Supreme Court Clarifies Limits Of Promissory Estoppel And Legitimate Expectation In Light Of Legislative Changes

The Supreme Court has ruled that individuals cannot claim enforceable legal rights based on executive actions if these actions are subsequently altered by the state legislature in the larger public interest. The Court emphasised that the doctrines of legitimate expectation and promissory estoppel do not apply when legislative changes override previous executive decisions.

In a ruling by Justices Vikram Nath and Ahsanuddin Amanullah, the Court noted that if an executive decision is withdrawn or modified by legislative action, any prior promise cannot be enforced as a right. The authorities are not barred from retracting their promises, as such expectations do not confer enforceable rights.

The Court asserted that a prior executive decision does not restrict the state legislature from enacting laws or policies that contradict previous executive actions if done in the public interest. This principle is not affected by promissory estoppel or legitimate expectation, even if the executive had previously indicated a different stance.

Supporting this viewpoint, the Court referenced the Hero Motocorp Ltd vs Union of India case, where it was held that promissory estoppel does not apply against the legislative powers of the State.

The Court clarified that the doctrines of legitimate expectation and promissory estoppel are relevant to executive decisions when both the initial and subsequent decisions are made by the same or equivalent authorities. When an executive decision is retracted to the detriment of a party relying on it, the authorities may be stopped from doing so. However, this does not extend to legislative actions.

In the present case, the appellant had entered into a road construction project with the State based on an executive assurance that no stamp duty would be levied on the concession agreement. However, due to subsequent legislative changes, the appellant was required to pay stamp duty. The appellant argued that this assurance created a legitimate expectation. 

The Supreme Court ruled that the appellant could not invoke the doctrines of legitimate expectation or promissory estoppel to avoid paying the stamp duty, as the legislative reversal of executive decisions in the public interest prevails.