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ESTOPPEL
(S.115 to 117)
QUESTION BANK
1. Discuss the law relating to Estoppel under the Indian Evidence Act.
2. What is the doctrine of Estoppel in law? Give any two illustrations.
3. What do you understand by the term âEstoppelâ? Discuss the various kinds of estoppel.
SHORT NOTES
1. Write a short note on Estoppel.
SYNOPSIS
I. GENERAL:-
II. ESTOPPEL MEANS:--
A) Estoppel and Admission:--
B) Estoppel and waiver:--
III)
INGREDIENTS OF ESTOPPEL -
1.
2.
3.
4.
5.
There must be some representation â
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:---
1.
2
Estoppel by the record:---
Estoppel by deed:--
3.
Estoppel in the matter of pais or by conduct.:--
(1)
Estoppel by attestation:--
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(2)
(3)
(4)
(5)
(6)
(7)
Estoppel by-election:--
Estoppel by acceptance of benefit:--
Estoppel by Silence:-
Estoppel by acquiescence or doctrine of studying by -
Estoppel by Pleading:-
Estoppel by negligence:-
V.
SPECIFIC FORMS OF ESTOPPEL:-
1.
2.
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):-
3.
4.
VI. EXCEPTIONS TO THE RULE OF ESTOPPEL -
(1)
(2)
(3)
(4)
(5)
Facts are known to both parties:-
On a point of law:-
Against a statute:-
Against public policy:-
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 â
a)
b)
c)
declaration
act, or
omission,
- intentionally caused or permitted by any person.
i)
to believe a thing to be true, and
to act upon such belief.
ii)
- 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.
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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'. 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.
1.
2.
3.
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 :--
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.
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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.
There must be some representation â
1.
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,
1.
2.
Representation must be as to fact and not law.
Representation must be as to existing fact.
S.115 states, âwhen one person has by his declaration, act or omission, intentionally
caused or permitted another person to believe a thing to be trueâ. âA thingâ means âfactâ,
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.
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
1.
KINDS OF ESTOPPEL:-
Following are the kinds of estoppel.
Estoppel by the record:-
Estoppel by record is also called Estoppel by âJudgmentâ. Estoppel by
ârecordâ or âjudgmentâ is nothing but a principle of res-judicata. It means a matter, once
1 [AIR 1976 SC 2408]
2 [1956 MLJ 25]
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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:--
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 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:--
Attestation by a witness operates as estoppel against the witness and prevents
him from denying execution of the deed.
(2) Estoppel by-election:--
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
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has to elect either of these two.
(3)
Estoppel by acceptance of a benefit:-
A person who takes benefit of a transaction cannot later on challenge the
validity of it.
Facts â Plaintiffâs land was sold in a court auction to recover arrears of the revenue. The
plaintiffâs objection to conducting an auction was rejected. The plaintiff received the sale
proceeds balance after the rent arrears were adjusted.
Held â The plaintiff has stopped denying the validity of the auction.
(4)
Estoppel by Silence:-
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.
(5)
Estoppel by acquiescence or doctrine of standing by -
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:-
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:-
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
4
[(1960) 2OJD 82]
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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)
(2)
Facts are known to both parties:-
If the true facts are known to both parties, there is no question of estoppel.
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:-
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.
Mere promise to do something:--
(5)
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:-
The Court of Equity in England has evolved the âpromissory estoppelâ
concept. This is also known as ârequisite estoppelâ, âquasi estoppelâ, or ânew estoppelâ.
The Court of Equity evolved this principle to avoid injustice. However, it is neither
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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 âpromissory estoppelâ 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
In India, promissory estoppel was first invoked in Games Manufacturing Co. V.
In 1961, the Punjab High Court applied the doctrine in Satyanarayan V. Union Bank
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
5 [(1877) AC 489]
6 [1880 2LR5 Col. 669]
7 [AIR1961 Punj 314]
8 [AIR 1968 SC 118].