PROMISORY ESTOPPEL

Sequence to address theory question:-

a. Definition of doctrine.
b. How is it applicable?
c. Explanation of Central London v High trees case.
d. Principle of equity
e. Indian position with respect to:-
i. Section 63
ii. Section 2(d)
iii. Motilal case
1. After Anglo Saxon rule came into force in England, the rules promulgated by king is
not evolved as common law. In those times, the common law worked as precedents
of judgements. The king was at the discretion where he thought that the justice
requires the divergence from common law for justice and equity. The king sought
the advice of religion in such case. In time, the king found that religion does not do
well in such cases and thus he appointed a Vice chancellor and delegated his duties
to him.
Hence the court of the judges came to be known as the common law system (later
on came to be known as king or queen benches) and the vice chancellor division of
court came to be known as equity courts (started to be known as chancellery
division).
Certain cases required application of both laws of equity and common law. This
distinction was merged in 1873. Even today judges in Equity do not apply the
principles of common law.
2. The problem of stated above echoed in Hughes v Metropolitan Railway case:-
a. Facts:- there was a landlord who gave the house for rent to the tenant on
condition that if there is any complain/ renovation to be done in house, it is to be
done within first 6 months. The notice was given on 1st March. From August to
November, the negotiations were going on. Then, the negotiations fell apart.
Then, the party sued other stating that renovation was not done within 6 months
claiming it as breach of contract. (Dates are hypothetical).
b. Because of the then prevalent distinction common law and equity, technically
court could not have granted excuse for the contended breach of contract.
However, the Lord Kennes speaking for House of Lords even though contract
says something else can be said for justice and equity. Hence, in the case the
negotiation was removed from the time specified in the contract.
3. Definition of promissory estoppels:-
When one person by his conduct or words makes representation to the other person
and the latter person acts on it, then the first person cannot circumvent such
 representation. Estoppels as such cannot arise as an contract as there is no
consideration. Hence, the concept evolved in equity.
4. Forms of Estoppel:-
a. Estoppel of Fact(representation of fact)
Fact can be for example, A owes a ownership title of a piece of land.
b. Representation of intention
A has to pay immediately to B. But, then B says that A can pay by 6 months
considering some financial difficulties of B.
c. Jorden v Money
Husband and wife had a divorce in court- no alimony was stated then during the
settlement. Wife was earning a lot more than the husband. Husband’s lawyer
sent a letter to wife stating that Husband will pay X amount to her per month.
Wife sued Husband as he did not pay the money.
The court held that payment of X is intention not supported by consideration and
hence the agreement cannot be enforced. The court held that Estoppels can only
apply for the fact and not intention because there is no fresh consideration in the
contract.
5. Central London property v high trees house 1947 kb 130
a. Facts:-
Certain agreements were entered into tenancy for consideration of X amount.
But, war started. Hence, the party orally stated to reduce the X amount to Y. For
some years, the tenants paid as per the rent as per the reduced amount. War
ended and money started coming in. The owners thereafter claimed to increase
the rent and sued for the actual rent amount for the last five years when the
tenants were paying as per the reduced amount. The owners stated that since
the contract stated more rent, so the increase in rent and the claim for previous
rent is justified. They stated that the rent was always the same amount and they
just didn’t enforce it before.
b. Lord Denning:-
i. When the property owners had made a representation that they
won’t charge due to certain compassionate grounds, and then they
are bound by their representation for such period till war (that was
going on during that time) exists. (Principle of promissory estoppels).
So, for war period i.e. five years the owners cannot claim any more
money.
ii. The court was bound by Jordan v money on one hand; it used the
principle of Hughes v Metropolitan railway to go beyond the common
law principles and stated that the justice and equity requires the
reduced rent for war period. This principle was stated as promissory
estoppels by him.
 iii. However, if the case was heard in India, then the section 63 could
have applied and reduced rent could have been enforced.
6. The concept of promissory estoppels arose in UK because:-
a. The definition of consideration was too rigid
(The law commission report in 1937 recommended for an expansion of
definition of consideration, but, the English court denied such expansion and
held the restricted i.e. benefit detriment test for consideration by Lord
Atkinson in Balfore v. Balfore case)
b. Past consideration was not valid in Indian law.
Rule in Pinnel's Case 1602 5 Rep, 117- A promise to pay part of debt cannot
amount as new consideration. Hence, it is not enforceable. So, the full
amount has to be paid.
7. Indian law:-
a. The Indian law has diverted from the rule in Pinnel’s case. It can be seen in form
of section 63 (Accord and satisfaction). It means that a promise to pay part of
debt can be stated a discharge of the debt because he accepted the part amount
as satisfaction of promise.
b. The section only looks at only debt. It can be argued that the words “extension of
time” and “satisfaction” can be stated as provision for promissory estoppels.
c. However, the courts in India have interpreted the section in light of English law
which has made it narrow in use.
d. The section 2(d) allows for a broader definition than benefit detriment test said
by Lord Atkinson in Balfore v Balfore of consideration by allowing for the privity
of contract rather than privity of consideration and allowing for past
consideration. But, our Indian courts have borrowed from the English law. Thus,
judiciarily the benefit detriment test is applicable in India.
Motilal Padampath Sugar mills v State of UP:-
i. The courts have given a restrictive definition of the promissory estoppels
and applied it only in cases of government representations. When the
government makes the representation, then it is bound by it. It is because
government authorities are of public importance and hence by the public
policy considerations, it should be bound by it.
ii. The judgement was made without any strict application of section 63.

Can promissory estoppels be used as shield or sword?

Crabb v Arun Committee DC:-

Unlike in case of Central London property v. High trees, promissory estoppel was taken as a
sword i.e. for suing the other party rather than as a defence. The court held that the general
rule is that the promissory estoppel can only be taken as defence and cannot be used to
sue. However, in certain exceptional cases, it can be used as sword as well. In Crabb v Arun
Committee DC, the promissory estoppel was used as a sword.

WAIVER
When the representation of one party translates into a written agreement, then it is a
waiver. Waiver could be of term, right, clause.etc.

Company A going to be bankrupt. It wishes to sell a lot of its property to B. A part of the
agreement says that for any other sale of property if the company is about to be bankrupt,
then they will take permission of the court. There is a section in Companies Act that requires
such permission. After the contract was entered into, B decided to remove the clause about
permission from the court. In such situation, B is said to have waived off such requirement
and entered into a waiver by removing the right/obligation in the contract. If the same act
was done in an oral way, then it would be promissory estoppel. Section 63 also includes
about the waiver concept.

Waiver also amounts to alternation and novation of the contract.