ARTICLE
13 September 2013

Doctrine Of Estoppel: Overview

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S&A Law Offices

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The doctrine of Estoppels, precludes a person from denying or to negate anything to the contrary of that which has been constituted as truth, either by his own actions, by his deeds or by his representations or by the acts of judicial or legislative officers.
India Real Estate and Construction
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Article by Arvind Thapliyal and Kunal Kumar1

Estoppel Principle

"Estoppel may be defined as disability whereby a party is precluded from alleging or proving in legal proceedings, that a fact is otherwise than it has been made to appear by the matter giving rise to that disability." HALSBURY (4th Ed, Vol. 16, para 1501, page1008).

The term "Estoppel," comes from an old-French word- "Estoupail" (or variation), which means "stopper plug", referring to placing a brake on the imbalance of the situation. The rationale behind estoppel is to prevent injustice owing to fraud or inconsistency.

In its simplest sense, doctrine of Estoppels, precludes a person from denying or to negate anything to the contrary of that which has been constituted as truth, either by his own actions, by his deeds or by his representations or by the acts of judicial or legislative officers. Estoppel is often described as a rule of evidence as indeed it may be so described. But the whole concept is more carefully viewed as a rule of substantive law.

To invoke the doctrine of estoppels, there are three conditions which must be satisfied;

  1. Representation by a person to another
  2. The other should have acted upon the said representation and
  3. Such action should have been detrimental to the interests of the person to whom the representation has been made.

However in the case, "Gyarsi Bai vs. Dhansukh Lal,2" it was observed by the Hon'ble Apex Court that even if the first two conditions are fulfilled, but the third is not, then there is no scope to invoke the doctrine of estoppel.

Types of Estoppel

  1. Estoppel by Silence or Acquiescence
  2. Employment Estoppel
  3. Reliance-based estoppels:

    1. Promissory estoppel, without any enforceable contract a promise has been made by one party to another.
    2. Proprietary estoppel, where the parties are litigating the title to land.
  4. Estoppel by deed
  5. Estoppel by record
  6. Estoppel Against Minor
  7. Estoppel by deed

International Prospective

The Development of Estoppel – U. K. In English law, a promise which has been made without consideration is generally not enforceable. It is known as a bare promise. The doctrine of promissory estoppel was first developed in Hughes v. Metropolitan Railway Co.3

Thomas Hughes was the owner of the property which was leased to the Railway Company. Under the lease agreement, Hughes was entitled to compel the tenant to repair the building within six months of notice. The Notice was served to leasee on 22 October 1874, from which the tenants had until 22 April to make those repairs. On 28 November, the tenant had sent an offer letter to owner for purchasing the same property. Negotiations began and continued until 30 December, but there was no settlement. The time of 6 months had elapsed; the owner sued the tenants for the breach of contract and also tried to evict the tenant.

The House of Lords ruled that with the initiation of the negotiations there was an implied promise by the landlord not to enforce their strict legal rights with respect to the time limit on the repairs and the tenant acted on this promise to their detriment, thus allowing the tenants more time to repair. Hence, the owner is estopped from claiming to the contrary.

However, the doctrine of estoppel had lost its value for some time after this case and it was resurrected by Lord Denning in the case "Central London Property Trust Ltd v High Trees House Ltd"4

In 1937, High Trees House Ltd leased a block of flats in Clapham, London, for a rate £2500/year from Central London Property Trust Ltd. Due to the prevailing conditions during the beginning of the World War II occupancy rates were drastically lower than normal. In January 1940, to ameliorate the situation the parties made an agreement in writing to reduce rent by half. However, neither party stipulated the period for which this reduced rental was to apply. Over the next five years, High Trees paid the reduced rate while the flats began to fill, and by 1945, the flats were back at full occupancy. Central London sued for payment of the full rental costs from June 1945 onwards.5

Based on previous judgments as Hughes v Metropolitan Railway Co, Denning J held that the full rent was payable from the time that the flats became fully occupied in mid-1945. However, he continued in an obiter statement that if Central London had tried to claim for the full rent from 1940 onwards, they would not have been able to. This was reasoned on the basis that if a party leads another party to believe that he will not enforce his strict legal rights, then the Courts will prevent him from doing so at a later stage. This obiter remark was not actually a binding precedent, yet it essentially created the doctrine of promissory estoppel.

The Indian Development of Estoppel

Estoppel has been defined under Section 115 in "The Indian Evidence Act, 1872."

"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".

The History of doctrine of promissory estoppel in India can be traced to the case of Ganges Mfg Co. v. Sourajmul6whereby the Calcutta High Court had held that the doctrine of estoppel was not only limited to the law of evidence, but that a person may be estopped from doing acts or relying on particular arguments or contentions.

Estoppel against Government

In Motilal Padampat Sugar Mills vs. State of U.P.,7it was held that the government was bound by its promise & was liable to exempt the appellant from sales tax for a period of three years commencing from the date of production.

Estoppel against the private parties

Taking note of section 115 of the Indian Evidence Act, which would be the governing law for deciding on the disputes between the parties, it can be held that promissory estoppel also applies in cases of dispute between private parties. It was held in the case, "Century Spinning and Mfg Co. Ltd. v. Ulhasnagar Municipal Council"8 by Supreme Court, the concept of promissory estoppel also applies to private individuals/ entities.

No Estoppel can be made against Statutes

In Jatindra Prasad Das Vs. State of Orissa & others,9 Orissa High Court, held that:

"There can be no estoppel against statutes and the Statutory Provisions and therefore, the said statutory provisions cannot be ignored on the grounds of an earlier administrative decision or precedent."

State of Bihar and others v. Project Uchcha Vidya, Sikshak Sangh and others,10 in which it was laid that "We do not find any merit in the contention raised by the learned counsel appearing on behalf of the respondents that the principle of equitable estoppel would apply against the State of Bihar. It is now well known, the rule of estoppels has no application where contention as regards a constitutional provision or a statute is raised."

Olga Tellis v. Bombay Municipal Corporation (1985.07.10) (Right to Life and Livelihood for Homeless),11 that there can be no estoppels against the constitution of India or against the fundamental rights.

Some Case-laws related to Estoppel

i. International Amusement Ltd. v Entertainment Tax Officer & Ors12. It was held that "Benefits of exemption which is available to Assessee shall not be denied by Authority, unless it is justified by law."

ii. O.P. Sharma & Ors. Vs .Union of India & Ors.,13, once the voluntary retirement is taken by the petitioners and they have taken it without reserving any right as claimed in the writ petition, the petitioners also would be estopped in claiming any reliefs in the writ petition.

Footnotes

1 Intern

2 AIR 1965 SC 1055 3 (1876-77) LR 2 App Cas 439

4 [1947] KB 130

5 http://en.wikipedia.org/wiki/Central_London_Property_Trust_Ltd_v_High_Trees_House_Ltd

6 (1880) ILR 5 Cal 669

7 1979 AIR 621, 1979 SCR (2) 641

8 [1970] 3SCR 854

9 MANU/OR/0225/2011

10 MANU/SC/0054/2006 : (2006) 2 SCC 545

11 1986 AIR 180, 1985 SCR Supl. (2) 51

12 MANU/DE/0360/2013

13 MANU/DE/0524/2013

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
13 September 2013

Doctrine Of Estoppel: Overview

India Real Estate and Construction

Contributor

S&A Law Offices is a full-service law firm comprising experienced, well-recognized and accomplished professionals. S&A Law Offices aims to provide its clients (both domestic and international) with top-quality counsel and legal insights, which combines the Firm's innovative approach with comprehensive expertise across industries and a broad spectrum of modalities. Being a full-service law firm, we take pride in having the capability of providing impeccable legal solutions across various practice areas and industries and makes an endeavor to provide a 360 degree legal solution. With registered office at Gurugram and other strategically located offices in New Delhi, Mumbai, and Bengaluru, along with associate offices across India, S&A is fully equipped to provide legal services on a pan-India basis.
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