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ESTOPPEL[1]

Table of Contents

(S.115 to 117)

QUESTION BANK

Discuss the law relating to Estoppel under the Indian Evidence Act.
What is the doctrine of Estoppel in law? Give any two illustrations.
What do you understand by the term ‘Estoppel”? Discuss the various kinds of estoppel.

SHORT NOTES

Write a short note on Estoppel.

SYNOPSIS

GENERAL:-
ESTOPPEL MEANS:–
A) Estoppel and Admission:–
B) Estoppel and waiver:–

III) INGREDIENTS OF ESTOPPEL –

There must be some representation –
Representation must be as to fact, and not Law
Representation must be as to existing fact:–
The representation must be intended to cause a belief in another-
Person must have acted upon that belief and suffered a loss:-

IV KINDS OF ESTOPPEL:—

Estoppel by the record:—

2 Estoppel by deed:–

Estoppel in the matter of pais or by conduct.:–

(1) Estoppel by attestation:–

(2) Estoppel by-election:–

(3) Estoppel by acceptance of benefit:–

(4) Estoppel by Silence:-

(5) Estoppel by acquiescence or doctrine of studying by –

(6) Estoppel by Pleading:-

(7) Estoppel by negligence:-

SPECIFIC FORMS OF ESTOPPEL:-
Estoppel of a tenant (S. 116):-
Estoppel of License (S. 116 later part):-
Estoppel of acceptor of a bill of Exchange (S. 117):-
Estoppel of bailee or licensee (S. 117 later part):-
EXCEPTIONS TO THE RULE OF ESTOPPEL –

(1) Facts are known to both parties:-

(2) On a point of law:-

(3) Against a statute:-

(4) Against public policy:-

(5) Mere promise to do something:–

VII. PROMISSORY ESTOPPEL:-

A) Essentials of Promissory Estoppel:-
B) Origin and development of the Doctrine of Promissory estoppel:-

I. GENERAL:-_

This chapter consists of only three sections, which deal with the law regarding the doctrine of estoppel. S.115 lays down the general principle of estoppel, whereas Ss. 116 and 117 deal with specific instances of its application. Provisions in this chapter on estoppel are not exhaustive; there are many cases of estoppel that are not covered in this chapter.

II. ESTOPPEL MEANS:–

S.115 defines estoppel as –

When one person, by his –

a) declaration
b) act, or
c) omission,

– intentionally caused or permitted by any person.

i) to believe a thing to be true, and
ii) to act upon such belief.

– neither he nor his representative shall be allowed to deny the truth of that thing in any suit or proceeding between himself and such person or his representative.

Illustrations

A intentionally and falsely leads B to believe that certain land belongs to A and thereby induces B to buy and pay for it. The land afterwards becomes the property of A, and A seeks to set aside the sale on the ground that, at the time of the sale, he had no title. He must not be allowed to prove his want of title.

The term ‘estoppel’ is derived from the French term ‘estop’, which means ‘shut the mouth’. When any person makes contradictory statements, we stop him from speaking; the same analogy is applied in the principle of ‘estoppel’[2]. When a person asserts one fact before the Court and subsequently denies it, he is estopped from denying it.

E.g. 1) If A, a landlord, makes a statement before the Court that B is his tenant, he will be estopped from saying that B is not his tenant and is a trespasser.

2) A intentionally and falsely leads B to believe that certain land belongs to A (in fact not) and thereby induces B to buy and pay for it. The land afterwards becomes the property of A (by partition sale, etc.). A is now seeking to set aside the sale of the property to B on the grounds that he had no title at the time of sale. He will be stopped from saying so.

3) If A asserts at the time of the sale of landed property by B to C that the property, which was Joint Hindu Family property of A and B, is already partitioned and B is the independent owner and possessor of the landed property, he subsequently (after the sale) cannot deny this and say that property was not partitioned.

The principle of estoppel is thus a rule that prevents a person from taking up an inconsistent position based on what he has pleaded or asserted earlier. This principle is based on equity and good conscience.

A) Estoppel and Admission:–

The following are the grounds for the distinction between estoppel and admission.

An estoppel binds only parties thereto. No stranger can take advantage of it, but admission can be utilized by the stranger also.
Estoppel is only the rule of law. It does not give rise to a cause of action, whereas admission provides a cause of action.
Admission can also operate as estoppel where a person relying on such admission has altered his position.

B) Estoppel and Waiver[3] :–

A waiver is the voluntary relinquishing of a contractual right. It is an agreement to release or not assert a right. On the other hand, Estoppel is merely a rule of evidence and cannot be a cause of action. But sometimes, a waiver may amount to estoppel.

In Union of India v. Subramanyam[4].

Facts: The petitioner was to appear before the Selection Board for an interview, and he did not object to the composition (persons) in the Selection Board because he hoped that he would be selected favourably by selectors. But when the decision went against him, i.e., he was not selected, and he challenged the composition of the selection committee.

Held: By appearing before the Selection Board, he waived his right, and subsequently, he is estopped from questioning its composition.

III) INGREDIENTS OF ESTOPPEL –

Following are the requirements of S.115, i.e. estoppel.

1. There must be some representation –

The first requirement of S.115 is that there should be a misrepresentation; such misrepresentation can be made by an act, omission, or declaration. Thus,

Representation must be as to fact and not law.
Representation must be as to existing fact.

S.115 states, “when one person has by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true”. ‘A thing’ means ‘fact’, which exists and does not include future promises.

2. The representation must be intended to cause a belief in another.

To raise ‘estoppel,’ it is necessary that the act, omission, or declaration must be made to cause or permit another person to believe a thing to be true and act upon such belief.

3. A person must have acted upon that belief and suffered a loss.

Upon misrepresentation of the former, others must have acted and suffered a loss.

At the University of Madras, V. Sundara Shetty[5]

Facts: The petitioner passed the SSLC examination and was admitted to intermediate. He passed the first year of intermediate and joined the second year. Before the second-year examination, the University declared that he had wrongly passed the SSLC examination. Therefore, he cannot continue with intermediate.

Held: The university was stopped, declaring that the petitioner had not passed.

IV KINDS OF ESTOPPEL:-

Following are the kinds of estoppel.

1. Estoppel by the record[6]:-

Estoppel by record is also called Estoppel by ‘Judgment’. Estoppel by ‘record’ or ‘judgment’ is nothing but a principle of res-judicata. It means a matter, once adjudicated and finally decided by a competent court, cannot be reopened by the same parties or their representatives in interest. In other words, where a cause of action has been agitated between certain parties and the case has been decided, no new action can be brought on the same cause of action between the parties. If the plaintiff troubles the defendant on the same cause of action, the earlier judgment will be a complete bar (estoppel). It means subsequent suit on the same cause of action is estopped or prohibited. S.40 of the Evidence Act and S.11 of the C.P.C. deal with the doctrine of res-judicata (Prohibition of the subsequent suit on the same cause of action).

2 Estoppel by deed[7]:–

When a person has entered into a transaction by deed under his hand, he shall not be permitted to deny the matter which is in the deed. A statement asserted in a deed by a party is an admission. However, under S.31 of the Evidence Act, statements of admissions are not proof unless they operate as estoppel, but where it is shown that the other party has relied on such statement of admissions and suffered a detriment, the deed may operate as an estoppel.

3. Estoppel in the matter of pais or by conduct[8].:–

Estoppel in pais is also known as estoppel by conduct or representation. When a person, by word or conduct, induces another to believe that a certain state representation of things exists and causes that other person to act on that belief, which he otherwise would not have done and suffered.

It arises from (i) experiment or conduct, (ii) act or conduct of misrepresentation.

The rule of estoppel by representation or conduct is embodied in S.115, 116, and 117 of the Evidence Act.

Estoppel by pais arises in the following cases –

(1) Estoppel by attestation[9]:–

Attestation by a witness operates as estoppel against the witness and prevents him from denying execution of the deed.

(2) Estoppel by-election[10]:–

The essence of the doctrine of election is that a person is not allowed to both probate and reprobate. In other words, a person cannot take hot and cold at a time.

Where a person is affected by more than one right or benefit, and he is prepared to elect one of them. He is bound by the choice made or the election exercised by him regarding one of the rights or benefits, e.g., the Right of election is available to a minor partner when he becomes major, either to elect to be a partner or cease to be a partner. He has to elect either of these two.

(3) Estoppel by acceptance of a benefit[11]:-

A person who takes benefit of a transaction cannot later on challenge the validity of it.

In Raghunath Debata V Budhi Debya[12]

Facts – Plaintiff’s land was sold in a court auction to recover arrears of the revenue. The plaintiff’s objection to conducting an auction was rejected. The plaintiff received the sale proceeds balance after the rent arrears were adjusted.

Held – The plaintiff has stopped denying the validity of the auction.

(4) Estoppel by Silence[13]:-

Silence alone cannot operate as an estoppel. However, where there is a duty to speak, the silence may amount to speech and operate as an estoppel.[14]

(5) Estoppel by acquiescence or doctrine of standing by[15] –

When a person with a legal right finds another trying to violate his legal right to do a certain act, he is expected to naturally oppose such a move. Still, if he stands by and allows the other person to commit any violation of his legal right, the doctrine of acquiescence prevents him from asserting his legal right subsequently.

(6) Estoppel by Pleading[16]:-

A party to a suit is estopped from setting up a plea contrary to the one which he had successfully set up in a formal suit.

(7) Estoppel by negligence[17]:-

Estoppel by negligence operates against a person who negligently represents a fact, causes a belief in another that a certain thing is true, and induces the other person to act upon that belief.

V. SPECIFIC FORMS OF ESTOPPEL:-

Ss 116 and 117 lay down specific forms of estoppel enunciated in S. 115. The four specific forms of estoppel are mentioned in Ss 116 and 117.

1. Estoppel against the tenant (S. 116):-

No tenant of immovable property (or a person claiming through such tenant) shall, during the continuance of the tenancy, be permitted to deny that the landlord of such tenant had, at the beginning of the tenancy, a title to such property. In other words, a tenant cannot deny his landlord’s title.

2. Estoppel against License (S. 116 later part):-

No person who came upon any immovable property by the license of the person in possession thereof shall be permitted to deny that such person had a title to such possession at the time when such license was given.

3. Estoppel against the acceptor of a bill of Exchange (S. 117):-

No acceptor of a bill of exchange shall be permitted to deny that the drawer had the authority to draw such bill or to endorse it.

Explanation:- The acceptor of the bill of exchange may deny that it was actually drawn by the person it purports to have been drawn.

4. Estoppel against bailee or licensee (S. 117 later part):-

No bailee or licensee be permitted to deny that his bailor or licensor had the authority to make or grant such a license when the bailment or license commenced.

Explanation: If the bailee delivers the goods bailed to a person other than the bailor, he may prove that such person had a better right to receive the goods bailed.

VI. EXCEPTIONS TO THE RULE OF ESTOPPEL –

Following are the exceptions in which the rule of estoppel does not apply-

(1) Facts are known to both parties:-

If the true facts are known to both parties, there is no question of estoppel.

(2) On the point of law:-

An Estoppel refers to a belief in a fact, not a proposition of law. A person cannot be estopped for misrepresentation on the point of law. This is because everybody is presumed to know the law on a particular point.

(3) Against a statute[18]:-

There is no estoppel against an act of the legislature. The court is bound to give effect to the statute despite the parties’ conduct. The reason is that estoppel is a rule of evidence and cannot be permitted to override the mandatory provisions of law.

For example, minors cannot be stopped to enforce a contract [Moharibibi V Dhoramdas Ghosh].

(4) Against public policy:–

Estoppel does not apply against public policy.

(5) Mere promise to do something:–

Estoppel applies to a fact in existence or the past but does not include a promise of social nature. Therefore, any promise of a social nature does not stop party. E. g. A mere promise to come for dinner, make a gift, etc.

VII. PROMISSORY ESTOPPEL[19]:-

The Court of Equity in England has evolved the ‘promissory estoppel’ concept. This is also known as ‘requisite estoppel’, ‘quasi estoppel’, or ‘new estoppel’.

The Court of Equity evolved this principle to avoid injustice. However, it is neither in the realm of contract nor in the realm of the law of evidence. Promissory estoppel does not fit the definition of ‘estoppel’ under S. 115. Estoppel under S. 115 pertains to a representation made regarding existing facts. The ‘promissory estoppel’ rules are related to future promises (i.e., de futuro).

Where a promise is made with an intention that it should be binding and acted upon by the promisee and the promisee, in fact, acting upon the promise alters his position, the person who made such promise is estopped from denying the truth of that promise.

A) Essentials of Promissory Estoppel:-

(i) There must be some promise as to whether to do something or not in the future.

(ii) The promise should be made with the intention that it should be binding and should be acted upon.

In Hira Industries Ltd. V. State (AIR 2007 Chh. 7)

Facts:- The government framed the transport subsidy scheme to promote industrial growth. Petitioner company commenced its production according to that scheme. According to the scheme, the petitioner was entitled to a five-year subsidy.

Accordingly, the State Government passed the order to grant subsidies to the petitioner. However, the Government afterwards cancelled the order on the grounds that it was issued without complying with the provisions of the Constitution.

Held:- Canceling order by the Government is arbitrary, unreasonable, and opposed to principles of ‘promissory estoppel’.

B) Origin and development of the Doctrine of Promissory estoppel:-

The doctrine of Promissory Estoppel originated in Huges V. Metropolitan Railway Co[20].

In India, promissory estoppel was first invoked in Games Manufacturing Co. V. Sooraj Mal.[21] but it did not get much prominence.

In 1961, the Punjab High Court applied the doctrine in Satyanarayan V. Union Bank of India.[22] Supreme Court of India also applied this doctrine in Union of India V. Indo Afghan Agencies Ltd.[23]

Held: The Supreme Court has refused to distinguish between a private individual and a public body in the context of promissory estoppel.

Again, the doctrine of promissory estoppel was applied in M. P. Sugar Mills V. State of UP.[24].

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[1] प्रतिबंधक कबुली [निवारक स्वीकारोक्ति ]

[2] This principle of estoppel is based on maximum ‘alleges contraries honest audiences (i.e. person alleging contradictory facts should not be heard.

[3] हक्कक सोडणे [अधिकारों का त्याग ]

[4] [AIR 1976 SC 2408]

[5] [1956 MLJ 25]

6 पूर्वीच्या निकालाने प्रतिबंध [पूर्व निर्णय द्वारा निषेध ]

7 दस्तऐवजाने प्रतिबंध [दस्तावेज़ द्वारा निषेध ]

8 वर्तनुकीने प्रतिबंध [व्यवहार निषेध ]

9 साक्षीदार असल्याने प्रतिबंध [साक्षी होने पर रोक ]

[10] निवडीने प्रतिबंध [ पसंद से रोकथाम ]

[11] फायदा स्विकारल्याने प्रतिबंध [फायदा उठाने पर रोक ]

[12] [(1960) 2OJD 82]

[13] शांत राहण्याने प्रतिबंध [शांत रहकर बचाव करें ]

[14] In Green Wood v. Martins Bank Ltd. [(1930)] AC (5)]

[15] मुक संमतीने प्रतिबंध [मौन सहमति से निषेध ]

[16] दाव्यातील कथनाने प्रतिबंध [दावे में कथा द्वारा रोकथाम ]

[17] निष्काळजीपणाने प्रतिबंध [लापरवाही से बचाव]

[18] कायदयाविरुध्द [कानून के खिलाफ ]

[19] वचन दिल्याने प्रतिबंध [वचन द्वारा निषेध ]

[20] [(1877) AC 489]

[21] [1880 2LR5 Col. 669]

[22] [AIR1961 Punj 314]

[23] [AIR 1968 SC 118].

[24] [AIR 1979 SC 621].