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.
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ADVERTISEMENTS:
Illustration:
A intentionally and falsely leads В to believe that certain land belongs to A, and thereby induces В 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.
Comments:
Principle:
ADVERTISEMENTS:
The principle laid down in this section is that when a person has by his,— (i) declaration, (ii) act, or (iii) omission intentionally caused or permitted another (a) to believe a thing to be true, and (b) to act upon such belief, then neither he nor his representative shall not be allowed to deny the truth of it. In short, the section means that when a person by his words or by his conduct makes a representation to another that certain state of things is true and induces him to act on that belief and when the other person relying upon the representation alter his previous position, then the person making such representation would be estopped from denying the truth of his previous representation.
If a person makes a wrong statement with knowledge of consequence thereof he would ordinarily to be estoppel from pleading that even if a fact had been disclosed, it would not have made any material change. The private property of the Chogyal of Sikkim was acquired by the Sikkim durbar. The Chogyal accepted compensation without any objection. It was held that the owner as well as his successor-in-interest was estopped and precluded from denying the vesting of the land in Sikkim durbar and consequently in the Government of India. By virtue of will the plaintiff-son of testator was made beneficiary. But by subsequent will bequeathing all property were shared equally by children and wife of testator. Plaintiff accepted subsequent will on the basis of it and became party to several transactions.
Plaintiff would be estoppel to go back on his representation and claim of said property on the basis of earlier will by contending that the subsequent will was fabricated will. Unilateral cancellation of allotment by C1DCO on the ground of violation of public policy was not proper.
Ingredients:
ADVERTISEMENTS:
Following are ingredients of Section 115, viz.,—
1. There must be some representation.
2. The representation must be made with the intention to be acted upon.
3. The representation must have been acted upon.
4. Such action should have been detrimental to the interests of the person whom the representation has been made.
Representation:
The representation is one of the ingredients for application of doctrine of estoppel. It may be in the form of a declaration, act or omission. The representation also covers statement—oral or written and conduct—active or passive. It also includes negligence. 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.
The question of representation by omission was again considered by the Privy Council and held that an estoppel would arise when there was a failure to perform one’s duty that misled another. In the instant case the document on its face conveyed no representation and it was held that the plea of estoppel could not be availed.
The plaintiff had given consent to grant certain lands under the Karnataka Village Offices Abolition Act, 1961 in the name of his son, and the son later sold part of the land to the respondents. After ten years the plaintiff’s father, the appellant filed a suit for declaration that he was the absolute owner of the land. The court held that the appellant was bound by the principle of estoppel. Where the petitioner had not questioned the award of arbitration earlier later on he could not challenge it. Fresh writ petition on the cause of action challenging the same order is not maintainable.
Representation relates to fact not of law:
The representation should be of fact and not on matter of law. When the respondent had obtained birth certificate from the Chief Medical Officer and accordingly his name was entered in the electoral role. There was no question of the respondent being estopped.
Representation must be acted upon:
The representation must have been acted upon by the opposite party. To avail the benefit of estoppel it has to be proved that the representation was duly acted upon. Where after the respondent unit was sold by the appellant corporation; a certificate was issued by the bank regarding the loan amount outstanding and the respondent wanted that the balance after adjusting the due to the Corporation should go to discharge the loan to the bank, it was held that the respondent is estopped from questioning the court sale.
In order to obtain estoppel the plaintiff must be acted in reply to the representation and alter his position. There is no estoppel if the applicant failed to come under a revised scheme according to agreement from the original scheme in respect of allotment of plots of land. When there is participation in arbitration proceedings for a long time no question of validly does arise. When the Branch Manager of a Bank was instrumental in effecting the sale of property hypothecated to the Bank and represented to the parties that the liability would be transferred to third parties, the Bank is estopped from proceeding against the debtor, sureties and the hypothecated property.
Action being detrimental:
It is also necessary to prove that the party to whom the representation was made has suffered detriment. The construction of building after approval by the corporation cannot be brought under the orders of demolition. Person who has not suffered detriment by acting upon the representation of the parties cannot invoke the doctrine of estoppel.
Kinds of estoppel:
Primarily there are three kinds of estoppel:
1. Estoppel by matters of record.
2. Estoppel by deed.
3. Estoppel by conduct or Estoppel in pias.
1. Estoppel by record:
Estoppel by matter of record is also used as quasi record. It arises mainly from the judgment of a competent court. “A matter of record is something part of the records of a court.” When there is a final judgment awarded by a competent court it is conclusive binding the parties and their privies including legal heirs, executors, administrators and assigns. The parties and their privies are estopped form agitating the same issue before the same court. Thus, “estoppel by record is enacted by a final judgment” of a court. Although, an estoppel by record is a final judgment, the law allows the party an opportunity to set aside the judgment by way of appeal or revision.
Estoppel by matter of records was used as res judicata. It has been dealt with under sections 10 to 14 of the Civil Procedure Code and Sections 40 to 44 of the Evidence Act.
Estoppel is mainly concerned with the effect of judgment in rem and judgment in personam. But, a judgment obtained by fraud or collusion etc., will not work as estoppel. A compromise decree does not amount to res judicata, but it creates an estoppel by conduct. The executing court cannot go into correctness of order of reference court amending its earlier order, the principle of estoppel by records would also apply. Where payment was accepted under a arbitration award and the party who had received such benefit cannot afterwards challenge the award.
Estoppel and res judicata —Estoppel differs from res judicata:
(i) Estoppel results from the conduct of the parties and also rules of evidence. It is rule of equity. The doctrine of res judicata is creation of the court and is a part of procedure. It is founded on principle that “there should be end of litigation.”
(ii) Estoppel prohibits a party from denying or contradicting his previous declarations whereas res judicata stops the court adjudicating into matter already decided.
(iii) “Estoppel shuts the mouth of a party, res judicata oust the jurisdiction of the court.”
Estoppel and presumption:
An estoppel is a personal disqualificate with a party and is prevented from denying the truth of his declaration, “whereas a presumption is a rule that particular inference shall be drawn from facts, whoever proves them.”
Estoppel and waiver:
In Dawsons Bank v Nippin Mekawa Lord Russell had made the distinction between an estoppel and waiver:
“Estoppel and waiver are entirely different. Estoppel is not a cause of action. It may, assist a plaintiff in enforcing a cause of action by preventing a defendant from denying the existence of same facts essential to establish the cause of action; on the other hand, waiver is contractual, and may, constitute a cause of action, it is an agreement to release or not to assert a right; i.e. if an agent with an authority to make such an agreement on behalf of the principal agrees to waive his principal’s right them the principal will be bound by the contract; not by estoppel. There is no such thing as estoppel by waiver.”
“Some shares were registered by the Company though presented after the period of two months without any demour. In refusing to register remaining shares the company can be said to have waived their right.
In an appointment of arbitrators it was established that the reference court had no jurisdiction in matter of terms. It was held that inherent lack of jurisdiction cannot be cured by consent of parties or waiver.
Waiver is an intentional relinquishment of a known right. It means abandonment of right and may be either express or implied from conduct but its basic requirement is that it must be intentional act. It signifies nothing more than an intention not to insist upon the right.
Waiver is generally created upon knowledge of all facts by both parties, whereas in estoppel by representation, knowledge of facts by the representee destroys that estoppel.
In waiver there should be some clear and decisive act or conduct beyond mere silence. It may arise from acquiescence. But in case of estoppel mere silence may give rise to an estoppel.
“The principle of waiver although is akin to the principle of estoppel, the difference between the two, however, is that whereas estoppel is mear cause of action, it is a rule of evidence, waiver is contractual and may constituted a cause of action.”
Where the officers of the Municipal Corporation and Town and Country Planning Development in the inspection report had submitted that there was no violation of the rules and the construction were in accordance with the sanctioned plan, it was held that subsequently there was no jurisdiction of the Building Officer of the Municipal Corporation to issue show cause notice for demolitions, the principle of estoppel, waiver and acquiescence who attracted in the case.’’
The estoppel does not operate against statute, while in case of waiver, unless it involves the public at large or the statutory requirement is in public interest a private person can waive it. The benefit, claim or privilege which expect for such a waiver, the party would enjoy. Even in a case if a plea is taken and evidence is not led it would amount to be a waiver.
Estoppel by deed:
Estoppel by deed is based on the principle that those who are parties to the deed as to certain facts, they or any one of them and their privies shall not be permitted to deny such facts contained in the deed. So, it binds the parties and privies. There is no estoppel where the deed is affected by fraud or illegality. Section 43 of the Transfer of Property Act has embodied the principle of estoppel by deed.
“Where there was agreement to hire plinth for three years but registered lease was not executed. Hirer terminated tenancy before three years, the defence that since no registered lease deed was executed, the tenancy was month to month and that was legally terminated, was not tenable.” If sub-lease is given by a leasee by a deed, it will operate to the extent of his rights as a leasee, i.e. the sub-leasee will be bound by the period of the original lease though not mentioned in the sub-lease.
Estoppel by conduct:
Estoppel by conduct is also known as estoppel by matter in pias. Estoppel by conduct is said to mean that when one person either by words or by conduct made a misrepresentation to another with the intention that it should be acted upon and that the other has acted accordingly and thereby alter his position, an estoppel arises against the person who made such representation. An estoppel by conduct is neither based on record nor on any deed. It may exist in writing not being under seal.
This doctrine has been dealt with under sections 115 to 117 of the Evidence Act. It embraces all acts and statements of a party upon faith which another party to take and change his position. Where a candidate appeared before a selection committee without any protest knowing it fully the irregularity in its constitution. He was estopped from challenging the validity of the selection committee. Where the eligibility criteria were changed; it was held that a candidate who had applied for the post and appeared at the interview without protest could not be allowed to challenge that the eligibility were wrongly framed.
Promissory estoppel:
Doctrine of promissory estoppel consists of elements of promise and estoppel. According to Halsbury’s Laws of England “when one party has, by his words or conduct, made to the other a promise or assurance which has intended to affect the legal relations between them and to be acted on accordingly, then, on the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards to be allowed to revert to their previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced.” In other words it may be said that whoever gives promise of favour or concession to another and another by such promise changes his legal position, the promise will also be binding upon the proposer who cannot be permitted to say that his promise was out of consideration. “Unlike an ordinary estoppel the promissory estoppel gives rise to a cause of action. It indisputably creates right. It is also an equity.” The idea that a man must keep to his word and must be responsible for the consequences of his conduct when other men have trusted him. Where on the promise made by the executives the opposite party has acted not against public interest or statutory rules, the doctrine of promissory estoppel is attracted and the executive is expected to fulfil its promise.
The Supreme Court has observed that a representation that something will be done in future, may involve an existing intention to act in future in the manner represented will be called promissory estoppel. Having evolved new Rule of estoppel Lord Denning observed:
“There has been a series of decisions over the last fifty years, which, although they are said to be cases of estoppel, are not really such. There are the cases in which promise was made, which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made, and which was in fact so acted on. In such cases, the courts have said that the promise must be honoured.”
Therefore the promissory estoppel is not permitted to recile from the promise. It is not necessary in case of promissory estoppel that the promisee acting in reliance on the promise should suffer any detriment, what is necessary is only that the promisee should have altered his position in reliance on the promise. In an application the applicant was seeking grant of benefit for the scheme of new industrial units. It was held that the applicant was not entitled to get concessional tariff and the principle of promissory estoppel was not attracted in facts and circumstances. A plot was allotted to the appellant for construction of hotel. For application of doctrine of promissory estoppel the promisee must establish that he suffered any detriment or altered his position by reliance on the promise. In considering the importance of Article 39(b) & (c) of the Constitution of India the Supreme Court emphasized on the necessity of striking balance between individual rights and larger public interest.
Promissory estoppel being equitable estoppel:
Since the promissory estoppel is based on equity it is subject to following equitable qualifications, namely:
“(i) That the other party has altered his position,
(ii) That the promisor can recile from the promise on giving reasonable notice which need not be a formal notice, giving promisee a reasonable opportunity of resuming his position, and
(iii) The promise becomes final and irrevocable only if the promisee cannot resume his position.”
Although the promissory estoppel is not really based on doctrine of estoppel; it is evolved out of equity to prevent injustice. The promissory estoppel has sometimes been described as “equitable estoppel” or “quasiestoppel.” That is why it is said that “the doctrine belongs not to law of contract or evidence but appertains to equity, fairness in action.” While dealing with the doctrine of promissory estoppel it was observed that since it is an equitable doctrine it should be kept elastic enough in hands of court to do complete justice between parties.
Promissory estoppel against government and statutory bodies:
Generally the government or state is not subject to promissory estoppel there are exceptions that the doctrine is applied to the state to prevent fraud and manifest injustice. Promissory estoppel first came to be applied by the Supreme Court in Indo- Afgan Agencies case. ’ Justice Shah, on behalf of the court, observed: “the Government was not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it.” Subsequently in another case the Supreme Court invoked the doctrine of promissory estoppel. Justice Shah, again, speaking for the court observed:
“If our nascent democracy is to thrive different standards of conduct for the people and the public bodies cannot ordinarily be permitted. A public body, in our judgment, no exempt from liability to carry out its obligation arising out of representation made by it relying upon which a citizen has altered his position to his prejudice.”
Again, where the State Government granted exemption form sales tax for setting up a vanaspati plant and subsequently abrogated its policy of exemption, the Supreme Court allowed petition holding that the Government was bound by its declared intention. Doctrine is applicable when a representation was made by the State in exercise of its power to exempt or abolish a commodity as taxable commodity. Representation was made to consumer of electrical energy and in further-one whereof he had altered his position. The doctrine of promissory estoppel shall apply. It would bind the Electricity Regulatory Commission.
The principle of promissory estoppel is applicable to the Government in exercise of its executive functions. The government cannot invoke defense of executive necessity or freedom of future executive action. Where no promise was held out by the government the principle of promissory estoppel would not be attracted.
No promissory estoppel against public authorities:
The doctrine of promissory estoppel has no application to promises made by the statutory authorities, but the doctrine of ultra virus will come into operation. Before making public authorities responsible for acts of the subordinate officers it has to be established that the subordinate officers were competent to make a binding promise and made such representation. To bind a public authority with ultra virus promises would amount to granting premium and legitimacy to ultra virus acts of subordinate officers But the Supreme Court held, that where the promise is contrary to law or outside the authority of the government or persons making promise, the rule of promissory estoppel would have no application.
Promissory estoppel against public officers exercising statutory powers:
When a statute delegates discretionary power in favour of officers and to discharge statutory duties the question of application of the doctrine of promissory estoppel arises. Because, all functions of the Government, whether exercised under statute or otherwise, have to be for “public good.” Motilal Padampat case is an example where the promissory estoppel applied against the government as well as public authorities.
The State Financial Corporation in exercise of its statutory duty to advance loan entered into an agreement with a private hotel which was intended to set up a four star hotel. Acting on agreement the hotel company proceeded to undertake and execute the project of setting up that hotel, but the company incurred huge expenses and was put to liability in setting up the hotel. The principle of promissory estoppel would estop the corporation from backing out from the agreement to advance loan.
No promissory estoppel:
1 There can be no question of application of promissory estoppel against the government exercising legislative functions.
2 Promissory estoppel cannot be invoked for preventing the government from discharging its functions under the law or to act contrary to law. The plea of nullity can be raised even by a person who participated in proceedings, there can be no estoppel if the matter is opposed to public policy.
3 Where the State Electricity Board granted a rebate in the demand and energy changes for High Tension Industries like the respondent from the date of going into regular production and withdrew the rebate before commencement of production on commercial basis by the respondent, the respondent was not entitled to the concession and the doctrine of promissory estoppel was not attracted as the respondent failed to act upon the representation made by the Board.
No estoppel against law and statute:
There can be no estoppel against the rule of law and statute. It is a fundamental principle of law that a man cannot contract out of his rights. Therefore, the phrase ‘no estoppel against statute’ means that a person who makes a statement as to the existence of the provisions of a statutory law is not estoppel, subsequently, from contending that the statutory provision is different from what he has previously stated.” A rule of law cannot be nullified by resorting to the doctrine of estopped.
There is no estoppel against a statute. Even against the Government the doctrine of estoppel may not be applied where it would be inequitable to hold the Government or a public authority to the promise or representations made by it. On the facts, the concessional rate of tax to tourist buses, withdrawal of it subsequently is not allowed to be assailed on the ground of promissory estoppel. A wrong concession of law cannot bind parties, particularly when the constitution of statute is in question.
Where two contesting candidates in Panchayet election secured equal votes they agreed on tie to determine their fate and that was accordingly done. The defeated candidate challenged the validity of the result done by tie. It was hold that there was no estoppel.
In tax law an estoppel is not applicable, because equity does not have any role to play. If a particular income is not taxable under the Income Tax Act, it cannot be taxed on that basis of estoppel, or any other equitable doctrine.
However, the doctrine of promissory estoppel is applicable when a representation is made by the State in exercise of its power to exempt or abolish a commodity as taxable commodity. Such promise, however must be made by persons having power to implement the representation. A contract in violation of mandatory provisions of law can only be read and enforced in terms of the law and in no other way. The question of equitable estoppel does not arise.
Estoppel between landlord and tenant:
The rule of estoppel between landlord and tenant continues to operate as long as the tenancy continues, unless the tenant surrenders possession to the landlord. The estoppel ceases to operate only on the tenant openly restoring possession surrendering the property to the landlord.
Estoppel against educational institutes:
The student on the basis of marks was admitted to the Law College. He had pursued his studies for two years. The University had also granted him admit card for the Pre-law and Inter Law Examinations. He was also admitted to the Final year law course. At the state of declaration of Pre-law and Inter-Law result the university raised the objection that he was ineligible for admission to law college. The University was estopped to raise that objection The University had accepted the examination forms and had permitted the studies to take the B. Ed Examination. It was held that the University was estoppel from taking a stand at a later stage that it will not declare the results of the students due to non-recognition of the college. Where a wrong mark sheet was issued to a candidate showing him passed. After a gap of five years, the University was estopped when it tried to question the validity of the mark sheet.
A candidate secured less marks in LL.B. 1st Year Examination. But due to error on part of concerned office staff he had been issued mark sheet showing him promoted. The principle of promissory estoppel was held to be applicable.
A student who obtains admission to MBBS course on the basis of misrepresentation cannot be permitted to take advantage and plead estoppel against the authorities.
Estoppel against sovereign functions:
The Supreme Court held that it was settled law that there cannot be any estoppel against the Government in the exercise of its sovereign, legislative and executive functions.
Estoppel by attestation:
No estoppel results from the attestation. It does not establish that he was aware of its contents and a consenting party to the transaction embodied in them. When a deed is void, there is no question of any election to affirm or disaffirm it by the attestation of the person affected it.
Estoppel by election or estoppel by approbation and reprobation:
Section 35 of the Transfer of Property Act and Sections 180-190 of the Indian Succession Act deal with the estoppel by election. When a person has made his election of one of two other inconsistent things, it is final and cannot be altered. He cannot be retracted. An estoppel by election means that a person who accept the benefit under a deed, must also accept its liability.
“A party cannot at the same time below hot and cold.” He cannot say at one time that the transaction is valid and thereby obtain some advantage to which he could only be entitled on the footing that it is valid and at another says it is void for the purpose of securing some further advantage.
Issue Estoppel:
Issue estoppel has been understood to mean that the issue of fact and law which have been determined in the previous proceeding must not be raised in the subsequent proceeding. The principle has been borrowed from the English decision and for the first time it was applied in Indian in Pritam Sing Case. The court has inherent power to exercise its discretion in the interest of finality not to allow a particular issue which has already been litigated to be reopened. To apply this principle the parties must be the same in both the trials and the fact in issue proved or not in the earlier one also must be identical with what is sought to be reagitated in subsequent trial. The rule of issue estoppel also applies in Criminal trial. It is applied when the accused has been acquitted in earlier case, but when the accused is convicted, the rule has no application.
Estoppel against estoppel:
In case of estoppel against estoppel both the plaintiff and defendant are bound by their previous representation and both of them are estopped from denying their previous position. “In a case of one estopped against another, the parties are set free and the court has to see what their original rights really are,” “Where of two competing estoppels one arises out of execution of a mortgage and the other arises out of the judgment in the previous suit, the later estoppel should prevail.”