Estoppel is based on the principle that it would be most inequitable and unjust that if one person , by a representation made, or by conduct amounting to a representation, had induced another to act as he would not otherwise have done, the person who made the representation should not be allowed to deny or repudiate the effect of his former statement, to the loss and injury of the person who acted on it.
Section 115 IEA:
Estoppel:
When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing.
Illustration:
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.
Rule of estoppel is based on Rule of equity and provide that when a person has made false representation and upon such representation other person has acted to his disadvantage then law prohibits the former to turn back and say that representation was false.
The Ingredients of Rule of Estoppel as Defined Under Section 115:
(a) There must be some representation.
(b) The Representation must be made with the intention to be acted upon.
(c) Representation must have been acted upon.
Representation:
First requirement of Rule of Estoppel is that there must be representation either by words or by conduct to another. This representation may be untrue or false or of some existing fact, made to person who is not aware the truth of that fact. Where the party effected by the representation had come to know before acted upon it, that the representation was false he cannot avail the Rule of Estoppel.
In Mohri Bibi v. Dharam Das Ghosh A minor entered into contract of Mortgage Later when Minor claimed that he being minor at the time of contract, so contract is void. Fact that Mortgage was minor was in the knowledge of Mortgage Court held that Rule of Estoppel is not applicable as Mortgage was aware about his minority.
Intention:
It is not necessary that the representation should be false to the knowledge of person making it provided that (i) it is intended to be acted upon in the manner in which it has been acted upon or (ii) the person who makes it so conducts himself that a reasonable man would take the representation to be true.
Representation Acted Upon:
It is also necessary to invoke the benefit of estoppel that representation must have been acted upon taking it to be true by the party to whom it was made.
In Kasinka Trading v. Union of India, (1995) 1 SCC 274,case, the Court observed as under:- In order to operate as estoppel under the aforesaid section, three conditions must be fulfilled
- there must be a representation made by the opposite party with a view to cause belief
- the representation should have been believed under circumstances that its falsity could not be ascertained in spite of due diligence and
- actions arising out of such belief.
There can be no estoppel where truth is accessible. Again, there can be no estoppel in the absence of representation or conduct amounting to such. Further, there can be no estoppel where a party is not misled and has not been induced to do something detrimental to his interest owing to the action of the other party
Thus, for application the doctrine following conditions have to be satisfied
- There must be a representation made by one person to another person.
- The representation must have been made as to fact and not as to law.
- The representation must be as to an existing fact.
- The representation must be intended to cause a belief in another.
- The person to whom the representation is made must have acted upon that belief and must have altered his position.
In Motilal Padampat Sugar Mills v. State of U.P., AIR 1979 SC 621 case, where the Chief Secretary of the Government gave a categorical assurance that total exemption from sales tax would be given for three years to all new industrial units in order them to establish themselves firmly. Acting on this assurance the appellant sugar mills set up a hydrogenation plant by raising a huge loan. Subsequently, the Government changed its policy and announced that sales tax exemption will be given at varying rates over three years. The appellant contended that they set up the plant and raised huge loans only due to the assurance given by the Government. The Supreme Court held that the Government was bound by its promise and was liable to exempt the appellants from sales tax for a period of three years commencing from the date of production.
Promissory Estoppel:
Promissory estoppel is similar to one by representation but requires additional requirements to be met. It can be described as preventing a party from acting in a particular manner having previously promised not to. It is more accurate to describe the estoppel of suspending rather than extinguishing contractual rights.
To establish promissory estoppel, there must be an established legal relationship as well as a clear and unambiguous promise that for all intents and purposes was expected to be fulfilled whether it is express or implied. The party must then change their position on that promise (i.e. go back on their promise) and if that promise were to have reneged on an injustice would occur. There is also no need for the defendant to provide consideration for the promise.
Kinds of Estoppel:
Estoppel by Representation:
It prevents a party from contradicting a previous misrepresentation by subsequently attempting to take a new opposing position. i.e., it prevents a party from saying a set of facts or a situation is untrue when they previously represented that they were.
In Pickard v Sears [1837] (112 E.R. 179) case, where Pickard had a mortgage on some machinery. The creditor of the mortgage seized then later sold this machinery to Sears. During the seizure, Pickard made representations that he had no title on the machinery which influenced the creditor and Sears to change their actions accordingly. Pickard later claimed the property but was estopped from arguing this position for failing to mention this initially.
Estoppel by Record:
Under this kind of estoppel, a person is not permitted to dispute the facts upon which a judgment against him is based. It is dealt with by (i) Ss. 11 to 14 of the Code of Civil Procedure, and (ii) Ss. 40 to 44 of the Indian Evidence Act.
Estoppel by Deed:
Under this kind of estoppel, where a party has entered into a solemn engagement by deed as to certain facts, neither he, nor any one claiming through or under him, is permitted to deny such facts. When a deed contains a specific and unambiguous statement of a specific fact and this is used as the basis for the transaction then estoppel by deed may apply. To establish estoppel by deed then both the parties will be named on the deed that is not void, voidable or rectifiable and the party who the estoppel is raised against has sought to deny the fact within the deed.
Estoppel by Conduct:
Sometimes called estoppel in pais, may arise from agreement, misrepresentation, or negligence. Estoppel in pais is dealt with in Ss. 115 to 117. (Estoppel in pais means “estoppel in the country” or “estoppel before the public.”
If a man, either by words or by conduct, has intimated that he consents to an act which has been done, and that he will not offer any opposition to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that from which they otherwise might have abstained from doing, he cannot question the legality of the act to the prejudice of those who have so given faith to his words, or to the fair inference to be drawn from his conduct.
Equitable Estoppel:
The Evidence Act is not exhaustive of the rules of estoppel. Thus, although S. 116 only deals with the estoppel that arises against a tenant or licensee, a similar estoppel has been held to arise against a mortgagee, an executor, a legatee, a trustee, or an assignee of property, precluding him from denying the title of the mortgagor, the testator, the author of the trust, or the assignor, as the case may be.
Estoppel by Negligence:
This type of estoppel enables a party, as against some other party, to claim a right of property which in fact he does not possess. Such estoppel is described as estoppel by negligence or by conduct or representation or by a holding out of ostensible authority. Such estoppel is based on the existence of a duty which the person estopped is owing to the person led into the wrong belief or to the general public of whom the person is one.
Estoppel on Benami Transactions:
If the owner of property clothes a third person with the apparent ownership and a right of disposition thereof, not merely by transferring it to him, but also by acknowledging that the transferee has paid him the consideration for it, he is estopped from asserting his title as against a person to whom such third party has disposed of the property and who has taken it in good faith and for value.
Section 116 IEA:
Estoppel of tenants and of licensee of person in possession:
No tenant of immovable property, or 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 immovable property; and no person who came upon any immovable property by the licence of the person in possession there of shall be permitted to deny that such person had a title to such possession at the time when such licence was given.
Section 116 provides for estoppels of a tenant as against his landlord and of a licensee as against his licensor. The section provides that a person who comes into an immovable property taking possession from a person whom he accepts as to the landlord , is not permitted to say as against his landlord that he had no title to the property at the commencement of the tenancy. So long the relation of landlord and tenant stands and by which the tenant remains in possession of tenancy the principle of estoppel is applicable against the tenant.
Section 117 IEA:
Estoppel of acceptor of bill of exchange, bailee or licensee:
No acceptor of a bill of exchange shall be permitted to deny that the drawer had authority to draw such bill or to endorse it; nor shall any bailee or licensee be permitted to deny that his bailor or licensor had, at the time when the bailment or licence commenced, authority to make such bailment or grant such licence.
Explanation 1:
The acceptor of a bill of exchange may deny that the bill was really drawn by the person by whom it purports to have been drawn.
Explanation 2:
If a bailee delivers the goods bailed to a person other than the bailor, he may prove that such person had a right to them as against the bailor.
Section 117 deals with estoppel in respect of movable property. An estoppel under this section is based on agreement. It is applicable to:
- Against the acceptor of a bill of exchange.
- Against the bailee, and
- Against a licensee.
Acceptor of a bill of exchange:
An acceptor of a bill of exchange is not permitted to deny that the drawer had authority to draw or to endorse it. But there is an exception laid down in Explanation-I which provides that the acceptor of a bill of exchange may deny that the bill was really drawn by the person by whom it purports to have been drawn.
Bailee:
A bailee of goods cannot be permitted to say that at the time of commencement of the bailment, the bailor has no authority to bail or to take them back. Under the Explanation-II, if a bailee delivers the goods bailed to a person other than the bailer, he may prove that such person had a right to them as against the bailor. A garage owner receiving a car for repairs is estopped from challenging the title of the person from when the car was received.
License:
Same rule is applicable here as applied in bailment