promissory estoppel

Where one party makes a clear and unequivocal promise intending it to be acted on, and the other party acts on it and alters his position, the promisor is not allowed to resile even if there is no consideration and no formal contract. In England it is only a shield (a defence), not a cause of action. Indian courts have gone further and allowed it to found a claim, especially against the State.

In Motilal Padampat, the Supreme Court held that the government was bound by its assurance of a sales tax exemption on which the company had set up its factory. Limits: there is no estoppel against a statute or the legislature, and the government may withdraw if overriding public interest requires it, after notice.

Example

Having set up its unit on the State's assurance of a five-year tax holiday, the company invoked promissory estoppel to stop its early withdrawal.

In Indian law

• Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, 1978 INSC 256: promissory estoppel binds the government
• Central London Property Trust v. High Trees House (King's Bench, England, 1947)

See also

estoppel · legitimate expectation · consideration

Read more in the study notes

• Promissory estoppel, legitimate expectation and proportionality (Administrative Law)
• Delegated legislation: meaning, growth, merits and administrative directions (Administrative Law)
• Administrative discretion and its judicial review (Administrative Law)
• Government contracts and state liability: the administrative-law angle (Administrative Law)
• Estoppel (Bharatiya Sakshya Adhiniyam)
• State liability in tort and contract (Constitutional Law II)