SC ruling on Agnipath scheme: What does promissory estoppel under contract law mean?

Context: Advocate Prashant Bhushan argued that instead of implementing the new recruitment scheme, the government should complete the old process and cited the doctrine of promissory estoppel.

What was the case?

  • Advocate Prashant Bhushan who appeared for some of these candidates told the apex court that their names appeared in a provisional list for recruitment to Air Force but the recruitment process was cancelled when the Agnipath scheme was notified.
  • He argued that the government must be directed to complete the old process citing the doctrine of promissory estoppel.
  • Bhushan argued that there was a written exam, physical test, and medical exam conducted under the old recruitment process after which a provisional selection list was published with the ranks.
  • Thereafter for more than one year, every three months they kept saying that appointment letters were going to be issued, however, they were postponed due to Covid-19, etc.
  • In the meantime, they did recruitment rallies for the same posts claiming it was for fast-track recruitments to address the demographic imbalance to recruit tribal people, etc.
  • He added that these candidates had got jobs in BSF and other paramilitary organisations, but had refused as they were told that Air Force recruitment letters will be issued.

What is the doctrine of promissory estoppel?

  • Promissory estoppel is a concept developed in contractual laws.
  • A valid contract under law requires an agreement to be made with sufficient consideration.
  • A claim of the doctrine of promissory estoppel essentially prevents a “promisor” from backing out of an agreement because there is no “consideration.”
  • The doctrine is invoked in court by a plaintiff (the party moving court in a civil action) against the defendant to ensure the execution of a contract or seek compensation for failure to perform the contract.
  • In a 1981 decision in Chhaganlal Keshavalal Mehta v. Patel Narandas Haribhai, the SC lists out a checklist for when the doctrine can be applied.
  • First, there must be an unambiguous promise.
  • Second, the plaintiff must have acted relying reasonably on that promise.
  • Third, the plaintiff must have suffered a loss.

How does it relate to the Agnipath case?

  • Bhushan’s argument invoking the doctrine essentially means that the government’s actions of putting up a shortlist etc would be a “promise” made by it.
  • The other party here — the candidates acted based on that promise — they refused other jobs in CRPF, BSF etc and now must be compensated for their loss.
  • However, the judges quickly refused this argument. CJI DY Chandrachud pointed out that “promissory estoppel is always subject to the overarching public interest”.
  • Justice PS Narasimha added that “this is not a contract matter where promissory estoppel in public law was applied, it is a public employment” and that “the question of applying this principle will not arise in this case”.

Practice MCQ

Consider the following statements regarding the doctrine of promissory estoppel

1.      It is a doctrine related to contractual laws.

2.      it prevents a “promisor” from backing out of an agreement.

3.      Unambiguous promise is one of the components of checklists to apply this doctrine

Which of the statements given above are correct

(a)    1 and 3 only

(b)   2 and 3 only

(c)    1 and 2 only

(d)   1, 2 and 3

Ans. D

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