The applicability of this doctrine necessitates striking balance between individual rights and larger public interest. The government has a duty to the public in general to act fairly and reasonably. The government or public bodies are as much bound as are private individuals to carry out representation of fact and promises made by them relying on which other persons have altered their positions.
In Motilal Sugar Mills v. State of UP (AIR 1979 SC 61), it has been held that where a Government makes a promise knowing that it would be acted upon by the promisee and the other acts upon it and alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government notwithsanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution.
Justice P.N. Bhagwati, was heard quoting from the 13th Report that the doctrine of promissory estoppel could be invoked as an equitable doctrine and as an exception to Section 25 of the Indian Contract Act, 1872. It has also been laid down that suffering of detriment is not necesary to maintain a cause of action on the basis of the doctrine of promissory estoppel. All that is required is that there should have been a promise by the Government and the other party should have altered its position on the basis of that promise. However, simply because the party to the dispute has altered its position on the basis of the promise of the Government does not mean that the Government would be held bound by it. Since it is an equitable doctrine, therefore, it would have to be shown that the equity requires it that the Government should be held bound by it. Therefore, if the equity shows that the Government cannot be held bound by it, then the doctrine would not be made applicable.
It has been held in the case UOI v. M/s Anglo Agencies, AIR 1968 SC 718, that in order to resist its liability the Government would disclose to the Court the various events which render it to be inequifible to enforce the liability against the Government.
EXCEPTIONS TO DOCTRINE OF ESTOPPEL
(1) No estoppel where truth is known
A person having knowledge of facts cannot get the benefit of estoppel. Either the party was in the know of the true state of affairs or had the means of knowing the same by reasonable inquiries.
(ii) No estoppel in case of mistake
Where both the parties are under common misapprehension, there could be no estoppel. However, where one the parties is only under a mistake and the other acts and shifts his position on the basis of the representation, estoppel is certainly available.
(iii) No estoppel in case of mere promise to do something
A mere declaration or representation containing a promise to do something in future which might or might not be enforceable in contract cannot be estoppel within Section 115 of the Act. The word something used in Section 115 means a fact which is in existence now or in the past but does not include promise for the future. For instance, a mere promise to make gift cannot create an estoppel.
(iv) When both parties plead estoppel If both the parties plead estoppel, then the court will have to by other evidences available on record and decide upon the rights of the parties.
v) Fraud/ misrepresentation/ negligence on the part of the other party
A person who made a representation to the other party due to fraud on the part of the other party, then in such a case the estoppel would not apply. If the other party to whom the representation had been made with ordinary diligence could have discovered the truth, then in such a case, the estoppel would not operate. Also in many situations it may so happen that a representation was made and the other person after independently of the representation, then in that situation the principle of estoppel would not apply.
vi) Mere attestation will not create a estoppel.
vii) No estoppel against a Statute/ law
viii) No estoppel against sovereign acts in public interest.