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LIST OF ABBREVIATIONS

SCC: Supreme court cases

HC: High court

SC: Supreme Court

i.e.: That is

pg.: Page no

Air-All India Report

Sec: Section

Para: Paragraph

Ed: Edition

Vole: Volume

Art: Article

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TABLE OF CONTENT

1. Meaning of Estoppel………………………………………………………………………4

(A).Estoppel- as Rule of Evidence......................................................................................5

(B).Evolution of Doctrine of Promissory Estoppel…………………………………........7

(C).Promissory Estoppel: an outline……………………………………………….….…8

(D).Nature of Promissory Estoppel…………………………………………………...….9

(E).Application of Doctrine of Promissory Estoppel to Government………………..…10

(F).Kinds of Estoppel………………………………………………………………....…14

2. Estoppel under “The Evidence Act, 1872”……………………………………………15

3. Estoppel under “The Contract Act, 1872” …………………………………………..18

4. Estoppel under “The Transfer of Property Act”…………………………………….22

5. Conclusion……………………………………………………………………………..24

6. Bibliography…………………………………………………………………………..25

ABSTRACT

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In law, estoppel is a set of doctrines in which a court prevents a litigant from taking an action the

litigant normally would have the right to take, in order to prevent an inequitable result. Estoppel

occurs when a party "reasonably relies on the promise of another party, and because of the

reliance is injured or damaged". For example, estoppel precludes "a person from denying, or

asserting anything to the contrary of, that which has, in contemplation of law, been established as

the truth, either by the acts of judicial or legislative officers, or by his own deed, acts, or

representations, either express or implied

Meaning of Estoppel

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Estoppel in simple words is a bar which prevents a party from asserting a fact or putting up claim

inconsistent with the position he previously took. It is said to be a rule which preludes a person

from saying one thing at one time and another thing, totally in consistent with the earlier one, at

another stage1.

 

In Black’s New Dictionary, “estoppel” is indicated to mean “that a party is prevented by his own

acts from claiming a right to the detriment of other party who was entitled to rely on such

conduct and has acted accordingly.”

 

According to Oxford Dictionary of Law estoppel is “a rule of evidence or a rule of law that

prevents a person from denying the truth of a statement he has made or from denying facts that

he has alleged to exist, The denial must have been acted upon (probably to his disadvantage) by

the person who wishes to take advantage of the estoppel or his position must have been altered as

a result2.

 When a 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 the thing. The former person is thus stopped from denying the truth of his

previous statement. He, thus, cannot both approbate and reprobate, because of invocation of rule

of estoppel against him.

In other words, estoppel is a rule, whereby a party is precluded from or to say estopped from

denying the existence of some state of facts which he had previously asserted and on which the

other party has relied or is entitled to rely upon. According to Wade and Forsyth the basic

principle of estoppel is that a person who by some statement or representation or representation

1 Kumar, Narender; Nature and Concepts of Administrative Law, 1st Ed., Allahabad Law Agency, Faridabad,2011, p. 366

2 Quoted inSharma Transport v. Government of Andhra Pradesh, AIR 2002 SC 322.

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of face causes the other to act to his determent in reliance on the truth of it is not allowed to deny

it later, even though it is wrong. Estoppel, thus, gives way to justice to prevail over the truth3.

 In Indira Bai v. Nand Kishore ,Sahai, J., stated “Estoppel is a rule of equity flowing out of

fairness striking on behavior deficient in good faith. It operates as a check on spurious

conducting by preventing the inducer from taking advantage and assailing forfeiture already

accomplished. It is invoked and applied to aid the law in administration of justice. But for it great

many injustices may have been perpetrated.”

(A). Estoppel   –   As a Rule of Evidence

Estoppel, as a rule of evidence, may be read in distinction to equitable principle of promissory

estoppel. While the former is more correctly described as “a principle of law”, the latter is known

as a rule of equity. As a principle of law estoppel applies only to representations about past or

present facts4. The basic premise of estoppel is that a person, who by some statement or

representation of facts causes another act in reliance on the truth of it, is not allowed to deny it

later, even though it is wrong.

The principle of estoppel embodies in Section 115 of the Indian Evidence Act, 1872 is

commonly known as a rule of evidence. The Section reads as under: 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 on such belief, neither he nor his representatives shall be allowed in any suit

or proceeding between himself and such person or his representative, to deny the truth of that

thing. To invoke the principle of estoppel enshrined in the Section, the following three conditions

are necessarily be satisfied:

(I).there must be a declaration, act or omission on the part of a person;

(ii).by the said declaration, etc., that person must have intentionally caused or permitted another

person to believe a thing to be true; and

3 Wade, H.W.R. & Forsyth, C.F.; Administrative Law, 9th Ed., Oxford University Press, New Delhi, 2006, p.237

4 Wade, H.W.R. & Forsyth, C.F.; Administrative Law, 9th Ed., Oxford University Press, New Delhi, 2006, p.236

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(iii).he must have intentionally caused or permitted the said another person, to act upon such

belief.

Section 115 explains that a party is precluded from denying the existence of some state of facts

which he had previously asserted and on which the other party has relied or is entitled to rely on.

That is, a man should keep his words, all the more so when the promise is made with the

intention that the other party should act upon it.

 As a rule of evidence, embodied in Section 115, estoppel may lie against the Government on a

representation or statement of facts, if the statement does not operate against the statute.

In Delhi University v. Ashok Kumar5, the respondent, a student after passing the Secondary

School Certificate Examination of the Gujarat Board was admitted provisionally in the B.A. I

year course in the Delhi University. After over a year, the University informed him that he was

ineligible to join the course because the Gujarat Board Examination had been recognized by the

appellate University as equivalent to Matric Examination while the qualification to join B.A. I

year Course was passing the Higher Secondary Examination. However, the Statute had

authorized the Academic Council of the University to grant exemption from the admission

requirements. The High Court of accepted the plea of the estoppel raised by the student

against the University. The Court stated that estoppel was within the meaning of Section 115 of

the Evidence Act, 1872, might arise from the silence as well as words, the Court held “inaction

of the University for over a year amounted to a representation by it that it had approved his

admission” and. therefore the University would now be estopped from doing that

 In Shri Krishna v. Kurukshetra University6, the Apex Court had ruled that the University could

not cancel the candidature of the appellant-student for the not complying with the attendance

requirement, as the respondents failed to tale the adequate care to scrutinize his examination

from at the relevant time to ascertain whether the candidate fulfilled the necessary conditions.

5 AIR 1968 Del. 1316 AIR 1976 SC 376

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(B). Evolution of Doctrine of Promissory   Estoppel

Promissory estoppel is a relatively new development. In order to trace the evolution of the

doctrine in England, we need to refer to some of the English decisions. The early cases did not

speak of this doctrine as estoppel. They spoke of it as “raising equity

This principle of equity made sporadic appearances but it was only in 1947 that it was restated as

a recognized doctrine by Lord Denning in Central London Properties Trust Ltd. v. High Trees

House Ltd7, who asserted: “A promise intended to be binding, intended to be acted upon, and in

fact acted upon is binding.”

In the formative period the doctrine of promissory estoppel could not be invoked by the promisee

unless he had suffered “detriment” or “prejudice”. All that is required is that the party asserting

the estoppel must have acted upon the assurance given by him. The alteration of position by the

party is the only indispensable requirement of the doctrine. In India, there are two stages in the

evolution of the application of this doctrine; pre-Anglo Afghan case and post - Anglo Afghan

case. Prior to this case, the position was that promissory estoppel did not apply against the

Government. But the position altered with this case.

In Union of India v. Indo Anglo Afghan Agencies Ltd.8, the Government of India announced

certain concessions with regard to the import of certain raw materials in order to encourage

export of woollen garments to Afghanistan. Subsequently, only partial concessions and not full

concessions were extended as announced. The Supreme Court held that the Government was

estopped by its promise. Thereafter the courts have applied the doctrine of promissory estoppel

even against the Government

(C). Promissory Estoppel: An Outline

7 1947) KB 1308 AIR 1968 SC 718

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Lord Denning in Central London Property Trust Ltd. v. High Trees House Ltd9., expressing the

doctrine stated: “Once a promise has been made by a person knowing that it would be acted upon

by the person to whom it is made and in face it is no acted upon, then it is inequitable to allow

the party making the promise to go back upon it.”

 

In this case, during the Second World War, people left London owing to bombardment and as a

result, a number of flats remained unoccupied. A had left out his flat to B for 99 years at the rate

of £2500 a year. He, however, due to war conditions, agreed to reduce the rent by fifty per cent.

After the war was over, the tenants returned. A demanded full amount of rent to which B

objected relying on A’s assurance. The Court applied the doctrine of estoppel and granted relief

to B. The doctrine of Promissory Estoppel is premised to be conduct of a party making a

representation to the other so as to enable him to arrange its affairs in such a manner as if the said

representation is acted upon.

 In Sharma Transport v. Government of Andhra Pradesh10, Promissory Estoppel was defined as:

An estoppel which arises when there is a promise which promisor should reasonably except to

induce action or forbearance of a definite and substantial character on the part of the promise and

which does induce be avoided only by enforcement of promise. The principle of promissory

estoppel is that where one party has by his words or conduct made to the other a clear and

unequivocal promise or representation which is intended to create legal relations or affect a legal

relationship to arise in the future, knowing or intending that it would be acted upon by the other

party, the promise or representation would be binding on the party making it and he would not be

entitled to go back upon it, if it would be inequitable to allow him to do so, having regard to the

dealings which have taken place between the parties.

(D). Nature of Promissory Estoppel

9 (1947) 1 KB 13010 AIR 2002 SC 322

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It has been said that the rule of promissory estoppel cannot itself be the basis of an action. It

cannot be a cause of action; it can only be a shield and not a sword. Since the doctrine has been

usually invoked by way of defense, it has come to be identified as a measure of defense. But, in the

present day judicial tendency appears to be that estoppel can be used as a sword also11.

 

Stating that “there are estoppels and estoppels” Lord Denning held that “some do give rise to

cause of action, some do not.” In the species of estoppel called “proprietary estoppel”, says the

learned Lord “it does give rise to cause of action”. Estoppel is often described as a rule of

evidence, but the whole concept is more correctly viewed as a substantive rule of law. It is

necessary to make it clear that the doctrine of promissory estoppel or equitable estoppel is not

based on the principle of estoppel but it is a doctrine evolved by equity in order to prevent

injustice. Estoppel by conduct proceeds on the rule of substantive law and equity where a

promise made by a person knowing that it would be acted on by the person to whom it is made

and in fact it is so acted and it is inequitable to allow the party making the promise to go back

upon it.

It being an equitable principle evolved for doing justice, “there is no reason,” said Bhagwati, J.,

“why it should be given only limited application by way of defense. It can be the basis of cause

of action. “Though commonly named as “promissory estoppel”, it is neither in the realm of 

Contract nor in the realm of estoppel. The basis of the doctrine is the interposition of equity

which has always, true to its form, stepped in to mitigate the rigor of strict law12.

 

(E). Application of Doctrine of Promissory Estoppel to Government

11 Moorgate Mercantile Co. v. Twichings, (1975) 3 All ER 314

12 Wade, H.W.R. & Forsyth, C.F.; Administrative Law, 9th Ed., Oxford University Press, New Delhi, 2006, p.236

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Since the doctrine of promissory estoppel is an equitable doctrine it must yield when the equity

so requires. If it can be shown by the Government that having regard to the facts as they have

subsequently transpired, it would be inequitable to the Government to abide by the promise made

by it, the court would not raise equity in favor of the promise and enforce it against the

Government. When the Government is able to show that due to the facts which have transpired

subsequent to the promise being made, public interest would be prejudiced if the Government

were required to carry out the promise made, the court would have to balance the public interest

in the Government carrying out the promise made to a citizen which has induced the citizen to

alter his position to his prejudice and the public interest likely to suffer if the Government were

to carry out the promise, and determine which way the equity lies. The case of  Motilal Padampat

Sugar Mills v. State of Uttar Pradesh13, is a trendsetter regarding the application of the doctrine

of promissory estoppel against the Government. In this case 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. In

Century Spinning and Manufacturing Co. v. Ulhasnagar Municipality14, the municipality

agreed to exempt certain existent industrial concerns in the area from octroi duty for a period of

seven years. However, later on it sought to impose duty. This was challenged and the Supreme

Court, while remanding the case to the High Court, held that where the private party had acted

upon the representation of a public authority, it could be enforced against the authority on the

grounds of equity in appropriate cases even though the representation did not result in a contract

owing to the lack of proper form. However, the case of  Jit Ram Shiv Kumar v. State of Haryana15,

cast a shadow on the Motilal case where it was held that the doctrine of promissory estoppel is not

13 AIR 1979 SC 62114 AIR 1971 SC 1021 : 1970 SCR (2) 85415 AIR 1980 SC 1285 : 1980 SCR (3) 689 : (1981) SCC (1) 11

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available against the exercise of executive functions of the State. The Supreme Court in Union

of India v. Godfrey Phillips India Ltd.16, soon removed this doubt. The Court held that the law

laid down in Motilal case represents the correct law on promissory estoppel.

In State of Punjab v. Nestle India Ltd.17, the Apex Court said: “promissory estoppel long

recognized as a legitimate defense in equity was held to find cause of action against the

Government, even when, and this needs to be emphasized, the representation sought to be

enforced was legally invalid in the sense that it was made in a manner which was not in

conformity with the procedure prescribed by the statute. “It has also been made clear that the

Government could not, on some undefined and undisclosed ground of necessity or expediency

fail to carry out the promise solemnly made by it. Nor, the Government could claim to be the

Judge of its own obligation to the citizen on an ex parte appraisement of the  circumstances in

which the obligation had arisen.

The doctrine of estoppel cannot be invoked for preventing the Government from acting in

discharge of its duties under the law. The doctrine of cannot be applied in teeth of  an obligation

or liability imposed by the law. It cannot be used to compel the Government or even a private

party to do an act prohibited by law. There can be no promissory estoppels against the exercise

of legislative power. The legislature can never be precluded from exercising its legislative

functions by resort to the doctrine of promissory estoppel.

Historical Background

England was conquered by the Normans in the year 1066. The period preceding this date is

called that of Anglo- Saxon law of which little is known. There was no common law for the

whole of England at any time before the Norman Conquest. With the Norman Conquest, the

period of tribal rule came to an end and feudalism was installed. It prepared and paved the way

for the development of Common Law.

The creation of Common Law (Comune Ley) was to be exclusive work of the Royal Courts of

Justice, usually called the courts of the West minister, after the name of the place where they sat

16 1996 (85) ELT 242 Bom17 AIR 2004 SC 4559

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from the thirteenth century. Common Law is that part of the law of England which before the

Judicature Acts, 1873-1875 was adjudicated by the Common Law courts (especially the former

Courts of Queen's Bench, Common Pleas), as opposed to equity, or that part of the law which

was administered by the Court of Chancery at Lincoln's Inn.

Blackstone defines Common Law as the municipal law of England or the rule of civil conduct

prescribed to be inhabitants of the kingdom. It is “experience expressed in law”. It is composed

of established customs, established rules and maxims such as “the King can do no wrong”.

In the earlier times the Common Law courts provided no remedy in many cases where one was

required. Hence the custom grew of applying for redress to the King in parliament or to the King

in Council, who referred the matter to the Chancellor. In later times petitions were presented to

the Chancellor directly. The Chancellor being an ecclesiastic, and keeper of the King's

conscience, did not feel bound to follow the rules of Common Law, but gave such relief as he

thought the petitioner or plaintiff entitled to “in equity and good conscience”. Equity thus

represents the conscience of law, and a moral correction of law in order to accord more with

justice.

Common Law was administered by King's Justice on circuit and three Common Law courts,

namely, King's Bench, Common Pleas and Exchequer. King's Courts administered equity also

but at that time they did not regard themselves as administering a new body of law. They were

trying to give relief in hard cases. Of the three courts of Common Law, the Exchequer was not

only a court of law but was also an administrative department, its secretarial section being called

a Chancery. The head of this section was called a Chancellor, whose business was to collect

State revenue and to decide disputes concerning the same. The Court of the Exchequer

department met thrice a year on the occasion of the three great feasts of the temple. The

Chancellor has been described by Maitland as the “King's prime minister”.

If a person wanted to start an action at Common Law, he had to obtain a writ on payment of

prescribed fees from the Chancery section. The Chancellor issued such writs. It should be noted

that in the 13th Century the available writs covered a very narrow ground. An injured party could

only sue at Common Law if his complaint came within the scope of an existing writ or form of

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action. Many genuine cases remained unredressed and the plaintiff was without a remedy

because his cause of action did not fit into any of the existing forms of action.

Therefore the King and the King alone in his council who had wide discretionary powers to do

justice among the subjects. By 1348 A.D. the King completely assigned his equity jurisdiction to

the Chancellor. Initially the Chancellors were ecclesiastical persons. This was only 1529 A.D.

Sir Thomas Moore was the first Lawyer- Chancellor from the year 1530 A.D. and from then

onwards the Chancellors were persons trained in law. This Common Law and Equity were

administered by side by side by parallel process for a long time. However, the Judicature Acts,

1873-1875 merged the jurisdictions and from then onwards, codes in England have been Courts

of Law as well as Equity. Equity, in a way, gained a supremacy in that Section 25(11) of the

Judicature Act, 1875 provides that where the rules of Common Law and Equity were in conflict

on a particular point, the rules of Equity would prevail. In India, all Courts are Courts of Law

and also Courts of Equity. The principles of Equity found statutory recognition in India in:

1. The Specific Relief Act, 1877,

2. The Indian Trusts Act, 1882,

3. The Indian Succession Act, 1925,

4. The Guardians and Wards Act, 1890,

5. The Indian Contract Act, 1872,

6. The Transfer of Property Act, 1882

7. The Indian Divorce Act, 1869, and

8. The Indian Evidence Act.

(F). Kinds of Estoppels

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There are different kinds of estoppels:

1) Estoppels by matter of record;

2) Estoppels by deed; and

3) Estoppels in pais.

Estoppel by Matter of Record

A matter of record is something part of the records of a Court. It is at once the narrative and the

proof of its proceedings. Estoppel by records results from the judgment of a competent Court.

The law allows a party sample opportunity, by way of appeal and otherwise, of upsetting a

wrong decision. And if he takes the opportunity and fails, or does not choose to avail himself of

it, he cannot subsequently re-open or dispute that decision. And not only the parties themselves,

but also the heir, executor, administrator and assign of each of them are bound by the decision,

for they are privy to the estoppel. Estoppel by matter of record is chiefly concerned with the

effect of judgments and their admissibility in evidence, and this kind of estoppel is dealt with

Sections 11 to 14, Civil Procedure Code and Sections 40 to 44 of the Evidence Act. It is the final

decision and not any and every expression of opinion in a judgment which gives rise to an

estoppel by record, and the actual decision cannot be carried further than the circumstances

warrant. The general principle which runs through the doctrine of estoppel by record is that a

decree is an order of the Court and the judgment-debtor must, when it has once been completed,

obey it unless and until he can get it set aside in proceedings duly constituted for the purpose.

2. Estoppel under Evidence act 1872:-

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When a person has, by his

(I) Declaration

(ii) Act, or

(iii) Omission

Intentionally caused or permitted or another person

(I) to believe a thing to be true, and

(ii) To act upon such belief

Neither (I) he, nor (ii) his representative can be allowed to deny the truth of that thing in a suit or

proceeding between himself and such person or his representative.

Illustration:

A intentionally and falsely leads В to believe that certain land belongs to 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 to title.

Principle of Section 115:

Estoppel is based on the principle that it would be most inequitable and unjust that if one person,

by a representation, or by conduct amounting to a representation, has induced another to act as he

would not otherwise have done, the person who made the representation should be allowed to

deny or repudiate the effect of his former statement, to the loss and injury of the person who

acted on it.

Sir Edward Coke had defined estoppel in these words: An estoppel exists “where a man’s own

act or acceptance stoppeth or closeth up his mouth to allege or plead the truth.” In simpler

language, a person cannot be allowed to say one thing at one time and the contrary at another: He

cannot blow both hot and cold at the same time.

This section is founded upon the doctrine laid down in Pickard v. Sears (1837 6A. & E. 475),

namely, that where a person “by his words or conduct, wilfully causes another to believe the

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existence of a certain state of things, and induces him to act on that belief, so as to alter his own

previous position, the former is concluded from averring against the latter, a different state of

things as existing at the same time.” This doctrine precludes a person from denying the truth of

some statement previously made by himself. No cause of action arises upon estoppel itself.

Scope of Section 115:

In order to hold that a case comes within the scope of this section, a Court must find:

1. That A believed a thing to be true.

2. That in consequence of that belief, he acted in a particular manner.

3. That that belief, and A’s so acting were brought about by some representation by S, either by a

declaration, act, or omission, which representation was made intentionally to produce that result.

If the above three points are established, В is prohibited by law from denying the truth of his

representation in a proceeding by or against A or A’s representative.

It may be noted that it is not necessary to prove any fraudulent intention on B‘s part. He will be

nonetheless estopped if he himself was acting under a mistake or misapprehension.

The section does not apply where the statement relied upon is made to a person who knows the

true facts and is not misled by the untrue statement. There can be no estoppel if true facts are

known to both the parties. Therefore, if A knew the true facts, no estoppel arises.

In Chhaganlal Mehta v. Haribhai Patel, [(1982) 1 S.C.C. 223 ], the Supreme Court analyzed the

scope of S. 115 of the Act, and laid down that the following eight conditions must be satisfied to

bring a case within the scope of estoppel, as defined in S. 115.

(I) there must have been a representation by a person (or his authorized agent) to another person.

Such a representation 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.

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(v) There must have been some action on the faith of that declaration, act or omission. In other

words, such declaration, act or omission 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 (or his

representative) can avail of the doctrine.

There are four classes of estoppel to be found in section 116 and 117 of the Act, viz., and

estoppel of

1. Tenant (Section 116)

No tenant of immovable property (or person claiming through such tenant) can, during the

continuance of the tenancy, be permitted to deny that the land-lord of such tenant had, at the

beginning of the tenancy, a title to such immovable property.

2. Licensee of a person in possession (Section 116)

No person who came upon immovable property by the license of the person in possession thereof

can deny that such person had a title to such possession at the time when such license was given.

3. Acceptor of a bill of exchange (Section 117)

No acceptor of a bill of exchange can deny that the drawer had authority to draw such bill or to

endorse it; but he may deny that the bill was really drawn by the person by whom it purports to

have been drawn.

4. Bailee or licensee (Section 117):

No Bailee or licensee can deny that his bailor or licensor had, at the time when the bailment or

license commenced, authority to make such bailment or grant such license. But, if a Bailee

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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.

3. Evidence under The contract act

Capacity to contract

The enforceability of an agreement (Sec.2 (b) carries a pre-condition that the parties to a contract

must be competent to contract (Sec 10).

The competency/capability or capacity, has been defined in Sec 11.

‘Every person is competent to contract who is of the age of majority according to the law to

which he is subject, and who is of sound mind, and is not disqualified from contracting by any

law to which he is subject’. Persons not competent to contract

1. Minors

2. Persons of unsound mind

3. Persons disqualified by law

Minor

The term Minor is explained in sec 3 of Indian Majority Act 1875

‘A minor is a person who has not completed eighteen years of age’

Where a guardian has been appointed to take care of a minor’s person or property under the

guardian and Wards Act 1890 or where the superintendence of minor’s property is assumed by a

Court of Wards, and The person becomes major on completing the age of 21 years

Effects of minor’s contract

Sec.10 & 11 make it clear that any agreement made by a minor is void ab initio (not existent

from the very beginning) Mohri bibi V. Dharmodas Ghosh(1903)

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Facts.

"A minor borrowed Rs. 20000 from B and as security executed a mortgage in his favor. He

became major a few months later and filed a suit for the declaration that the mortgage executed

by him during his minority was void and should be cancelled. It was held that a mortgage by a

minor was void and B was not entitled for recovery of money.

No ratification

An agreement with the minor is completely void. A minor cannot ratify the agreement even on

attaining majority, because a void agreement cannot be ratified.

A person who is not competent, an act cannot give it validity by ratifying. But if on becoming

major, minor makes a new promise for fresh consideration, then this new promise will be

binding. Minor can be a promisee or beneficiary.

If a contract is beneficial to a minor it can be enforced by him. There is no restriction on a minor

from being a beneficiary, for example, being a payee or a promisee in a contract. Thus a minor is

capable of purchasing immovable property and he may sue to recover the possession of the

property upon tender of the purchase money. Similarly a minor in whose favor a promissory note

has been executed can enforce it.

The Indian Evidence Act, 1872 Sec.115 -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.

No estoppel against a minor

Where a minor by misrepresenting his age has induced the other party to enter into a

contract with him, he cannot be made liable for the contract. There can be no estoppel against a

minor. It means he is not estopped from pleading his infancy in order to avoid a contract.

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No Specific performance except in certain cases

A minor's contract being absolutely void, there can be no question of the specific

performance of such contract. A guardian of a minor cannot bind the minor by an agreement for

the purchase of immovable property; so the minor cannot ask for the specific performance of the

contract which the guardian had no power to enter into. But a contract entered into by guardian

or manager on minor's behalf can be specifically enforced if

(a) The contract is within the authority of the guardian or manager.

(b) It is for the benefit of the minor.

Persons of unsound mind

As per sec.12, ‘A person is said to be of sound mind for the purpose of making a contract if, at

the time when he makes it, he is capable of understanding it and of forming a rational judgment

as to its effects upon his interest’

The section requires two conditions

1. He should be capable of understanding the nature and contents of the contract.

2. He should be capable of forming a rational judgment about the effects of the contract on

his interest.

In otherwise situation he shall be considered as unsound mind and any contract, entered into by

him, would be void (Sec.11)

The following persons are considered as incapable of making a contract

1. Idiot. Who has completely lost his mental faculties of thinking, so is incapable of

forming a rationale judgment?

2. Lunatics, is a person whose mental faculties of thinking are deranged (disordered) but

are not completely lost and he suffers from intermittent intervals of sanity or insanity.

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3. The contracts entered during sanity are valid otherwise void(exception is even during

insanity period any contract made for necessities would be valid, like a contract made by

a minor and the property of lunatic would be liable for repayment)

4. Intoxication, as a man under the influence of intoxication cannot take a rational decision,

he would be categorized as an unsound mind person, so a contract would be void.

Persons disqualified by law

The following persons are disqualified by law

1. Alien Enemies, an alien is a person who is a foreigner to the land, who can be alien

friend or alien enemy, the status of friend or enemy shall be determined by the

relationship between the countries of citizenship, during the war or peace or on the

declaration of the war.

An alien enemy cannot enter into a contract with an Indian national, even he cannot sue in

Indian court during the war.

Any contract made by an alien enemy during the war, without a license from the central govt.

is unenforceable.

The contracts made before the war is either cancelled or suspended during the war and/or the

govt. may impose conditions which it deem fit in the interest of the nation

2. Foreign Sovereigns, diplomatic staff and accredited representatives of foreign states.

These persons can enter into a valid contract and also enforce them in Indian courts.

However no suit can be filed against them without prior permission of the central Govt.

3. Insolvents

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When a person has been declared as insolvent, his property vests in Receiver or Official

assignee, and his power to enter into a contract is withdrawn. However his disqualification of

an insolvent can be removed when a competent court passes an order of this intent.

4. Convicts

A convict cannot enter into a contract during imprisonment, but when that time expires or he

is acquitted, he becomes eligible to enter into a contract again.

4. Estoppel under Transfer of Property Act.

English law of estoppel is that where a grantor has purported to grant an interest in land which he

did not at the time possess but subsequently acquires, the benefit of his subsequent acquisition

goes automatically to the earlier grantee or, as it is usually expressed, feeds the estoppel.

 Section 43 of the Transfer of Property Act embodied this doctrine of feeding the grant by

estoppel.

Section 43 says that where a person fraudulently or erroneously represents that he is authorized

to transfer certain immovable property and professes to transfer such property for consideration,

such transfer shall, at the option of the transferee, operate on any interest which the transferor

may acquire in such property, at any time during which the contract of transfer subsists.

 Section 43 further provides that nothing in this section shall impair the right of transferees in

good faith for consideration without notice of the existence of the said option.

 The doctrine of feeding the grant by estoppels may be illustrated by an example.

Let us suppose that A , a Hindu , who has separated from his father B , sells to C three fields , X ,

Y  and Z , representing that A is authorized to transfer the same . Of these fields Z does not

belong to A, it having been retained by B on the partition, but on B’s dying, A as heir obtains Z.

C not having rescinded the contract of sale, may require A to deliver Z to him.

 The following are the conditions for application of the doctrine of feeding the grant by

estoppel .1) There must have a fraudulent or erroneous representation of ownership by the

transferor.

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2) The transferee must have acted on the fraudulent or erroneous representation of the transferor.

3) The transferor should not have transferable title on the property transferred.

 4) The transfer should be for consideration.

5) The transferor must subsequently acquire title upon the property transferred on the basis of

fraudulent or erroneous representation of ownership.

6) The contract of transfer must be subsisting when the transferee exercises his right to recourse

the doctrine of feeding the grant be estoppel.

 If these conditions are fulfilled the transferee can exercise his option only during continuance of

the contract and only in respect of the interest which the fraudulent or erroneous transferor

acquires in such property. But there are some circumstances where the doctrine of feeding the

grant by estoppel has no application. These circumstances are as follows:-

1) This section is not applicable if the transfer is not for consideration.

2) This section does not apply if the transfer is invalid for being forbidden by law or contrary to

public policy.

3) This section is not applicable if the contract comes to an end before acquisition of the property

by the transferor.

4) This section has no application to Court sales.

5) The right is not available against the bonafide purchasers for value without notice.

 In the case of Mohori Bibi Vs. Dharamdas, it was held by the Privy Council that no estoppel can

arise by reason of a false statement where truth is known to both the parties.

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Conclusion

A bar which precludes someone from denying the truth of a fact which has been determined in

an official proceeding or by an authoritative body. An estoppel arises when someone has done

some act which the policy of the law will not permit her to deny.

In certain situations, the law refuses to allow a person to deny facts when another person has

relied on and acted in accordance with the facts on the basis of the first person's behavior.

There are two kinds of estoppel.

Collateral estoppel prevents a party to a lawsuit from raising a fact or issue which was already

decided against him in another lawsuit. For example, if Donna obtained a paternity judgment

against Leroy and then sued him for child support, Leroy would be collaterally estopped from

claiming he isn't the father.

Equitable estoppel prevents one party from taking a different position at trial than she did at an

earlier time if the other party would be harmed by the change. For example, if after obtaining the

paternity judgment, Leroy sues Donna for custody, Donna is now equitably estopped from

claiming in the custody suit that Leroy is not the father.

An example of the slowly disappearing tendency of the legal profession to speak in secret code.

All it means is 'stopped,' 'blocked' or 'not allowed.' Not only is it bizarre but the term does not

appear to originate in any known language. Our research indicates it started either as a legal

fraternity's drunken prank or was the result of an unknown Judge's severe speech impediment.

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Bibliography

INTERNET SOURCES

www.google.co.in

http://hanumant.com/index.php/articles/general-articles/41-promissory-estoppel-

application-to-the-govt-by-divya-bhargava.html

http://en.wikipedia.org/wiki/Case_citation

http://www.legalserviceindia.com/article/l249-Promissory-Estoppel.html

http://www.indiankanoon.org/ 

http://www.manupatra.com

https://www.westlaw.com

https://lawyersclub.com

BOOKS REFERRED

Ratanlal Dhirajlal……Evidence: Book

Batuk Lal….Evidence :Book

The Indian Evidence Act, 1872.

The Contract Act 1872

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The Transferr of Property Act

Avtar singh… The Contract Act: Book