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

What was Bhushan’s argument?

Bhushan argued that there was written exam, physical test, 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.

“They didn’t say the issue of letters being postponed due to Agnipath,” he said, adding there was the issue of promissory estoppel.

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 doctrine of promissory estoppel essentially prevents a “promisor” from backing out of an agreement on the grounds that 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 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 a clear and 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 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”.