Report No. 69

IV. Promissory Estoppel

57.18. Broad features of promissory estoppel.-

In recent times the doctrine of promissory estoppel has emerged. It is too early to say anything very definite about its scope, but the following propositions taken from Chesire1 indicate its broad2 features

(1) If a promise is given by one party to a contract not to insist upon his rights under that contract and there is no consideration for the promise, the promisee cannot sue upon it.

(2) If the promisor breaks this promise and sues on the original contract, the promisee may use the promise by way of defence.

(3) To succeed in this defence, the promisee must persuade the court that it is "inequitable" to allow the promisor to sue on the original contract.

If the promisee has himself been guilty of unconscionable conduct the court will certainly not allow the equity to be pleaded. But in the present context as elsewhere the word 'inequitable' has a more technical significance. The promisee must have acted or omitted to act in reliance upon the promise; and by this act or omission he must have altered his position for the worse. Thus, in the New Zealand case of P. v. P., 1957 HELR 854., he was induced not to take advantage of his statutory powers.

(4) The fourth point is still the subject of controversy. It has been strongly urged that the doctrine of promissory estoppel applies only to suspend and not to abrogate the promisor's legal rights. Such, indeed, has been its effect in most of the cases in which the question has been relevant. But it was not so restricted in the case of P. v. P., and Lord Cairns in Hughes v. Metropolitan Rail Co., (1887) 2 App Cas 439, clearly stated the proposition in the alternative. The equitable doctrines might be applied, he said, when the promisee had been led "to suppose that the strict rights will not be enforced or will be kept in suspense or held in abeyance". The point would seem at least to be open to argument.

1 Chesire and Fifoot Contracts, (1971), pp. 89, 90.

2 Some of the footnotes have been omitted.

57.19. In India also, "promissory estoppel" has received consideration in judicial decisions.1 It has been debated at great length in periodical legal literature also. However, the dimensions of this concept await further definition. Apart from that, it may be stated that the topic may not properly belong to the law of evidence, since its subject-matter is nearer to substantive law than estoppel in the limited sense as known to section 115. For these reasons, we do not propose to discuss this topic in the present report.

1. (a) Union of India v. Anglo Afghan Agencies, AIR 1908 SC 718: (1962) 2 SCJ 869.

(b) State of Tamil Nadu v. Krishnamurthi, (1974) 1 SCJ 235.

(c) AIR 1973 All 230.

(d) Sankaranarayan v. State of Kerala, (1971) 2 SCC 364.

(e) I.F.C. Agency v. Union of India, AIR 1976 Del 4.

(f) Nathulal v. State, 1976 Raj 12.

V. No Estoppel against Statute

57.20. In general, there is no estoppel against a statute, in the sense that if a certain provision is made by statute for the public benefit, the enforcement of that provision by the competent statutory authority cannot be defeated by arguing that the competent authority had made a representation of fact which renders the statutory provision inapplicable and which estops the concerned authority from relying on the statute.

57.21. Where a particular act is declared to be void and unlawful by statute, a party cannot, by representation, any more than by other means, raise against him an estoppel so as to create a state of things, which he is under a legal disability from creating, as pointed out by Vice-Chancellor Beacon in Barrow's case.1

1. Barrow's case, (1880) 14 Ch D 432 (433), affirmed on appeal in (1880) 14 Ch D 443.

57.22. "The doctrine of estoppel cannot be applied to an Act of Parliament. Estoppel only applies to a contract inter partes, and it is not competent to the parties to a contract to estop themselves or anybody else in the face of an Act of Parliament .I am of opinion that as between the parties to this contract there was no estoppel, they contracted to do a thing which in the result it was unlawful to do".

57.23. On the same principle it has been held1 that a corporate body cannot be estopped from denying that they have entered into a contract, which it was ultra vires for them to make.

1. Canterbury Corporation v. Cooper, (1909) 100 LT 597.

VI. Recommendation

57.24. In the result, the only change needed in section 115 is the addition of an Explanation as follows to clarify the position as to minors-

"Explanation.-This section applies to a minor or other person under disability; but nothing in this section shall affect any provision of law whereby the minor or other person under disability becomes incompetent to incur a particular liability.

1. Canterbury Corporation v. Cooper, (1909) 100 LT 597.

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