Case Title: The State of Jharkhand and Ors. V. Brahmputra Metallics Ltd., Ranchi and Anr.

The Supreme Court's ruling in the present case is a useful resource for understanding the legal concepts of legitimate expectation and promissory estoppel.

The ruling issued by the bench comprising Justices DY Chandrachud and Indu Malhotra demonstrated an alternate way in which remedy can be sought using the notion of legitimate expectation in the face of capricious State conduct.

Background of the case

The respondent, Brahmaputra Metallics Ltd., was attempting to enforce a commitment made in 2012 by the Jharkhand Government to exempt captive power plants from paying 50% of the electricity duty for a five-year term. Despite the fact that this declaration was made in the Industrial Policy of 2012, it wasn't until 2015—and then only prospectively—that it became a law. The business requested that this policy be enforced retrospectively from 2012. It petitioned the High Court, relying on the concepts of promissory estoppel and fair expectation. The company's writ petition was granted by the High Court. The State moved the Supreme Court to contest that.

The following are some key ideas drawn from the judgement:

• The judgement first analysed the development of the theory of legitimate expectation and the emergence of the basis of promissory estoppel in English law.

• As an equitable remedy to provide relief to a person who has acted on a promise even in absence of a formal contractual relationship, promissory estoppel was created.

• In a courtroom, it may be applied as a "shield" rather than a "sword." In other words, promissory estoppel was permitted to be utilised as a defence in a judicial process even if it does not by itself establish a cause of action.

The doctrine of Legitimate Expectation is founded on the values of equity and lack of State arbitrariness. 

According to the Court, although the theory of legitimate expectation in public law is predicated on the norms of fairness and non-arbitrariness surrounding the action of public authorities, the doctrine of promissory estoppel in private law is based on a promise made between two parties.

According to the ruling, the theories of reasonable expectation and promissory estoppel are frequently confused in Indian law.

The Court outlined how the protection of a citizen who acted after placing their faith in the State is connected to the theory of legitimate expectation. The purpose of this entire idea was to hold the State responsible.

Must establish harm?

According to the judgement, it was noted in the 1989 ruling in National Buildings Construction Corporation v. S. Raghunathan that claims based on legitimate expectation must show harm done to the claimant as a result of acting on the State's representation, as in the case of promissory estoppel.

However, throughout time, there has been a departure from this stance to place the concept of legitimate expectations on a more comprehensive basis.

The verdict stated that Justice H.L. Gokhale addressed several factors that underpin the concepts of promissory estoppel and legitimate expectation in a concurring opinion in Monnet Ispat and Energy Ltd. v. Union of India(2012).

"For the application of the doctrine of promissory estoppel, there has to be a promise, based on which the promise has acted to its prejudice. In contrast, while applying the doctrine of legitimate expectation, the primary considerations are reasonableness and fairness of the State action", the judgment in Monnet observed.

Denial of a valid expectation only permissible in the interest of the public -

Deprivation of a valid expectation may only be justified on basis of the larger public interest, according to another important principle that emerged from the ruling. The Court observed that the State in this case had not provided any justifications based on the public interest.

The Court stated that “a denial of a right of private persons and private businesses must be commensurate to a demand justified in the public interest. We hold that such a course of action by the State is arbitrary and is in violation of Article 14. Since the State has produced no rationale for the delay in delivery of the notification or provided grounds as to why it is in the public interest,” the Court stated.