The doctrine is not limited to cases where there is some contractual relationship or other pre-existing legal relationship between the parties.

The principle would be applied even when the promise is intended to create legal relations or affect a legal relationship that would arise in future.

A leading authority on this subject is of the Supreme Court in Motilal Padampat Sugar Mills Co Ltd. v State of Uttar Pradesh (118 I.T.R. 326).

It was held that the government is susceptible to the operation of the doctrine in whatever area or field the promise is made: Contractual, administrative or statutory.

To put it in the words of the Court: "The law may, therefore, now be taken to be settled as a result of this decision, that where the government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would 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."

However, there are some limitations to this doctrine. These are:

If the power is there, then subject to the preconditions and limitations noted earlier, it must be exercised.

Thus, if the statute does not contain a provision enabling the Government to grant exemption, it would not be possible to enforce the representation against the Government, because the Government cannot be compelled to act contrary to the statute.

But if the statute confers power on the Government to grant the exemption, the Government can legitimately be held bound by its promise to exempt the promisee from payment of any tax.

An apparently aberrant note was struck in Jit Ram Shiv Kumar v State of Haryana (3 S.C.R. 689) where despite all the factors of promissory estoppel being established, the court held: "The plea of estoppel is not available against the state in the exercise of its legislative or statutory functions."

Of course, it was also found that the representative had no authority to make the representation it had.

To that extent the decision could not be said to have deviated from the earlier pronouncements of the law.

The discordant note struck in Jit Ram's case was disapproved by a Bench of three judges of the apex court in Union of India v Godfrey Philips India Ltd. (158 I.T.R. 574).

It was held that: "There can, therefore, be no doubt that the doctrine of promissory estoppel is applicable against the government in the exercise of its governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel."

It was held that regardless of the nature of power wielded, the government is bound to exercise that power provided it possessed such power and has promised to do so knowing and intending that the promisee would act on such promise and the promisee has done so.

The limitations to the doctrine delineated in Motilal Padampat Sugar Mills' case were also reaffirmed by declaring that there can be no promissory estoppel against the Legislature in the exercise of its legislative functions nor can the government or a public authority be debarred by promissory estoppel from enforcing a statutory prohibition.

Promissory estoppel cannot be used to compel the government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the government or of the public authority to make.

The decision of the Supreme Court in Bakul Cashew Co. v Sales Tax Officer (159 I.T.R. 565) was a case dealing with the preconditions on the fulfilment of which a plea of promissory estoppel can be raised — that the representation must not only be definite but must be satisfactorily established.

The alteration of the petitioner's position acting upon such representation must also be pleaded expressly and must be sufficiently supported with material.

The doctrine of promissory estoppel has also been extended to service law. In Surya Narain Yadav v Bihar State Electricity Board (3 S.C.C. 38), it was found as a fact that the Bihar State Electricity Board had made representations that graduates who would be taken as trainee engineers would be regularised against appropriate posts and the submission that such appointments would be contrary to statutory rules of the Board was brushed aside.

The court directed the Board to act in terms of the representation made.

The case of Kasinka Trading v Union of India (1 S.C.C. 274) is an authority for the proposition that the mere issuance of an exemption notification under a provision in a fiscal statute such as Section 25 of the Customs Act, 1962, could not create any promissory estoppel because such an exemption by its very nature is susceptible to being revoked or modified or subjected to other conditions. In other words, there is no unequivocal representation.

The seeds of equivocation are inherent in the power to grant exemption. Therefore, an exemption notification can be revoked without falling foul of the principle of promissory estoppel.

Amrit Banaspati Co. Ltd. v State of Punjab ((85 S.T.C. 493 (S.C.)); (2 S.C.C. 411)) is an example where, despite the petitioner having established the ingredients of promissory estoppel, the representation could not be enforced against the Government because the Court found that the Government's assurance was incompetent and illegal and "a fraud on the Constitution and a breach of faith of the people".

In a recent decision, the Supreme Court in State of Punjab v Nestle India Ltd. (269 I.T.R. 97) held that promissory estoppel, long recognised as a legitimate defence in equity, can be the basis of a cause of action against the government, even when the representation sought to be enforced is legally invalid in the sense that it was made in a manner which was not in conformity with the procedure prescribed by statute.

The Government cannot rely on a representation made without complying with the procedure prescribed in the relevant statute, but a citizen may and can compel the government to act on such a representation if the factors necessary for founding the plea of promissory estoppel are established.

The aforesaid decisions throw considerable light on the circumstances in which the doctrine is applicable and the limitations to which it is subjected.

(The author, a Mumbai-based advocate specialising in tax laws, can be contacted at ranina@bom2.vsnl.net.in.)

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