DOCTRINE OF PROMISSORY ESTOPPEL AND LEGITIMATE EXPECTATIONS

DOCTRINE OF PROMISSORY ESTOPPEL AND LEGITIMATE EXPECTATIONS

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Doctrine of Promissory Estoppel 

The Doctrine of Promissory Estoppel is basically an equitable doctrine. 

The Doctrine of Promissory Estoppel means where one party by his words or conduct made to the other a clear promise which is intended to create legal relations or even 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 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. 

It clearly means that administrative action would be marked by certainty, predictability and consistency.

Doctrine of Promissory Estoppel is available against the exercise of executive function of the State. In Express Newspapers Pvt. Ltd. Union of India (AIR 1986 SC 872), The Doctrine of Promissory Estoppel was used to prevent the government for quashing the action of the Minister for approval of a lease as it was within the scope of his authority to grant such permission. This ultimately resulted in checking whether there is fraud on the exercise of power or not. Here, the Express Newspapers were given notices of re-entry upon forfeiture of lease of land granted to them on which the lessee has raised buildings for the purpose of printing and publishing the newspapers. Thus, it was held by the Supreme Court that the action had been politically motivated and there is clear violation of mala fide intention. 

Nature and scope 

Estoppel is often described as a rule of evidence, but more correctly it is a principle of law. Though commonly named as promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. The basis of this doctrine is equity. It is invoked and applied to aid the law in administration of justice. But for it great many injustices ,may have been perpetrated. 

(c) Illustration 

This principle is embodied in Section 115 of the Indian Evidence Act, 1872. It provides: “When one person by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to he 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”. The illustration to the section reads as under: 

“A, intentionally and falsely leads B to believe that certain lands belong to A, and thereby induces B to buy and pay for it. 

The lands afterwards become the property of A, and A seeks to set aside the sale on the ground that at the time of sale he had no title. He must not be allowed to prove his want of a title.’ 

(d) Traditional view 

According to the traditional theory, the doctrine of promissory estoppel cannot itself be the basis of an action. It cannot find a cause of action: it can only be a shield and not a sword. 

Similarly, as per the traditional view, the doctrine of equitable estoppel or promissory estoppel applies to private individuals only and the Crown is not bound by it.

(e) Modern view 

It is. however, necessary to make it clear that the doctrine of promissory or equitable estoppel is not really based on the principle of estop- pel, but it is a doctrine evolved by equity in order to prevent injustice. The doctrine of promissory estoppel need not, therefore, be inhibited by the same limitation as estoppel in the strict sense of the term. It is 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. 

Likewise, it has now been accepted and the rule of estoppel applies to the Crown as well. There is no justification for not applying this against the Government and exempt it from liability to carry out its promises given to an individual. 

Motilal Padampat Sugar Mills v. State of U.P. 6 is one more leading decision on the subject. In that case, the Government of Uttar Pradesh announced that new industrial units in the State would be granted exemp- tion from payment of sales tax for a period of three years. Acting on the above assurance the petitioner established the factory. Later on, how- ever, the Government withdrew the said benefit. The petitioner ap- proached the High Court but failed. Applying the doctrine of estoppel, the Supreme Court allowed the appeal. 

(g) Estoppel against statute 

It should not, however, be forgotten that there cannot be any estoppel against a statute. The doctrine cannot be allowed to operate so as to validate an ultra vires act or to override the clear words of a statute nor does it apply to criminal proceedings.” 

The doctrine cannot be used against or in favour of the administration so as to give defacto validity to ultra vires administrative acts. 

h) Estoppel and public policy 

The doctrine of estoppel is equitable and, therefore, it must yield to equity and can be invoked in the larger public interest. If a promise or agreement is opposed to public policy, it cannot be enforced. Likewise, it cannot be extended or applied where the promise has been obtained by playing fraud on the Constitution. For instance, a right to reservation under Article 15 or 16 of the Constitution has been made with a view to promote interests of certain backward classes. If a person who does not belong to that class obtains a false certificate and gets an employment, and

on coming to know about the true facts, has been removed from service, he cannot invoke this doctrine. It would be permitted to play fraud on the Constitution. 

Doctrine of Legitimate Expectations 

(a) General 

The doctrine of “legitimate expectations” has been recently recognised in the English as well as in the Indian legal system. It is the ‘latest recruit’ to a long list of concepts fashioned by the courts for the review of administrative actions. The doctrine has an important place in the development of law of judicial review. 

(b) Nature and scope 

A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. 

Where a decision of an administrative authority adversely affects legal rights of an individual, duty to act judicially is implicit. 

But even in cases where there is no legal right, he may still have legitimate expectation of receiving the benefit or privilege. 

Such expectation may arise either from express promise or from existence of regular practice which the applicant can reasonably expect to continue. 

In such cases, the court may protect his expectation by invoking principles analogous to natural justice and fair play in action. 

The Court may not insist an administrative authority to act judicially but may still insist him to act fairly. 

(c) Object 

Principles of natural justice will apply in cases where there is some right which is likely to be affected by an act of administration. Good administration, however, demands observance of doctrine of reasonableness in other situations also where the citizens may legitimately expect to be treated fairly. 

A doctrine of legitimate expectation has been developed both in the context of reasonableness and in the context of natural justice.

(f) Illustrations 

The promise of a hearing before a decision is taken may give rise to a legitimate expectation that a hearing will be given. 

A past practice of consulting before a decision is taken may give rise to an expectation of consultation before any future decision is taken. 

A promise to confer, or past practice of conferring a substantive benefit, may give rise to an expectation that the individual will be given a hearing before a decision is taken not to confer the benefit. The actual enjoyment of a benefit may create a legitimate expectation that the benefit will not be removed with- out the individual being given a hearing. On occasions, individuals seek to enforce the promise or expectation itself, by claiming that the sub- stantive benefit be conferred. Decisions affecting such legitimate expec- tations are subject to judicial review. 

Leading Cases 

In Naijroti Coop. Group Housing Societ y v. Union of India ,7 as per the policy of the government, allotment of land to housing society was to he given on the basis of ”First come first served”. It was held that the societies who had applied earlier could invoke the doctrine of ‘legit 

mate expectation’. 

In Supreme Court Adtocares-on-Record Assn. v. Union of India, 8the Supreme Court held that in recommending appointment to the Su- preme Court, due consideration of every legitimate expectation has to be observed by the Chief Justice of India. “Just as a High Court Judge at the time of his initial appointment has the legitimate expectation to become Chief Justice of a High Court in his turn in the ordinary course, he has the legitimate expectation to be considered for appoint- ment to the Supreme Court in his turn, according to his seniority.” 

Consequences 

The existence of a legitimate expectation may have a number of consequences. It may give locus standi to a claimant to seek leave to apply for judicial review; 

it may mean that the authority ought not to act so as to defeat that expectation without justifiable cause.

It may also mean that before defeating a person’s legitimate expectation, the authority should afford him an opportunity of making representation on the matter. 

The claim based on the principle of legitimate expectation can be sustained and the decision resulting in denial of such expectation can he questioned provided the same is found to he unfair, unreasonable, arbitrary or violative of principles of natural justice. 

The clement of acting to applicant’s detriment which is a sine qua non for invoking estoppel is not a necessary ingredient of legitimate expectation 

Duty of applicant 

Legitimate expectation affords the applicant standing to apply for judicial review. A person who bases his claim on the doctrine of legitimate expectation in the first instance, must satisfy that there is a foundation for such claim.” 

(k) Duty of authority 

Where the applicant p r i m a f a c i e satisfies the court that his claim on the basis of legitimate expectation is well founded, it is for the authority to justify the action taken against the applicant. 

(I) Duty of court 

When a case of legitimate expectation is made out by the applicant, the Court will consider the prayer of the applicant for grant of relief. The protection of legitimate expectation does not require the fulfilment of the expectation where public interest requires otherwise. The court may uphold the decision taken by the authority on the basis of overriding public interest. Thus, protection of doctrine of legitimate expectation and grant of relief in favour of the claimant are two distinct and separate matters and presence of former does not necessarily result in the latter) 

Limitations 

● Interference with administrative decisions on merits which is not permissible. ● Moreover, the doctrine does not apply to legislative activities. ● doctrine of ‘legitimate expectations’ does not apply if it is contrary to public policy or against the security of State. 

15. CONCLUSIONS

It is a fundamental principle of law that every power must be exercised within the four corners of law and within the legal limits. Exercise of administrative power is not an exception to that basic rule. The doctrines by which those limits are ascertained and enforced form the very marrow of administrative law. Unfettered discretion cannot exist where the rule of law reigns. Again, all power is capable of abuse, and that the power to prevent the abuse is the acid test of effective judicial review.