Doctrine of Estoppel

Estoppel is a legal principle that prevents someone from arguing or asserting a right that contradicts what they previously agreed to or said. Put, estoppel prevents one person from contradicting an action or statement from the past. Estoppel ensures that a person stays true to their word and does not unfairly damage someone else so, if person A must adhere to their word if they make a promise to person B and later rescind it.

In various Corporates, we come across situations, may be Finance, Marketing, Supply-chain, and as well as in HR. Enforcement of contractual terms of an employee, litigations before labour adjudications, long-term wage agreements, and even in domestic enquiries. The intention behind this article is to enlighten all employees holding responsible positions in all disciplines in the Corporate, since, many times, it may go unnoticed.
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It has already been noted that under the "The Bharatiya Sakshya Adhiniyam, 2023 [Evidence Act), hereinafter referred to as Act, there are certain facts which need not be proved and there are some facts which cannot be proved because the Act, would not allow evidence of such facts. An estoppel is a principle, whereby a party is precluded from denying the existence of some state of facts which has formerly admitted. The foundation of the doctrine is that a person cannot approbate and reprobate at the same time;

Under The Bharatiya Sakshya Adhiniyam, 2023, sections 121 to 123 based on the principle what is called "doctrine of estoppel".
 
Sec. 121. 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.

Section 121 lays down that when one person has, either in word or by conduct, intentionally caused a person to believe to a thing to be true and to act upon such belief or to alter his position, neither he nor his representative in any suit or proceeding will be allowed to say that the representation was false. Estoppel is a principle of law by which a person is held bound by the representation, made by him or arising out of his conduct.
 
Another illustration;
Mr. X was selected based on his personal profile for the position of a GM in Y Company. Mr. X had declared that he possessed the experience and managerial skills having worked in three highly reputed organisations. Along with the profile he had enclosed service certificates as well accordingly, contract of service was executed between Mr. X & Y Company. Importantly, the terms like, if at any time, while the company reserves its right upon pre-employment verification, if indicates that Mr. X has produced false documents and withheld all information with an intention of personal gains, the contract will be terminated and Mr. X is required to pay penalty compensation equivalent to three months package to Y company. Pre employments showed complete negativity and were found to be false. Accordingly, upon the termination, he failed to pay penal damages as accepted by him. He expressed his innocence and to pardon him against the claim of damages. The Y company filed a civil suit against him for recovery of penal damages. Now, here, the doctrine of estoppel under the Evidence Act comes into picture. His defensive evidences are not admissible.

We come across similar situations, like, in the domestic enquiry, enforcement of contractual obligations, like, intellectual property, protection of trade secrets, innovations, non-disclosure, non-competence, long term wage agreements etc.

Hence this Doctrine which is a powerful tool in safe guarding the business interests of any company.
The main ingredients of estoppel as defined in section 121 i.e., estoppel bucket are:
(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.
 
What are the essential conditions for the applicability of section 121 of the Evidence Act?
i) There must have been a representation by a person to another person, which may be in any form - a declaration or an act or an omission.
ii) Such representation must have been of the existence of a fact, and not of future promises or intention.
iii) The representation must have been meant to have been relied upon.
iv) There must have been belief on the part of the other party in its truth.
v) There must have been some action on the faith of that declaration, act or omission. In other words, such declaration, etc., must have actually caused the other person to act on the faith of it and to alter his position to his prejudice or detriment.
vi) The misrepresentation or conduct or omission must have been the proximate cause of leading the other party to act to his prejudice.
vii) The person claiming the benefit of an estoppel must show that he was not aware of the true state of things. There can be no estoppel if such a person was aware of the true state of affairs or if he had means of such knowledge.
viii) Only the person to whom the representation was made or for whom it was designed, can avail of the doctrine. The burden of proving estoppel lies on such person.

The above are the essential ingredients are as per the judicial pronouncement by Hon'ble Supreme Court, Chhaganlal Keshavlal Mehta v. Patel Narandas Haribhai : (1982) 1 SCC 223: AIR 1982 SC 121: 1982.

There are three types of "Estoppel”.
1. Promissory Estoppel
"Where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the party who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relationship 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, even though it is not supported in point of law by any consideration, but only by his word."
 
2. Estoppel of tenant; 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 thereof, shall be permitted to deny that such person had a title to such possession at the time when such licence was given.

"A tenant may not dispute the right of his landlord saying that he had nothing in the property”. The section provides that a person who comes into an immovable property taking possession from a person whom he accepts as 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."

In Supreme Court verdict in Rita Lal v. Raj Kumar Singh, MANU/SC/0813/2002: AIR 2002 SC 3341: 2002 AIR SCW 3887

The rent note was proved to be signed by tenant. Tenant admitted the title of landlord in his disposition made on oath in earlier judicial proceeding of plea of tenant denying the title of landlord in the eviction suit raised for seeking leave to defend does not amount to raising tribal issue as he was estopped from raising the same. Tenant would not be entitled to permission to defend.

In the case of S.K. Sharma v Mahesh Kumar Verma AIR 2002 SC 3294, the respondent, a railway servant, was estopped from challenging the railway administration's title over the premises allocated to him as an official residence as long as he remained in possession, pursuant to Section 122 of the Evidence Act.
 
Sec 123. 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 the authority to draw such bill or to endorse it; nor shall any Bailee or licensee be permitted to deny that his bailer or licensor had, at the time when the bailment or license commenced, authority to make such bailment or grant such licence. Examples: Bank currency note, Bank draft, promissory note, note between the seller and a buyer etc.
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Now let us examine the difference between "Estoppel & Res juidicata"

Here, we can also examine the difference between "Estoppel & Waiver."

Courtesy:
Manupatra
Business Manager
March 2025

Doctrine of Estoppel
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