAL TEXTILE CORPORATION LIMITED & ORS. – [2021] 11 S.C.R. 321

4 UNION OF INDIA & ORS. Vs M/S PUNA HINDA – [2021] 9 S.C.R. 117

5  M/S UTKAL SUPPLIERS Vs M/S MAA KANAK DURGA ENTERPRISES & ORS. – [2021] 3 S.C.R. 391

6 THE STATE OF MADHYA PRADESH & ANR. Vs U.P. STATE BRIDGE CORPORATION LTD.& ANR. – [2020] 11 S.C.R. 821