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Privileges And Immunities of Government In Legal Proceeding Under Administrative Law

Immunity from Estoppel:

The sanctity of promises in our society lies in the societal and moral conventions that allow a promissory to be treated as bound to his promise. This moral convention is usually reflected in law by the enforcement of promises that are given in return of other promises or consideration, compelling the promissory to perform his end of the promise or pay expectation damages. In order to maintain this, there are yet more moral rules which govern promises, statements and agreements. These are embodied in the concept of estoppel which may be invoked in case of a breach in contract or against the government. The expression Estoppel is derived from the French word Estoup which means, Shut the mouth.

When a person tells us something, we generally hear him. If he says something different or contradicting, we would not hear any more and contradict such statement. Otherwise, we shall comply with it. . E.g. A, intentionally and falsely tells B that, he is the owner of certain land and induces him (B) to purchase and pay for it. Later, A happens to become the owner of the said land. Then A cannot set aside the sale on the ground that he did not have title at the time of the contract for sale. In other words, A cannot estop B for execution of the contract of sale. When a person by declaration (act or omission) makes/induces another to believe a thing, he cannot deny its truth subsequently.

The other person cannot be estopped from proceeding upon such declaration. Estoppel is a rule of evidence, by which a person is not allowed to plead the contrary of a fact or state of things, which he has formally asserted as existing. Section 115 of the Evidence Act {1} embodies the principle of Estoppel. It runs as follows. When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe 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.

Basis, object and underlying principle:

The principle of estoppel is based on the principle of equity and good conscience. The object of the principle of estoppel is to prevent fraud and to manifest good faith amongst the parties. This principle is enshrined in the maxim ‘Allgans Contraria Non Est Audiendus’. It means, a man alleging contradictory facts ought not to be heard.

Immunity From Estoppel:

The administrative authority is vested with large discretionary powers. As a result the Government may make some prior pronouncement of its policies or it may give some advice or promise to an individual. The question here is whether the Government is bound by those pronouncements or promises.

In other words whether the rule of estoppel is applicable to the government or not?

Estoppel means that a party is prevented from denying the existence of some facts, which he had previously admitted and on which the other party had relief or entitled to rely. In India the courts are reluctant to apply the rule of estoppel against the Government, formerly.

There are so many cases to assert the above point. In Sankaranarayan v. Kerala, {2} The Supreme Court refused to apply the principle of promissory estoppel. The Government extended the age of retirement on the basis of an agreement between the Government and the employees. But again the retirement age was lowered through another ordinance. Held that the power under Art. 309 cannot be curtailed by applying the principle of estoppel.

In India v. Anglo Afghan Agencies Limited, {3} The Supreme Court applied promissory estoppel against the Government. The Central Government notified in the Gazette an export promotion scheme under which an exporter will be entitled to import raw materials equal to the amount, which is exported. The petitioner exported 5 lakh rupees worth of goods, but he was given import license for an amount below 2 lakh rupees only. This was challenged before the court. The Court held that the Government is bound to keep its promise and the petitioner is entitled to get the benefit of the scheme.

This case is considered to have created a new judicial trend. The above decision was followed in Motilal Padampat Sugar Mills v. U.P., {4}

The Government assured through newspapers that the Government will give tax exemption for three years to new industrial units. Later the Government retreated from its earlier assurance. The court held that the Government was bound by its assurance.

But the effect of the above decision was diluted by the Supreme Court in Jit Ram Siv Kumar v. Haryana, {5} -A municipality resolved not to collect octroi duty on certain items. Later it changed its mind and levied octroi. The court held that the municipality could not be estopped because the decision not to levy octroi was ultra vires its power.

In M.P. v. Orient Paper Mills Ltd., {6}-The Government was held to be bound by its assurance to grant electricity duty exemption on the basis of the principle of promissory estoppel.

Promissory Estoppel: The rule of ‘Promissory Estoppel’ is recognized by the courts of Equity in England. It is also known as Requisite Estoppel or New Estoppel. It does not come within the meaning of Section 115 of the Evidence Act. It relates to future promises (Section 115 relates to existing facts). Where, a person makes a promise to another thereby induces him to do an act to alter his position; the person promised is estoppel from denying the truth of that promise.

The concept of promissory estoppel was involved for the first time in India in the case of M.P. Sugar Mills v. State of U.P., {7} in the instant case, the Government through the Chief Secretary announced categorical assurance for total exemption from Sales Tax. Basing on this promise, the defendant set up a hydro generation’s plant by raising huge loan. Later, the Government changed its policy and announced the exemption of Sales Tax @ 3%, 2.1/2% and 2% for the lst, 2nd and 3rd years respectively. The Tax exemption was completely withdrawn later, when the defendant’s factory started its production. The Supreme Court held that the Government was bound by its promise and directed to give exemption to the defendant’s company.

In Ashok Kumar Maheswari v. State of U.P., {8}: There was provision for only direct appointment to the post of Lecturer in Medical College. There was no avenue for promotion from the post of demonstrator to the post of Lecturer. Appellants pleaded that the State Government had assured that they would be promoted to the post of lecturer.

The contention was rejected on the ground that there could be no promissory estoppel against provisions of law.

Burden of proof: Burden of proving estoppel lies upon the party who claims estoppel. He has to prove the ingredients of Section 115 of the Evidence Act for this purpose {9}.

Conclusion:
The doctrine of promissory estoppel is a doctrine of equitable adjustment. It is in place to ensure that no party to an agreement suffers any detriment while attempting to perform the act that would serve as consideration for a unilateral promise by another party. However, this doctrine can only be applied when certain conditions are fulfilled:

  1. Firstly, the party seeking to impose the estoppel must have altered his position.
  2. Secondly, the other party must not have given reasonable notice or reasonable opportunity to the party to resume his position.
  3. Finally, the party must be unable to resume his original position.

If the above three conditions are fulfilled, then the doctrine of promissory estoppel is applicable. The doctrine of promissory estoppel is necessary to place checks on the arbitrary powers of the State and this doctrine is one that would certainly serve that purpose by protecting the freedom to contract of citizens. In recent times, there is emphasis on government promises, especially in the realm of contract law and business transactions. It follows that an ordinary citizen who invests his assets based on the government’s promise only to find that the government does not abide by its promise must be afforded protection.

End Notes:

  1. Dr. Avtar Singh, Principles Of The Law Of Evidence, 454,(Central Law Publication, Allahabad, 10th edn., 2013)
  2. AIR 1971 SC 1897
  3. AIR 1968 SC 718
  4. AIR 1979 SC 621
  5. AIR 1980 SC 1285
  6. 1990, 1 SC 176
  7. AIR 1979 SC 621
  8. AIR 1998 SC 966
  9. https://www.lawteacher.net/free-law-essays/administrative-law/scope-of-promissory-estoppel-against-law-essays.php

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