Kejriwal’s Rent Aid Proposal: A Breach Of Promise

KEY TAKEAWAYS

• Delhi CM, Arvind Kejriwal during a press conference promised the poor tenants of Delhi to pay their rent due to their inability to pay the rent during COVID Lockdown, 2020.
• The Delhi government thereafter issued an order and appealed to landlords to postpone collection of rent for at least one month and that the government would pay the rent on their behalf.
• Delhi High Court demanded the Delhi government to frame a scheme on the given promise which would be enforceable on the basis of promissory estoppel and legitimate expectation by the poor tenants. However, the government didn’t follow through with this direction and instead appealed to a Division Bench of the Delhi HC. The Division Bench stayed the single judge’s order.
• There was an appeal filed against this interim stay by two poor women on the verge of destitution as their rent had mounted up due to their inability to pay the rent.
• On February 28th, 2022, the plea by the two women had been dismissed by the Supreme Court stating that promissory estoppel will not be applied to the CM’s speech since there was no official policy or notification in this regard.
• Promissory estoppel is a doctrine under Law of Contracts which binds a party to perform a promise whether or not there was a contract or not. The doctrine is in place to protect the rights of the aggrieved party.

INTRODUCTION

During 2020, on March 29, five days after the announcement of COVID-19 lockdown and when migrant workers were fleeing the city fearing the infectious corona virus and shutting down of earning sources, the Delhi Chief Minister, Arvind Kejriwal bearing in mind the larger interest of the poor migrants, labourers and students expressed his concerns in a press conference and requested to all the landlords to not harass tenants if the rent is not paid and appealed to them to postpone the demand for rent collection from the “poor and poverty stricken”. He additionally assured and promised to pay the rent on behalf of the poor tenants and that the Delhi government would compensate for the same. This was done since the government wanted people to remain where they are as any migration would massively increase the risk of Corona virus transmission.

Thereafter, an order was issued by the Delhi government to help labourers (including migrants) and students in the state which stated that the government had been made aware of the instances where the landlords had been demanding rent from labourers and students. Therefore, the government had appealed to the landlords to not demand rent for at least one month.

The order also said that if the landlord would force any of the above-mentioned people to vacate the place, they will be liable for action according to the Disaster Management Act of 2005. The government had announced the same earlier as well in a notice released on March 29, 2020. Since some landlords did not follow this order, another notice was issued for strict compliance of the same. The order further stated that awareness campaigns will be undertaken by the District Magistrates on this issue in areas where the density of students or migrant labourers is high in Delhi. The government had also asked people who were facing eviction issues to lodge a complaint by the police. The weekly reports of such cases were expected to be forwarded to the state government.

Justice Pratibha Singh of Delhi HC had on July 22 last year directed the Delhi government to frame a scheme on the basis of the Delhi CM’'s promise, which she held to be enforceable on the basis of both, the doctrine of estoppel and a legitimate expectation by the people. However, instead of implementing the order, the Delhi government had appealed before a division bench of the HC, which stayed the single judge's order. Appeal against the Division Bench's interim stay was filed in the SC by two women, who claimed to be on the verge of destitution as the liability of rent has mounted up to such an extent that they may soon become homeless and forced to stay on the footpath.

For the petitioners, senior advocate Sanjay Parikh told the bench of Justices D. Y. Chandrachud and Surya Kant that Justice Pratibha Singh had merely directed framing of the scheme in six months and that no harm would have been caused to the Delhi government by framing a policy decision as per its repeated pro-poor approach.

But the bench went through the CM's 2020 promise and said that in the absence of a policy framework for implementation of the so-called promise, it would be difficult to hold the government liable for payment of rent for those poverty stricken who aren’t able to do pay their rent. However, it said that the petitioners should wait for the outcome of the appeal pending before the Division Bench and that it was a policy decision of the SC not to entertain appeals against interim orders of the High Courts. Finding the bench unconvinced, Sanjay Parikh withdrew the appeal.

On February 28th, 2022 the Supreme Court dismissed the plea for seeking enforcement of Delhi CM Arvind Kejriwal's promise stating that promissory estoppel will not apply to the CM’s speech. And hence, two women returned empty handed from the house of justice.

PROMISSORY ESTOPPEL

Under the Contract Law, promissory estoppel refers to a doctrine in which a party may recover based on a promise made as it had relied on the said promise. It is a doctrine which enforces a promise regardless of there being a contract or not. The doctrine seeks to protect the rights of a promisee or the aggrieved party (Petitioners) against the promisor, and in this case, the Delhi government.

Under promissory estoppel, one party backs out from the agreed obligation and Delhi government has done exactly that in the said case. The doctrine is applied when the promisor has made a promise to the promisee. The promisee must have relied on the promise and suffered a loss due to non-performance of the same promise. The doctrine prevents the promisor or enterprise from going back on their promise. There are, however, certain factors to consider under this doctrine such as the following:

1. The doctrine seeks to enforce a promise made under a contract, either orally or in writing.
2. The promisee must have suffered an economic loss. The aggrieved party can recover damages from the promisor for any losses incurred as a result of the contract.
3. No formal consideration is required from the promisor to the promisee under the contract.
4. The promise should be one on which a reasonable man could have relied on. The promisee should have acted reasonably and relied on the promise.
5. The doctrine allows the injured party or the promisee to recover on a promise.
6. Courts will enforce the doctrine of promissory estoppel if the performance of the promise is the sole relief for providing justice to the aggrieved party or the promise.

Justice Bhagwati also mentioned in one of the cases that if a promissory estoppel is used like a sword, then surely floodgates will open. The contribution in development of the doctrine by the SC has been noteworthy but still there are instances of restricted interpretation and limited application of the doctrine.

Case Law: CARLILL V CARBOLIC SMOKE BALL CO [1893] 1 QB 256

The Carbolic Smoke Ball Company (defendant) gave an advertisement in the Pall Mall Gazette of their product, smoke ball. It was stated in the advertisement, that they promise to pay 100 pounds as compensation to anyone who contracts influenza after using their ball three times daily for two weeks as per the instructions printed.

The Plaintiff, who believed the Defendant’s advertisement that its product would prevent influenza, had bought Carbolic Smoke Ball and used it according to the instructions from November 20, 1891 until January 17, 1892, when she got influenza. Plaintiff brought suit to recover the 100£, which she was entitled to recover. Defendant appealed.

The advertisement moreover, stated that they have deposited 1000 pounds with the Alliance bank as an assurance. Mrs. Carlill (plaintiff) after going through the advertisement bought the smoke balls and used it as per the directions but subsequently caught influenza. The plaintiff's claim was refused by the defendant and therefore, she brought a suit against them for the recovery of the amount.

This case considers whether an advertising gimmick (i.e. the promise to pay 100£ to anyone contracting influenza while using the Carbolic Smoke Ball) can be considered as an express contractual promise to pay.

Lindley, L., the Court of Appeals noted that the main issue was whether the language in Defendant’s advertisement, regarding the 100£ reward was meant to be an express promise or, rather, an exaggeration for the purpose of sale, which had no meaning whatsoever.

In this case, it was held that the Defendant’s Appeal was dismissed, Plaintiff was entitled to recover 100£.

The Court acknowledged that when it comes to vague advertisements, language regarding payment of a reward is generally an exaggeration, which is not enforceable. In this case, however, Defendant noted the deposit of £1000 in their advertisement, as a show of their sincerity. Due to this action of the Defendant, the Court found their offer to reward to be a promise, backed by their own sincerity.

This case stands for the opinion that while sales exaggeration in advertisements is generally not intended to create a contract with the potential buyers, in this case however, that did happen because the language the Defendant used was up to the extent of a promise, due to their own sincerity.

COURT’S OBSERVATION ON KEJRIWAL’S RENT AID PROPOSAL

A two-judge bench of Justices D.Y. Chandrachud and Surya Kant have dismissed the plea by Najma and Others stating that there is no case for interference under Article 136 of the Constitution had been made out and the special leave petition was junked on that ground.

A bench of Justice DY Chandrachud and Surya Kant, which examined the speech of Kejriwal said, while dismissing the appeal, “How can you apply promissory estoppel (enforcement of a promise) on a statement by the chief minister? There has to be a policy decision and a notification issued in this regard. We have seen the order of the High Court (passed by a single judge). It is incorrect in law; notification has to be issued in this regard”.

RELATED JUDICIAL OBSERVATION

Before the Apex Court, the petitioners moved against the order of the Division Bench led by Chief Justice D.N. Patel, which had put a stay on the order passed by single judge Justice Prathiba M. Singh. The Single Judge emphasised that the reason the doctrine of estoppel and legitimate expectation exist are to ensure Government officials and authorities follow the promises made by them and are enforceable subject to other conditions. She also stated that a statement given in a consciously held press conference in the background of the lockdown and “mass exodus” of migrant labourers shall not simply be overlooked and that the statement was not a political promise and not made as a part of any election rally.

Thereafter, in September 2021, a Division Bench comprising Chief Justice D N Patel and Justice Jyoti Singh said that the operation of the single judge’s order will remain pending till the next hearing and had also enquired the Government if they were willing to pay in part.

This came up due to an appeal by the Delhi government against the single judge’s order.

Senior Advocate Manish Vashisht also claimed that the CM’s statement was not a “promise”.

Advocate Gaurav Jain who represented the daily wagers and workers, opposed the Delhi government’s plea saying his clients have no means to pay the rent.

Therefore, due to the Supreme court’s final order being in favour of the Delhi government, the poor labourers couldn’t get any relief in the matter.

CONCLUSION

When the promise of one party becomes important for another and becomes a point of profit and loss, if it is denied it may cause harm to another party, for the protection of the aggrieved party, this doctrine of promissory estoppels is available as a shield. Promissory estoppel can be a great defence and a good principle to avoid injustice, however promissory estoppel will not be considered in the present scenario regarding the rent relief for the poverty-stricken people of Delhi by the State government. The judiciary has dismissed the case leaving the petitioners with no remedy. The very purpose of serving justice by the judiciary has been defeated through this order by the Supreme Court leaving the poor people with no doors open for them to approach.

This reflects the poorly made statements by Indian ministers regarding serious situations which have led to more harm than good. Loosely made promises end up causing despair to the general public and the question of good governance in India comes up. Such actions of ministers reiterate the lack of honesty and transparency in our political system and further deteriorates the direct relationship the citizens have with the government and their faith in our leaders.