Doctrine of Estoppel

Introduction:

The term ‘estoppel’ has been derived from the term ‘allegals contraria non est audiendus’, which means a person alleging contradictory facts should not be heard. Principle of Estoppel was first used in the case of Pickar v. Sears[1], where the court stated that any person who by his words or conducts induces another person to believe such words and subsequently such a person so induced acts on such representation then the accused cannot later change his position.

In India, the Principle of Estoppel has been discussed under section 115-117 of the Indian Evidence Act, 1892. The objective of this doctrine is to prohibit the person from giving false evidence by preventing the person from making contradictory statements in court. As per section 115 of the Indian Evidence Act, if the person intentionally represents by his conduct or any other means induces the other person and such person so induced believes and acts on such representation then the person representing cannot deny the truth in subsequent court proceedings. This article aims at understanding the relevant provisions of estoppel as mentioned under the Indian Evidence Act, the scope of this doctrine, and various types of estoppels. 

Section 115: Indian Evidence Act

As per section 115, a person is prohibited from denying what was said earlier otherwise going back would be unfair for the other party and also unfair in the eyes of law.

ESSENTIAL CONDITIONS UNDER SECTION 115 FOR APPLICATION OF DOCTRINE OF ESTOPPEL:

• The representation must be made by one person to another
• The representation made must be based on existing facts
• The representation must be made in such a manner that another person believes it to be true.
• The person to whom such representation is made must have acted on that belief
• The person to whom such representation is made has suffered some loss by such representation

Section 116: Indian Evidence Act

Section 116 is concerned with the estoppels taking place between tenant and landlord and Licensor and Licensee. As per section 116, tenant after receiving the possession of property cannot claim that landlord has no title over the property. This doctrine generally recognizes that tenant during the continuation of tenancy cannot deny the title of his landlord. In Moti Lal,[2] it was held that the tenant cannot raise the contention that the landlord has no interest in the property when the landlord files a suit of default payment or ejectment. However when the tenancy itself stands in dispute or tenancy has been moved by fraud or coercion, misrepresentation, or mistake, then the tenant is not estopped from raising the dispute related to the title of the landlord.

A similar rule exists in the case of a licensor-licensee relationship. When a licensee obtains the possession from licensor then during the continuation of such license, the licensee is estopped from denying the title to the licensor. 

Section 117, Indian Evidence Act

As per section 117, acceptor of the bills of exchange cannot deny the person who is supposed to draw those bills of exchange but acceptor can deny that the bills of exchange were really drawn by the person by whom it appeared to have drawn. Also, bailee and licensee are estopped from claiming that at the time when license or bail was granted, bailor or licensor had no authority at that time.  But bailee instead of delivering the goods bailed to the bailers delivers the goods to the third party then he can prove that the third party has a right against the bailor. 

Scope of Doctrine of Estoppel

Rule of Evidence: Estoppel as a rule of evidence can be applied to the past and present incidents and thus can be invoked against the opponent party from retracting the stand taken by it in the earlier or present course of dealing. Further, as a rule of evidence, it can be applied in a cause of action where the parties have a pre-existing legal relationship.

Rule of Substantive Law: Doctrine of estoppels now is also seen as a rule of substantive law where the principle of estoppels would be the cause of action in itself. Further estoppels as a rule of substantive law can also be invoked in respect of future assurance of the party. Estoppel now as a rule of substantive law can also be applied in cases where parties do not have any existing legal relationships.

Reciprocal or Mutual: Estoppel must be binding on both the parties to the litigation.

Estoppel Cannot Circumvent the Law: Estoppel cannot be used against the statutory provisions, meaning thereby if the statute has explicitly or implicitly has allowed or prohibited some act then estoppels cannot be used to go against the framework of the statue and allow some acts which are prohibited in the statue. For example, forcing the minor to perform his part of the contract would be against the statute thus no estoppel can be used to compel the minor to perform his obligations.

Estoppel against Private Parties: Concept of estoppels can also be applied in case of a dispute between the private parties. Supreme Court in Century Spinning and Mfg Co, Ltd.[3] applied the concept of promissory estoppels to private individuals and entities.

No Estoppel in Criminal Cases: Estoppel is considered as a rule of civil actions and hence it cannot be applied in criminal proceedings. A petition for quashing criminal proceedings on the grounds that there existed an agreement between the parties was rejected by the court.[4]

Types of Estoppel

ESTOPPEL BY MATTER OF RECORD

This is mainly concerned with the effects of judgment. Once the final decision has been made by the court, then the parties are bound by such decision, and parties cannot raise another suit in the same matter or raise a dispute related to facts of the same case in which court has passed its final decision. If a party even under the protest accepts a cost in the judgment, then it will be considered as an acceptance of judgment, and the party shall obey the same.[5]

ESTOPPEL BY DEED

This kind of estoppel is applicable in those cases where parties entered into an agreement by way of a deed as to certain facts then neither he nor his representatives can deny the facts mentioned in the deed.  However, no such estoppels can arise from matters which are non-binding or irrelevant. Further, if the deed is tainted or fraud then also no estoppels can arise from such fraud deed.

ESTOPPEL BY PAIS OR BY CONDUCT

According to estoppel by conduct, if a person through any agreement or contract or any act of misrepresentation, omission or negligence makes the other party believes in certain facts and subsequently the other party has taken some actions and cause the change in the position of the parties, then the person who has made or caused to make such representation cannot deny the veracity and existence of these facts later.

EQUITABLE ESTOPPEL

It is a defensive doctrine that prohibits the party from taking another position in the trial which would conflict with his previous claims or acts. According to this estoppel, a person would be stopped from bringing the suit against the other party who acted as per the command of that person. For example, A gives gold jewelry to B for repair. B accidentally left some mark on the jewelry and conveyed the same to A. A didn’t mind it and did not make any objections to such mark on the jewelry. Later, if A brings a suit against B, then A would be prohibited from instituting such suit as this suit would be contradictory to the statement made by him earlier.

PROMISSORY ESTOPPEL

As per Promissory Estoppel, if a person has made a promise to another party according to which the other party having faith on such promise made has acted on the basis of such promise made by the other person, then such a person who made the promise or gave assurance cannot revert to back his earlier position and states that no such promise or assurance was given. In Motilal Padampat Sugar Mills,[6] the State of U.P. promised to exempt new industrial setups from paying sales tax for a period of three years. Based on the promise of Government, the plaintiff set up the industrial unit after taking huge loans from the bank. Later Government changed its position and claimed that only partial concession would be allowed and later it completely changed the policy and said that no concession would be allowed now.  Court ruled that the government made the representation and plaintiff on the basis of such representation has performed some acts and thus government cannot change the position now as per the principle of promissory estoppel.

ISSUE ESTOPPEL

According to Issue Estoppel, the issues and facts of the case determined between the same parties cannot be litigated again if these issues and facts were addressed in the earlier litigation. If the issue which was addressed in the previous case is raised again in a new cause of action by one of the parties, then the court may use Issue Estoppel to prevent such party from raising that issue in a new cause of action. Issue Estoppel is different from Res Judicata, as in Res Judicata, the decision made by the court is final and the parties cannot raise those issues which were or could have been raised again in a new cause of action. However in case of Issue Estoppel, once the court has decided the issue in its judgment, then such an issue cannot be relitigated in a suit in the different cause of action involving a party to the first case.

ESTOPPEL ON POINT OF LAW

The doctrine of estoppels applies only to the facts and not statutes thus the principle of estoppel can never be applied on the statutes to defeat the provisions of law. For example, a minor who misrepresented his age and enters into an agreement to sell the property. The other party to the agreement cannot use the doctrine of estoppel to force the minor to perform his obligations as in law, a minor cannot enter into a contract. In Olga Tellis.[7] Supreme Court held that no estoppel can be granted against the constitution of India or against the fundamental rights.

PROPRIETARY ESTOPPEL

In matters related to land or property, if a person has made a representation related to such land or property and then later denies such representation then the other party can claim such rights under Proprietary Estoppel. In Thorner v. Major,[8] the court laid down the essentials in order to take the benefit of the proprietary estoppels: a) representation has been made b) the other party believed it to be true and acted upon it c) The other party suffered a loss as a result of such representation.

Apart from these, there are other various types of estoppels such as estoppels by convention, estoppels by acquiescence, contractual estoppels or election estoppel, etc.

Conclusion

Estoppel in simple terms means preventing the person from taking a different position with respect to his earlier conduct or promises. It protects the party against fraud or misrepresentation. It protects the innocent party from becoming prey to false assurance and representations made by the other party and thus this doctrine helps in enforcing the words or assurance given by one party to others and prevents the party from changing its position. The doctrine of estoppel has been given under section 115-117 of the Indian Evidence Act. There are various types of estoppels that are used by parties such as estoppels by deed, estoppels by record, equitable estoppels, or promissory estoppels. The whole purpose behind the doctrine of estoppels is to make sure that the party must keep its words and must be responsible for its conduct when the other party has trusted its word or behavior.

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References:

[1] 1837 6 Ad & El 469, 474.

[2] Moti Lal v. Yar Md., A.I.R. 1925 All 275.

[3] Century Spinning and Mfg Co. Ltd. v. Ulhasnagar Municipal Council [1970] 3SCR 854.

[4] Madhumiri surya Narayan v. state, 2003 Cr LJ NOC 75 (Kant).

[5] Sukdev Singh v. Union of India, 1989 Cr Lj 1340 (Del).

[6] Motilal Padampat Sugar Mills vs. State of U.P, 1979 2 SCR 641.

[7] Olga Tellis & Ors. v. Bombay Municipal Corporation & Ors., 1986 A.I.R. 180.

[8] UKHL 18, 1 WLR 776.