Promissory estoppel and administrative actions
⚖️ 1. Promissory Estoppel: Concept
Promissory estoppel is a legal doctrine that prevents a party (usually the government or an authority in administrative law) from going back on a promise made to another party when:
A clear promise was made.
The promisee relied on that promise.
The promisee suffered a loss due to that reliance.
It would be unjust to allow the promisor to go back on their promise.
Traditionally a private law concept (especially from contract law), it is now increasingly applied to administrative actions, especially to hold the State or public authorities accountable for promises or representations made to citizens, even without a formal contract.
🏛️ 2. Promissory Estoppel in Administrative Law
When the government or its officers make a representation or assurance, even without any legal contract, they may be estopped from going back on it if citizens or companies acted on it to their detriment.
But courts also balance it against public interest, statutory duty, or change in policy, which may override estoppel in some cases.
📚 Key Case Laws on Promissory Estoppel in Administrative Actions
Case 1: Union of India v. Anglo Afghan Agencies (1968 AIR 718)
📌 Facts:
The Government announced a Textile Export Promotion Scheme promising certain import entitlements to exporters.
Anglo Afghan Agencies exported goods expecting to get the full import entitlements as per the scheme.
The Government later gave only a partial amount, citing “executive instructions”.
🧑⚖️ Judgment:
The Supreme Court held that even executive promises are binding if a party has acted upon them.
The doctrine of promissory estoppel was applied against the government.
✅ Key Point:
A promise made under a scheme cannot be withdrawn arbitrarily after the other party has fulfilled their part.
Case 2: Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh (1979 AIR 621)
📌 Facts:
The UP Government promised tax exemption to new industrial units.
Relying on this, Motilal Padampat set up a sugar mill.
Later, the state denied the exemption, citing lack of proper notification.
🧑⚖️ Judgment:
The Supreme Court reiterated promissory estoppel against the government.
The State could not withdraw the promise just because it had not been backed by formal rules.
✅ Key Point:
The absence of formal contract or notification does not excuse the government from its promise if reliance and detriment are proven.
Case 3: Jit Ram Shiv Kumar v. State of Haryana (1981 AIR 1281)
📌 Facts:
The municipal committee leased out land and promised not to levy certain charges.
Later, it imposed those charges citing statutory duties.
🧑⚖️ Judgment:
The Supreme Court held promissory estoppel does not apply where the government must act in public interest or fulfill statutory duty.
Municipal bodies cannot be estopped from performing their legal obligations.
✅ Key Point:
Statutory obligations override previous promises made by public authorities.
Case 4: Union of India v. Godfrey Phillips India Ltd. (1985 AIR 806)
📌 Facts:
The Government promised tax concessions to cigarette manufacturers for setting up factories in certain areas.
Godfrey Phillips set up a factory relying on this.
The government later withdrew the concession.
🧑⚖️ Judgment:
The Court said promissory estoppel applies even to fiscal matters.
The government is bound by its promise unless there is an overriding public interest or change in law.
✅ Key Point:
Promissory estoppel can be used even in matters of taxation and economic policy, not just contracts.
Case 5: Kasinka Trading v. Union of India (1995 AIR 4052)
📌 Facts:
The Government allowed duty-free import of PVC resins for a fixed period.
Kasinka imported huge quantities relying on this.
Before the period ended, the Government withdrew the concession.
🧑⚖️ Judgment:
The Court held promissory estoppel does not apply when the promise is subject to public interest or economic necessity.
Government has the right to change policies.
✅ Key Point:
Economic policy decisions can override estoppel — promises are not absolute if they affect national interest.
📌 Summary Table:
| Case Name | Held | Key Principle |
|---|---|---|
| Anglo Afghan Agencies (1968) | Estoppel against government promise | Executive promises are binding if relied upon |
| Motilal Padampat (1979) | Estoppel even without formal notification | No backing by rules doesn't negate promise |
| Jit Ram Shiv Kumar (1981) | No estoppel if it contradicts statutory duty | Public duty > previous promise |
| Godfrey Phillips (1985) | Estoppel in tax/fiscal matters valid | Tax concessions must be honored if relied upon |
| Kasinka Trading (1995) | Policy change can override estoppel | Economic/public interest can nullify previous promise |
🔍 Important Observations by the Courts:
Not absolute: Promissory estoppel is not an absolute rule; it can be overridden by public interest, law, or policy shifts.
No estoppel against statute: If a government promise violates a statute, it cannot be enforced.
Binding when equitable: Estoppel is applied to prevent injustice, especially when a party has acted to their detriment.
Applies to administrative actions: Especially where a policy assurance has induced a person or company to change position.
🧠 Final Thought:
Promissory estoppel plays a critical role in holding governments accountable in administrative law. While courts are careful not to block legitimate policy shifts or statutory duties, they also emphasize fairness, trust, and protection of legitimate expectations.
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