In England the concept The King can do no wrong had its sway.

All the courts in England were under

the Crown and hence Ould not be sued. Absolute immunity was provided to the Crown and hence
couldn't be held liable for the acts of their servants. After the Crown Proceeding Act 1947, the
immunity provided to them was abolished and the Crown could be held liable for contractual (and
tortuous) obligations.

In India under article 294B states about the liability of Union and State Government can be sued
under any contract(tortuous liability as well)The government and state can be sued with regard to
their respective affairs.

Liability of state:
Under article 300 of the constitution which empowers the principle, state can be sued in its own
court subject to certain principles of liability.

In Stream Navigation Company case the SC stated that as the general rule is concerned, it is there
for the attribute of sovereignty that the state can't be sued without the consent and with this respect
distinction between sovereign and non-sovereign functions were drawn.

Sovereign and Non-sovereign function:

Sovereign function is one where the state is not answerable to the court for the functions which
concerns defence, maintenance of armed forces, peace of the state while non sovereign functions
are those functions under which the state can be sued. It includes any kind of tort or breach of
contract, they will be liable for their damages which is states.

In State Of Rajasthan v/s Mrs. Vidyavati, Vidyavati's husband died of an accident caused by the
government driver who was driving negligently the government jeep from the garage to the office.
Vidyavati sued the government , for compensation. It was held valid as he died during the course of
his employment.

Liability of state in a contract under article 299:

The objective of this article is to safeguard the government and not to saddle the government with
obligations, which are made by unauthorised officers or in excess of authority. Saving funds is
essential. Hence if the contract is invalid the government can ratify and make modifications and can
make it valid.

In article 299 it states the requirement of the formulation of contract:

1. Contract made by President or governor

2. By state or union

3. It should be assumed all the contracts were under the eye of president or governor

4. Governor or president can authorise agent to enter in their behalf

5. Should be a written contract (oral contract is not binding on the government)

It is not directory but mandatory that it must be complied with all the requirements under article
299, hence it can't be enforced by the government or the other party. When the contract is valid,
article 299 immunes the Governor or President and also the person they authorised will also be
immune.

1. Contract made by an unauthorised person

In UOI V NK Pvt Ltd, railway board made an offer to the company to maintain surplus trains.
The authorised person was the director of store on behalf of President. The letter of
acceptance was given by secretary. It was held not binding as the contract created was by an
unauthorised person.

2. Even if the contract is void if the state acquires any kind of benefit they'll be liable to pay:
State Of West Bengal v/s BK Mondal
Construction was to be executed by the respondent and the building was constructed and
that it was used for government purpose. No payment was made to the contractor. The
government claimed as all the requirements of article 299 were not in compliance the
contract was not enforceable. The SC held that it is not enforceable but the government
needs to pay under section 70 of Indian Contract Act for which the work has been done.

3. When the government didn't receive any kind of benefit under void contract:
In State Of UP v/s Murari Lal & Brothers
Officers of agricultural department was not authorised to enter into contract on behalf of
government. He entered into a contract for space of cold storage for potato. But the
government never sent the potato. The place was kept vacant and the person suffered loss.
It was held not applicable under article 299 and section 70. Hence the party will have no
over the claim as no benefit was taken by the government. Till there is no benefit it can't
claim for money.

LIC India v/s Consumer Edu & Research Centre

When a matter of state action, the action of state having public interest authority, the terms
and policy were restricted to some class of person and for other people the benefit was not
available. Because it states instrumentality it must make fair, just and socio economically
correct policy and if the policy is not biding to these it won't be valid.

4. When the contract is between state and a person it is precisely contractual and also the
rights. The court can entertain the petition in the area where the contract shows
arbitrariness, unjust and unfair.

Mahabeer Auto Store v/s IOC

The petitioner carried business of lubricant service for 18 yrs. IOC suddenly stopped the supply and
no opportunity was given. The SC held that it is well settled principle, every action taken by
instrumentality of state, it should be taken without any arbitrary and should be informed(reasoning
should be given) as IOC comes under article 12 and should follow rules and tell the termination
reason which should be relevant. Government while entering into contract should give equal
opportunity to everyone.

Eurasian Equipment & Co Ltd v/s State Of West Bengal

Government blacklisted some person to enter into contract. This hampered them to enter into
contract . All the individuals should be given equal right to opportunity to be heard and also the
reason should be valid.

Unit 5

The State liability for the acts of omission and commission committed by its servants, not being a static
concept, has been governed by written or unwritten laws. Liability of State for the tortious acts of its
servants known as tortious liability. of State makes it liable for the acts of omission and commission,
voluntary or involuntary and brings it before Court of Law in a claim for non liquidated damages for
such acts. This liability is also a branch of Law of Torts. Law of Torts like various other laws has travelled
to this country through the British in India and now stands varied due to being regulated by certain
local laws and Constitutional provisions. The English maxim 'the King can do no wrong' regarding the
absolute immunity of Crown was never accepted in this country even in the past from ancient times.
The Crown could not be sued in tort for acts of its servants in the course of their employment. But it
was not accepted in this country even during the rule of the East India Company. The East India
Company which came to India initially for carrying on trade gradually became ruler of a great part of
this country and made yet another part under its subjugation. It was not a sovereign body but was
delegate of the Crown. Its powers and extent of political authority were gradually regulated by certain
legislations passed by the British Parliament. The British Crown took over the reigns of this country
directly in 1858 after armed uprising in India against the English rule termed by the British Rulers as
Sepoy Mutiny of 1857 was quelled. The vicarious liability of the Government in the absence any
statutory rules or contours depended on the extent and exercise of the power by the Government or
the head of the Government. In pre-independence period, the extent of tortious liability of the State
and its immunity was subject matter of dispute before existing Courts. "The liability of the State was
dependent on the nature of the act and the category of power in which it was placed viz sovereign or
non-sovereign power of the State. Sovereign powers of the State were never defined and in the
absence of any clear cut distinction between sovereign and non-sovereign powers of the State Courts
of law were faced some times with difficulties in resolving the disputes. The plank for defence by State
in cases pertaining to State liability used to be that the acts of omission or commission complained of
were within the realm of sovereign powers of the State and as such State was not liable. The first
judicial interpretation of State liability during the East India Company was made in John Stuart's case,
1775. It was held for the first time that the Governor Genera~ in Council had no immunity from Court's
jurisdiction in cases involving dismissal of Government servants. In Moodaly v. The East India Company
1775 (1 Bro-CC 469) the Privy Council expressed the opinion that Common law doctrine of sovereign
immunity was not applicable to India. After assumption of sovereign powers by the British Crown in
1858. The first enactment regarding the administration of Country was enacted in 1858 known as
Government of India Act 1858. Later on it was replaced by the Government of India Act 1915 and 1935.
Sec. 58 of the Act of 1858, the provisions of which remained on Statute Book in subsequent
Government of India Acts, for the first time spelt out tortiuous liability of State in Statutory terms. It
provided that Secretary of State may sue or be sued which read as follows "The Secretary of State in
Council may sue and be sued as well in India as in England in the name of the Secretary of State in
Council as a body corporate and all persons and bodies politic shall and may have and take the same
suits remedies and proceedings legal and equitable against the Secretary of State in Council of India as
they could have done against the said company, and the property and effects hereby vested in Her
Majesty for the purposes of the Government of India acquired for the said purpose shall be subject
and liable to the same judgments and executions as those vested in the said Company would have
been liable to in respect of debts and liabilities lawfully contracted and incurred by the said Company".
Sec. 68 of the said Act protected members of the Council from personal liability. Now Article 361 of
the Constitution of India exempts the President and the Governors who are heads of State from
personal liability. The leading case under Sec. 58 of the Government of India Act 1858 was Oriental
Steam Navigation v. Secretary to the State of India (Bombay High Court Reports Vol. V, 1868-69)
Appendix I. The Calcutta High Court in the said case held that there was a great and clear distinction
between acts done by the public servants in the delegated exercise of sovereign powers and acts done
by them in the conduct of other activities. The Court held that East India Company were not sovereign,
drew distinction between sovereign acts in respect of which State was not liable and the other category
i.e. non sovereign in respect of which the Secretary of the State was made liable. In the said case due
to negligence of a servant of Government working in Dockyard an accident happened and horse of a
carriage hired by an individual was injured. Calcutta High Court had in a subsequent decision adhered
to the same view but the Bombay and Madras High Courts did not agree with the same. The Madras
High Court in Secretary of State v. Hari Bhanjj (1882) ILR Madras 273 held that immunity of East India
Company extended only to "Acts of the State". The defence of an act of State is not available against a
citizen. Acts of State are directed against another sovereign State or its sovereign personally or its
subjects and being based on policy consideration and not on law administered by municipal Courts
they are not justiciable. Under the Constitution of India two Articles viz Article 294 and Article 300
contain explicit and implicit provisions regarding tortious liability of State and suit against it. Both the
Articles come under Chapter III of "Part XII of the Constitution of India which is headed as Property
Contracts. Rights, Liabilities Obligations and Suits." Article 294 (b) of the Constitution of India provides
that the liability of Union Government or State Government may arise out of any contract or otherwise.
The word "otherwise" would include various liabilities including tortious liability also. This Article thus
constitutes and transfers the liabilities of Government of India and Government of each governing
province in the Union of India and corresponding States.

Article 300 of the Constitution of India provides that State can sue or be sued as juristic personality. It
reads as under: "The Government of India may sue or be sued by the name of the Union of India and
the Government of a State may sue or be sued by the name of the State and may, subject to any
provisions which may be made by Act of Parliament or of the Legislature of such State enacted by
virtue of powers conferred by this Constitution, sue or be sued in relation to their respective affairs in
the like cases as the Dominion of India and the corresponding Provinces or the corresponding Indian
States might have sued or been sued if this Constitution had not been enacted." The first part of the
Article 300 deals with the nomenclature of the parties to a suit or proceeding, that is Union of India
and State Government but the second part defines the extent of liability by the use of words 'in the
like cases. The Supreme Court of India after coming into force of the Constitution of India in the first
notable case regarding State's tortious liability viz. State of Rajasthan v. Mrs. Vidyavati, AIR 1962 SC
937 removed the doubt that the scope of Article 300 was limited and held that the scope of Article
300 is not limited and the expression 'in the like cases' refers back for the determination of such cases
to the legal position before the enactment of the Constitution and Article 300 has saved the right of
Parliament or legislature of a State to enact such law as it may think fit and proper in this behalf and
so long as legislature has not expressed its intention to the contrary, law must be held to be the same
which has been continuing from the day of the East India Company. The Court further held that there
can be no difficulty in holding that the State should be as much liable for tort in respect of a tortious
act committed by its servant within the scope of his employment and wholly dissociated from the
exercise of sovereign powers as any other employer. Sovereign functions were specified as defence act
of State and other like operatives. It was thus made clear that ambit of Article 300 included tortious
liability of State and its scope is not limited to suit or right to one in respect of contractual liability only.
In the said case a vehicle owned by the State of Rajasthan met with an accident causing death of one
person due to negligence of the driver. The State was held liable as the said accident could not be
associated with the sovereign powers. The Court held that the act of public servant committed by him
during the course of his employment was in discharge of duties assigned to him not by virtue of
delegation of any sovereign powers. In subsequent decision of Kasturi Lal Ralia Ram v. State of Uttar
Pradesh, AIR 1965 SC 1039 the case of Vidyavati was distinguished on facts confining it to tortious
liability not arising from the exercise of sovereign powers. The Court in Kasturi Lal's case upheld the
defence of sovereign immunity and held that area of employment referable to sovereign powers must
be strictly determined. In the said case the seized gold was kept in the Malkhana and the person from
whom it was seized applied for its return later on but the case was not done and it appeared that it
was no longer in Malkhana and the same was misappropriated by the person incharge of the same. It
was held that this happened because of the negligence on the part of the police officers who acted in
violation of provision of U.P. Police Regulations and the powers which were exercised by them could
be properly characterised as sovereign powers. Kasturi Lal's case was distinguished by the Supreme
Court in subsequent decisions and without overruling it the Court diluted the emphasis laid in the said
case on sovereign immunity of the State and the Court took these Regulations to have special
characteristics of sovereign functions of State. These cases and other cases came up for consideration
before the Supreme Court in the case of Nagendra Rao v. State of Andhra Pradesh, AIR 1994 SC 2663
which arose under Essential Commodities Act. The Court observed that in welfare state functions of
State are not only defence or administration of Justice or maintaining law and order which are
sovereign functions of State, but its functions intend to regulate and control activities of people in
almost every sphere: educational, commercial, social, economic, political or even marital, and the
demarcating line between sovereign and non sovereign powers for which no rational basis survives
has largely disappeared. The water tight compartmentation of sovereign and non-sovereign functions
was held not to be sound and against modern jurisprudential thinking. The Court observed that
distinction between sovereign and non sovereign powers depends upon the nature of power and its
exercise. One of the tests to determine if the legislative or executive function is sovereign in nature is
whether the State is answerable for such actions in Courts of law. For instance, such as defence,
security, raising armed forces and maintaining it, making peace or war, foreign affairs, power to clear
territory are functions which are indicative of external sovereignty and therefore they are not
amenable to the civil courts. Kasturi Lal's case was distinguished in this case too and it was pointed out
that the property in respect of which suit for damages was filed was seized by the police officers while
exercising the powers of arrest under Section 54(1) (4) of the Cr. P.C. and the act complained of was
committed during the course of employment being of the category which can claim special
characteristics of sovereign powers and it was for this reason that the principle of sovereign immunity
was extended by the Court, which was not available in a large number of other activities. In the recent
decision of Achut Rao Hari Bhau Kodwa and another v. State of Maharashtra and others, (1996) 2 SCC
634 the Government doctor and the State were held liable because of the negligence of the said doctor
in the hospital resulting in death of the patients, it was held that running of hospitals not being
exclusive function of the Government, maintaining a hospital by Govt. would not be an exercise of
sovereign power so as to enable to claim immunity from liability for the tortious acts of its hospital
employees. Compensation was awarded to the family of the deceased reversing the decision of the
High Court and affirming the decision of the Trial Court. Sovereignty in India now vests in the people
who have given a written constitution to India with certain aims and objects enshrined in the Preamble
to the Constitution. It is obvious that the claim of immunity now survives in defence, administration
of justice, maintenance of law and order, repression of crime etc. which are primary and inalienable
functions of Government regulated by a constitution. The Supreme Court in Dr. M. Ismail Farooqui v.
Union of India, AIR 1995 se 605 held that the acquisition of temple and mosque may it be because it
is covered in maintenance of law and order is also covered in the sovereign functions of State. In the
matter of payment of compensation for damage caused to a person by the wrongful act of another
person, say Government servant, there is some deviation from the traditional concept in this behalf
even if no specific damage is alleged. The liability of the State has gone beyond the traditional
principles in view of changing laws and the Constitutional mandates in this country too. Negligence
and carelessness of the employees are words of great importance and the State would be liable to pay
compensation to aggrieved persons because of the negligent and careless act done by its employees
during the course of employment. Even if an employee was doing an unauthorised act but not in a
prohibited way, the employer is liable for such acts because such employee was acting within the scope
of his employment and in acting did something negligent or wrongful. A master would be liable even
for acts which he has not authorised if the same can be connected with the acts so authorised.

Article 21 of the Constitution of India forbids State to deprive a person of his life and liberty except in
accordance with a procedure established by law. To expand the word 'life', it includes every aspect of
life which makes life meaningful, complete and living, and even culture, tradition, heritage and
personal liberty which have a very expanded meaning impose negative deed on the State and in view
of Constitutional provisions including Directives Principles of State Policy it has been interpreted to be
imposing positive obligation upon the State which is to ensure better enjoyment of life and dignity of
individual. The Fundamental Rights which have been guaranteed and are enforceable by the Supreme
Court. Under Article 32 and High Court, under Article 226 have not only made the defence of sovereign
immunity completely inapplicable but have overthrown it altogether as it cannot go with
constitutionally guaranteed rights. In view of complete ouster of sovereign immunity in regard to
fundamental rights particularly Article 21, right to award money compensation for violation of the law
is justified. The Union and State governments would be liable for tortious acts committed by their
employees in the course of employment for violation of Article 21. The Supreme Court awarded
monetary compensation in a large number of cases. In the case of Nibati Behera v. State of Orissa, AIR
1993 SC 1960, the Court spelt out the principles on the liability ofthe State in case for payment of
compensation and the distinction between this liability and the liability in law for the payment of
compensation for the tort so committed. If no other practicable mode of redress is available the Court
would award monetary compensation for breach of fundamental rights by State or its employees
based on the principle of strict liability.

DOCTINE OF PROMISSORY ESTOPPLE

The principle of estoppel in India is a rule of evidence incorporated in Section 115 of The Indian
Evidence Act, 1872. The section reads as follows:
When one person has, by his declaration, act or omission, intentionally caused or permitted another
person to believe such a thing to be 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 doctrine of promissory estoppel is an equitable doctrine. Like all equitable remedies, it is
discretionary, in contrast to the common law absolute right like right to damages for breach of
contract. The doctrine has been variously called 'promissory estoppel', 'equitable 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 contract nor in the realm of
estoppel.

The true principle of promissory estoppel is 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. It is not
necessary, in order to attract the applicability of the doctrine of promissory estoppel that the
promisee acting in reliance of the promise, should suffer any detriment. The only thing necessary is
that the promisee should have altered his position in reliance of the promise.

This rule is applied by the Courts of Equity in England, as estoppel is a rule of equity. In India,
however, as the rule of estoppel is a rule of evidence, the ingredients of section 115 of the Indian
Evidence Act, 1872, must be satisfied for the application of the doctrine. The doctrine of promissory
estoppel does not fall within the scope of section 115 as the section talks about representations
made as to existing facts whereas promissory estoppel deals with future promises. The application of
the doctrine would negate the constitutional provision, as under Article 299, which affords
exemption from personal liability of the person making the promise or assurance.

Hence, as the doctrine is a principle of equity, the courts have taken a prerogative to lay emphasis on
equity and justice and have explained the doctrine of promissory estoppel in India. The ingredients
for the application of the doctrine are:

• That there was a representation or promise in regard to something to be done in the future,
• That the representation or promise was intended to affect the legal relationship of the parties and
to be acted upon accordingly, and,
• That it is, one on which, the other side has, in fact, acted to its prejudice.

Evolution of the doctrine of promissory estoppel

Promissory estoppel is a relatively new development. In order to trace the evolution of the doctrine
in England, we need to refer to some of the English decisions. The early cases did not speak of this
doctrine as estoppel. They spoke of it as 'raising equity'. Lord Cairns stated the doctrine in its earliest
form in the following words in Hughes v. Metropolitan Railway Company, [1877] 2 A.C. 439:
It is the first principle upon which all courts of equity proceed, that if parties who have entered into
definite and distinct terms involving certain legal results afterwards by their own act or with their
won consent enter upon a course of negotiation which has the effect of leading one of the parties to
suppose that the strict rights arising under the contract will not be enforced, or will be kept in
suspense, or held in abeyance, the person who otherwise might have enforced those rights will not
be allowed to enforce them where it would be inequitable having regard to the dealings which have
thus taken place between the parties.

This principle of equity made sporadic appearances but it was only in 1947 that it was restated as a
recognized doctrine by Lord Denning in Central London Properties Ltd. v. High Trees House Ltd.,
[1947] K.B. 130, who asserted:
A promise intended to be binding, intended to be acted upon, and in fact acted upon is binding.

In the formative period the doctrine of promissory estoppel could not be invoked by the promisee
unless he had suffered 'detriment' or 'prejudice'. All that is required is that the party asserting the
estoppel must have acted upon the assurance given by him. The alteration of position by the party Is
the only indispensable requirement of the doctrine.

In India, there are two stages in the evolution of the application of this doctrine; pre-Anglo Afghan
case and post- Anglo Afghan case. Prior to this case, the position was that promissory estoppel did
not apply against the Government. But the position altered with this case. In Union of India v. Anglo
Afghan Agencies , the Government of India announced certain concessions with regard to the import
of certain raw materials in order to encourage export of woolen garments to Afghanistan.
Subsequently, only partial concessions and not full concessions were extended as announced. The
Supreme Court held that the Government was estopped by its promise. Thereafter the courts have
applied the doctrine of promissory estoppel even against the Government.

Essential characteristics to make promise binding on Government

The following are the essentials to make any promise binding on the Government:
1. The State makes the promise within the ambit of law.
2. There is an intention to enter into a legal relationship.

3. The other party must do an act in furtherance of that promise or is forbidden to do anything.

No estoppel against statute and law

The doctrine of estoppel does not apply to statutes. In other words, a person who makes a statement
as to the existence of the provisions of a statute is not estopped, subsequently, from contending that
the statutory provision is different from what he has previously stated. A person may not represent
the true status of a statute or law, but the other person who relies on such a representation is at
liberty to find out the position of law on the matter and as the maxim says, ignorance of law is no
excuse. So a person can not take recourse to the defence of estoppel to plead that a false
representation has been made regarding the provisions of a statute or law. The principles of estoppel
can not override the provisions of a statute. Where a statute imposes a duty by positive action,
estoppel can not prevent it. The doctrine cannot also be invoked to prevent the legislative and
executive organs of the Government from performing their duties.

In Jit Ram Shiv Kumar v. State of Haryana , a municipality granted exemption from octroi for
developing a mandi, but subsequently is revoked the exemption. Later it again granted the
exemption in keeping with the terms of the original sale of plots, but levied taxes again. Even so, a
claim of estoppel against its legislative power was not allowed.
So is the case with the tax laws. If the law requires that a certain tax be collected, it cannot be given
up, and any assurances by the Government that the taxes would not be collected would not bind the
Government, when it chooses to collect the taxes. Thus it was held that when there was a clear and
unambiguous provision of law that entitles the plaintiff to a relief, no question of estoppel arises.

The following conditions have been laid down as necessary to invoke the maxim of 'No estoppel
against a statute':
• The parties must bilaterally agree to contract irrespective of statutory provisions of the applicable
Act.
• The agreement entered into by the parties must be expressly prohibited by the Act.

• The provision of law must be made for public interest and not pertain to a particular class of
persons.
• The agreement of the parties should not have been merged into an order of the court which by the
conduct of the parties had been dissuaded from performing its statutory obligations.

Application of Doctrine of Promissory Estoppel to Government

The doctrine of promissory estoppel has also been applied against the Government and the defence
based on executive necessity has been categorically negatived. The Government is not exempted
from liability to carry out the representation made by it to its future conduct and it cannot on some
undefined and undisclosed grounds of necessity or expediency fail to carry out the promise made,
solemnly by it. The Supreme Court has refused to make any distinction between a private individual
and public body so far as the doctrine of promissory estoppel is concerned. But if the promise is on
behalf of the Government is unconstitutional, against any statute or against public policy the
question of promissory estoppel against Government does not apply. Thus, the Government through
its officers is bound by the doctrine and cannot invoke any defence for their inaction, unless backed
by statutory authority. Statute imposes a public duty while the duties imposed by a promise are
owed by the Government not to the public but to private individuals. Thus estoppel does not apply
to contravention of a statute but applies to the breach of a promise by the Government.

Where the Government makes a promise knowing or intending that it would be acted upon by the
promisee and, in fact, the promisee acting in reliance of it, alters his position, the Government will be
held bound by the promise and the promise would be enforceable against the Government at the
instance of the promisee, notwithstanding that there is no consideration for the promise and the
promise is not recorded in the form of a formal contract as required by Article 299 of the
Constitution of India.

It is elementary in a republic, governed by a rule of law, no one howsoever high or low, is above the
law. Everyone is subjected to the law as fully and completely as any other and the Government is no
exception. It is indeed the pride of constitutional democracy and the rule of law that the
Government stands on the same footing as a private individual so far as obligation under the law is
concerned. The Government cannot claim immunity from the applicability of the rule of promissory
estoppel and repudiate a promise made by it on the ground that such promise may fetter its future
executive action.
Since the doctrine of promissory estoppel is an equitable doctrine it must yield when the equity so
requires. If it can be shown by the Government that having regard to the facts as they have
subsequently transpired, it would be inequitable to the Government to abide by the promise made
by it, the court would not raise an equity in favor of the promise and enforce the it against the
Government. The doctrine of promissory estoppel will be displaced is such a case because equity
would not require the Government to be bound by the promise. When the Government is able to
show that due to the facts which have transpired subsequent to the promise being made, public
interest would be prejudiced if the Government were required to carry out the promise made, the
court would have to balance the public interest in the Government carrying out the promise made to
a citizen which has induced the citizen to alter his position to his prejudice and the public interest
likely to suffer if the Government were to carry out the promise, and determine which way the
equity lies.

The doctrine of estoppel cannot be invoked for preventing the Government from acting in discharge
of its duties under the law. The doctrine of cannot be applied in teeth of an obligation or liability
imposed by the law. It cannot be used to compel the Government or even a private party to do an
act prohibited by law. There can be no promissory estoppel against the exercise of legislative power.
The legislature can never be precluded from exercising its legislative functions by resort to the
doctrine of promissory estoppel.

An insight into judicial behaviour further indicates that estoppel cannot be applied against the
Government if it jeopardizes the constitutional powers of Government. In the case of C.
Sankaranarayanan v. State of Kerala, the court rejected the contention of estoppel and held that the
power conferred by the Constitution cannot be curtailed by any agreement.

The court also did not allow the plea of estoppel against he Government if it had the effect of
repealing any provision of the Constitution. In Mulamchand v. State of Madhya Pradesh, the
Supreme Court did not apply estoppel against the Government in cases of contracts not entered into
in accordance with the form prescribed in Article 299 of the Constitution. The court held that if the
estoppel is allowed it would mean the repeal of an important constitutional provision, intended for
the protection of the general public.

The case of Motilal Padampat Sugar Mills v. State of U.P. is a trendsetter regarding the application of
the doctrine of promissory estoppel against the Government. In this case the Chief Secretary of the
Government gave a categorical assurance that total exemption from sales tax would be given for
three years to all new industrial units in order them to establish themselves firmly. Acting on this
assurance the appellant sugar mills set up a hydrogenation plant by raising a huge loan.
Subsequently, the Government changed its policy and announced that sales tax exemption will be
given at varying rates over three years. The appellant contended that they set up the plant and raised
huge loans only due to the assurance given by the Government. The Supreme Court held that the
Government was bound by its promise and was liable to exempt the appellants from sales tax for a
period of three years commencing from the date of production.

In State of Rajasthan v. Mahavir Oil Mills, a new industry was set up on the basis of an incentive
scheme from the Government wherein it promised some benefits. The Supreme Court held that the
State Government was bound by its promise held out in such situation. However, it does not
preclude the State Government from withdrawing the scheme prospectively. It could withdraw the
scheme even during its continuance, if public interest so requires. Even if the party has altered his
position, if due to supervening circumstances public interest requires the withdrawal of benefits, the
benefits can be withdrawn or modified. The supervening public interest would prevail over
promissory estoppel.

Further, in Century Spinning and Manufacturing Co. v. Ulhasnagar Municipality, the municipality
agreed to exempt certain existent industrial concerns in the area from octroi duty for a period of
seven years. However, later on it sought to impose duty. This was challenged and the Supreme Court,
while remanding the case to the High Court, held that where the private party had acted upon the
representation of a public authority, it could be enforced against the authority on the grounds of
equity in appropriate cases even though the representation did not result in a contract owing to the
lack of proper form.

However, the case of Jit Ram Shiv Kumar v. State of Haryana, cast a shadow on the Motilal case
where it was held that the doctrine of promissory estoppel is not available against the exercise of
executive functions of the State. The Supreme Court in Union of India v. Godfrey Phillips India Ltd.
soon removed this doubt. The court held that the law laid down in Motilal case represents the
correct law on promissory estoppel.

There is another landmark judgment given by the Supreme Court in Express Newspaper Pvt. Ltd. v.
Union of India wherein the doctrine was used to preclude the Government from quashing the action
of a minister for approval of a lease as it was within the scope of his authority to grant such
permission. Thus the fraud on power was checked. But if there is misrepresentation by the party
itself to obtain the promise then the State is not bound by the promissory estoppel as held in Central
Airmen Selection Board v. Surender Kumar. The court said that a person, who has himself misled the
authority by making a fake statement, couldn't invoke this principle, if his misrepresentation misled
the authority into taking a decision, which on discovery of the misinterpretation is sought to be
cancelled.

Significance of the doctrine of promissory estoppel in India

Today we are living in a world where a promise of Government to any citizen or non citizen matters a
lot especially if it is done in a contractual or business transaction. When a person relies on the
Government's promise and invests hard earned money and the Government afterwards does not
abide by its promise then it creates a position where the person's investment is in danger and he
becomes helpless and paralyzed. The judiciary in India has played a very significant role in making
the State responsible and accountable and made it abide by its promise.

Conclusion
In conclusion, it can be said that if the Government of India or of any State in India makes a promise
to any person and the promise is not inconsistent with the law of the land and is not against public
interest, then afterwards it cannot refuse to abide by its promise. The Supreme Court of India has
said that acting on the assurance or representations is enough and consequent detriment, damage
or prejudice caused is not to be proved. It is also immaterial whether such representation was wholly
or partially responsible for such alteration in the position. The Supreme Court has rightly observed
that the concept of detriment now is not merely monetary loss but whether it appears unjust. It is
inequitable that the promisor should be allowed to resile from the assurance or representation
having regard to what the promisee has done or refrained from doing in reliance on the assurance or
representation. Hence, one can rely on the lawful promise of the Government of India and can safely
act on the same because the law of the land is there to protect the citizens.