Published Paper
Article Details
ESTOPPEL
AUTHORED BY
- ASHEENA AUGUSTA ALFRED
Meaning and Concept
The word estoppel is derived from the
French term 'estoup' which means 'shut the mouth'. It is derived from the maxim
ALLGANS CONTRARIA NON EST AUDIENDUS which means a man alleging contradictory
facts ought not to be heard. It is an equitable doctrine which has its roots on
the principles of equity and good conscience. The doctrine of estoppel prevents
a person from taking up a position inconsistent with what he had asserted
earlier.
Origin
The foundation of the concept of doctrine
of estoppel was first laid down in english law in the case Hughes v
Metropoliton railway company, the plaintiff leased his land to the
defendant company to conduct the repair work within 6 months and on failure to
carry out such works within the time period the lease would stand forfeited.
Later the same parties negotiated another agreement whereby the railway company
was to purchase the freehold of land. The defendants did not carryout the
repair works under the delusion that transfer of property would takes place.
Later after the period of 6months plaintiff issues notice to forfeiture. The
upheld that when negotiation initiated there was an implied promise to forfeit
the lease with respect to the limited time period. The railway company acted
upon the promise and hence doctrine of estoppel was applied and they were given
more time for the repair work.
This doctrine acquired much attention
in the case of Central London Property Trust Ltd v High Trees Housing Ltd. The
defendants rented his flat to the plaintiff for certain sum of money and the
amount was reduced to half during the period of World war II as the occupancy
rate was reducing. The plaintiff continued to pay half of the amount even after
the world war on the contention that no time period was stated by the
defendant. The defendant claimed the payment of full amount. The court by
applying the doctrine of estoppel held that it is implied that the reduced rate
is limited to the period of continuance of war and defendants were held liable
to pay the full amount.
Indian Perspective
In India estoppel have been treated
as rule of evidence and they have been given a place in the evidence Act.
" Estoppel is only a rule of evidence, you cannot found an action upon
estoppel" (per Bowen L.J, in Law v Bouverie, 1891,3 Ch 82, 105 AC;
As a rule of substantive law, it is
entirely judge made, both in England and in India. The principle is evolved as
a result of compulsions felt by the Judges when called upon to adjudicate cases
based on equity and good conscience in the absence of any statutory provision
dealing with the subject matter of the case. The result is that the rule is
invoked and applied even in cases where there is no pre-existing legal
relationship between the parties to a cause either in the form of a contract or
otherwise. The principles are applied even to a mere promise to perform an act
in future even if the promise is not supported with consideration. All that is
required to be established is that the promise made was intended to be acted upon
and on that belief someone did act and altered his position.
India the principle of estoppel was
first recognised in the case of Sourujmull & Ors v athe Ganges
Manufacturing Co. The SC held that this doctrine is not only limited to the
law of evidence but also a person may be prevented from doing some act or
relying upon certain arguments or contention which in the light of equity and
good conscience will be detrimental to his opponent.
Though the concept of estoppel has
wider application under Indian law it is mainly dealt under the Indian Evidence
Act 1872. Section 115 to 117 of The Indian Evidence Act deals with the concept
of estoppel.
According to section 115 of the Act,
When one person has, by his declaration, act or ommission, intentionally
caused or permitted another to believe a thing to be true and to act upon
such beleif, neither he or his representative shall be allowed, in any suit or
proceedinga between himself and such person or his representative, to deny the
truth of that thing.
This principle was laid down in the
famous case Pickard v. Sears, In this case A who was the owner of
certain machinery allowed it to be in the possession of B his friend. B owed
some money to C. C obtained a decree against B and the execution the machinery
was being attached and A does not raised any objection at that time.
Subsequently when C sold the machinery to another A brought a suit setting up
his title. The court held that A is estopped from denying the fact that B is
the owner of the machinery.
Essential Elements
·
There must be a declaration, act or ommission by one
person intentionally causing or permitting another to beleive certain things to
be true.
·
The other person must have beleived and acted upon
such beleif and suffered a loss.
If the above conditions are satisfied
the doctrine of estoppel would apply and person made representation cannot deny
the truth of that thing.
The doctrine would not apply to a
person who relied upon a second hand information unless it is intended to be
made towards him or it was a general representation where anybody could act
upon it.
The party claiming the plea of
estoppel must clearly state in its pleadings. Otherwise he cannot claim it in a
later stage.
If the party to whom the
representation has somehow recognises the truth and knows that it was a false
representation then he claim the plea of estoppel.
Section 116
According to this section a tenant of
an immovable property during the continuance of tenancy cannot deny the title
of his landlord at the time of begining of tenancy. Similarly under this
section a licensee of an immovable property shall not be permitted to deny the
that the person in possession from whom got the license had a title at the time
of giving the license.
When a property has been mortgaged by
one person and the mortgagee has taken possession then the parties cannot deny
the title of eachother.
Section 117
The person accepting the bill of
exchange cannot deny that the person drawing the bill has the authority to draw
it or endorse it but can deny that bill was actually drawn by a person whom it
appeared to have been drawn.
Kinds of Estoppel
·
Estoppel by record
It is public record or
judgement which are beleived to be true. And a person who acts in pursuance of
such record or judgement cannot be estopped.
·
Estoppel by
deed
When a person enters into an
agreement and his statement is furnished. Then he cannot deny the truth of his
statement.
·
Estoppel by conduct (estoppel by pais)
When a person by words or
conduct or deed induces another person to beleive the existence of certain
things and make him to act. Then he is estopped from denying the existence of
such facts.
·
Estoppel by Election
Where a person has option
to choose and has chosen certain thing then he cannot go back from it. If a
person A offers his property to B. B out of generosity says that he cannot take
it for free. Then A says to B that he has the freedom to take it as a gift or
make payment as per his willingness. B then makes payment and takes the
property in his possession. Later B becomes bankrupt and requires A to give
back the money as he now wishes to take the property as a gift. As per this
principle now B is estopped from choosing the other option because he had
already elected and exercised that option.
·
Equitable Estoppel
Where a person tries to
bring an action which would defeat his previously given statement, claim or
action he would be estopped from doing so.
·
Estoppel by negligence
Where a person
negligently makes another person to beleive certain thing to be true and that
another had beleived and acted upon it then the former is estopped from denying
it.
Essentials
·
The
person against whom the plea of estoppel by negligence is claimed must have a
duty to take care the party who invokes the estoppel or to general public.
·
Negligence
must proximately connect with result to which it has led.
·
Estoppel and waiver
Waiver is the voluntary
relinquishment of rights by a person and is a contractual nature whereas
estoppel is a rule of evidence which does not create a cause of action. But
sometimes waiver also amounts to estoppel. When a person does not exercise a
right which he has then he estopped from exercising is subsequently for example
in a case Dr. G. Sarana v University of Lucknow the plaintiff had to go through
an interview by the selection board and at that time he did not questioned the
composition of the selection board hoping that he would be selected but later
when he was rejected he questioned the composition of the selection board and
court held that he is estopped from questioning it subsequently.
Applicability of estoppel against
statute and laws
This doctrine is not
applicable to statutes. That is if a person makes a statement as to the
existence of certain provisions in a statute he is not estopped from denying
what he was previously stated. This doctrine cannot be invoked to defeat the
provisions of law. If a minor enter into a contract representing himself as
major the contract is void ab initio. Minor is not estopped from taking the
defence of void ab initio contract.
No estoppel can arise
against the fundamental rights enshrined in the constitution. A concession made
by a person either by mistake of law that he would not exercise his fundamental
right would not estopp him as enforcing the estoppel would defeat the purpose
of the constitution.
Applicability of estoppel against
the Government
where the Government
makes a promise knowing or intending that it would be acted on by the promisee
and, in fact, the promisee, acting in reliance on it, alters his position, the
Government has been held bound by the promise and the promise is held to be
enforceable against the Government at the instance of the promisee
notwithstanding 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 229 of
the Constitution.
In Collector of Bombay v.
Municipal Corporation of the City of Bombay the Municipal Corporation removed
old markets from a certain site and vacated it in the year 1865 upon the
assurance of the Government who approved and authorized the grant of another
site to the Municipality. The Government also assured the Municipality that no
rent should be charged from it. The Municipality on the assurance of the
Government gave up the required site and erected new markets on the new site
after spending a sum of Rs. 17 lakhs. The Government thereafter in the year
1940 assessed the new site to land revenues. The Municipality challenged the
actions of the Government and the Supreme Court held that the Government, under
the circumstances of the case, has lost its right to assess the land in
question by reason of the equity arising in favour of the Municipality
Corporation because Corporation has taken possession of the land in terms of
assurance given by the Government. This is the first instance of doctrine of
promissory estoppel deployed against the Government by the Supreme Court where
the Court did not allow the Government to go back on its representation and
charge the land revenues from the Municipality.
Estoppel and tax laws
The doctrine is not
applicable where a non taxable income has been made taxable. I.T commissioner v
Fiem Muar.So also stating that tax would not be collected will not binding on
state to collect them. Mathura prasad v. State of Punjab
Estoppel under Indian contract Act
The Indian Contract Act
recognises the principle of Promissory Estoppel. It is common law
doctrine recognised by the courts of equity in England.
The concept of promissory
estoppel is defined by two bench judges "Where one party has by his words
or conduct made to the other a clear and unequivocal promise which is intended
to create legal relations or effect, a legal relationship to arise in the.
future, knowing or intending that it would be acted upon by the-other party to
whom the promise is made and it is in fact so acted upon by the other party,
the promise would be binding on the party making it and he would not be
entitled to go back upon it, if it would be inequitable to allow him to do so
having regard to the dealings which have taken place between the parties, and
this would be so irrespective whether there is any pre-existing relationship
between the parties or not.”
This principle was
evolved for the first time in the case M.P. Sugar Mills v. State of U.P where
the government through the Cheif secretary announced categorial assurance for
total exemption from sales tax. Based on this defendant setup a hydro
generation plant by raising huge loan. Later Government change its policy and
announced the exemption of sales tax @ 3%, 2.1/2% and 2% for the 1st, 2nd and
3rd years respectively. The tax exemption was completely withdrawn later, when
the defendants factory started its production. The Supreme Court held that the
Government is bound by its promise and directed to give exemption to the
defendants company.
Bowen L.J in Birmingham and District Land
Co. V. L. & N.W.Rly Co. explained the principle in following words:
If persons who have
contractual rights against others induce by their conduct those against whom
they have such rights to beleive that such rights will either not be enforced
or will be kept in suspense or abeyance for some particular time, those persons
will not be allowed, by a Court of Equity, to enforce the rights until such
time has elapsed...
The doctrine of
promissory estoppel is not really based on the principle of estoppel but it is
a doctrine evolved by equity in order to prevent injustice. Inorder tp invoke
the doctrine sound and positive foundation must be laid in the petition mere
bald expression without any supporting material stating the party has altered the
position would not be sufficient to invoke this doctrine. State of Arunachal
Pradesh v. Nezone Law house (2008)5 SCC 609(617): AIR 2008 SC 2045)
Estoppel Under Transfer of Property
Act
The doctrine of feeding
the grant by estoppel is embodied under section 43 of transfer of property Act.
Section 43:
Where a person
erroneously represents that he is authorised to transfer certain immoveable
property and professes to transfer such property for consideration, such
transfer shall, at the option of the transferee, operate on any interest which
the transferor may acquire in such property at any time during which the
contract of transfer subsists. Nothing in this section shall impair the right
of transferees in good faith for consideration without notice of the existence
of the said option.
For example A a Hindu who
has separated from his father B sells to C three fields, X, Y and Z,
representing that A is authorised to transfer the same. Of these fields Z does
not belong to A, it having been retained by B on the partition; but on B’s
dying A as heir obtains Z. C, not having rescinded the contract of sale, may
require A to deliver Z to him.
The section 43 feeds the
estoppel. It is based on the principle of equity and estoppel. Inorder to apply
section 43 there must be obviously fraudulant and erroneous representation by
the transferor that he was authorised to transfer the immovable property, but
there is nothing in the section that requires the transferor should have been
aware of the erroneousness of the representation made by him. The transferor
might have honestly beleived that he has the authority to tranfer that might
not make the section inapplicable.
The section 43 protects
the purchaser for value without notice. A transferee is entitled to the benefit
of section 43 if he beleived in the representation made by the vendor and was
not aware of the true interest of the vendor with reference to the property. It
was explained in the case Banwari Lal V. Sukhadarahan Dayal AIR 1973 SC 814,
Court find that plaintiff No 1 transferee is entitled to benefit of the said
provision in as much as she was never aware that her vendor defendant No. 2 had
no interest in the property, the property having vested in the State of Orissa
and she paid good consideration on the representation of the vendor- defendant
No.2 and obtained possession from him Court held that section 43 protects the
interest of plaintiffs.
This doctrine is partly
based on the common law doctrine of estoppel by deed and partly on the
equitable doctrine that a man who has promised more than he can perform must
make good his contract when he acquires the power of performance.
In
Tilakdhari Lal V. Khedan Lal, Lord Buckmaster stated the rule as
"If a man who has no
title whatever to property grants it by a conveyance which in form would carry
the legal estate, and he subsequently acquires an interest sufficient to
satisfy the grant, the estate instantly passes"
In the present case Prem
Lal had erroneously represented to the defenedant that he was authorised to
transfer the property. He had executed sale deed in respect of it for
consideration. At the option of transferees, therefore, the transfer could
operate on any interest which Prem Lal acquired in the property while contract
of transfer was subsisting. Prem Lal become entitled to one- third shares in
the property as a result of separation from his brothers. Therefore transferees
are entitled to that shares and they are not considered as tressspassers.
The subsequent aquisition
of title by the transferor does not automatically invest the transferee with
the title so acquired as in english law, and for such acquisition transferee
should exercise his option under Indian law. Any action by the transferee
indicative of such option will be sufficient. It may not be expressed it may be
implied also the plaintiff may claim his right over the property and that he
was proceeding against not only the transferor but also the so called
subsequent transferees.
Conclusion
The courts of equity in
England recognised the principle of estoppel. These are neither the realm of
law of contract nor the realm of law of evidence. The principle as embodied in
the section 115 of Evidence Act pertains to representation made as to the existing
facts and not deals with future promises. But this principle ennoumciated by
the Courts of Equity in England pertains to essntially promises which are de
futuro. Though the estoppel is a contribution of courts of equity but it has
wider application in Indian Law also.
Article Information
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
All research articles published in International Journal for Legal Research and Analysis are open access and available to read, download and share, subject to proper citation of the original work.
Disclaimer: The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of International Journal for Legal Research and Analysis.