Estoppel, Acquiescence, and Waiver in Indian Law

Navigating the Labyrinth: An Analysis of Estoppel, Acquiescence, and Waiver in Indian Jurisprudence

Introduction

The doctrines of estoppel, acquiescence, and waiver are fundamental pillars of equity and justice within the Indian legal system. While distinct in their conceptual underpinnings and legal consequences, they often operate in conjunction, shaping the outcomes of diverse legal disputes. These principles aim to prevent injustice, ensure fairness in dealings, and uphold the integrity of legal processes by precluding parties from adopting contradictory stances or resiling from representations that have induced others to alter their positions. This article undertakes a comprehensive analysis of estoppel, acquiescence, and waiver as interpreted and applied by Indian courts, drawing extensively from landmark judgments and legal commentaries to elucidate their scope, interplay, and limitations.

Defining the Doctrines: Conceptual Frameworks

Estoppel

Estoppel, in its broadest sense, is a legal principle that prevents a person from asserting something contrary to what is implied by a previous action or statement of that person or by a previous pertinent judicial determination. Section 115 of the Indian Evidence Act, 1872, codifies the principle of estoppel by representation, stating that 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.

Promissory Estoppel

A significant evolution of this doctrine is promissory estoppel, which applies where one party has, by words or conduct, made a clear and unequivocal promise to another, 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 to whom the promise is made, and it is in fact so acted upon by the other party, the promise 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.[1]

The Supreme Court, in Motilal Padampat Sugar Mills Co. Ltd. v. State Of Uttar Pradesh And Others[1], extensively deliberated on promissory estoppel, particularly its applicability against the State. The Court held that the government's unequivocal assurance, leading a company to alter its position by significant investment, rendered it inequitable for the State to renege on its promise. This principle was reiterated in Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & Etio And Others[2], where the Court recognized that legitimate expectations based on state promises could preserve rights despite legislative changes, affirming that the state is estopped from reneging on clear, unequivocal promises leading to substantial investments.[2] Similarly, in Union Of India And Others v. Indo-Afghan Agencies Ltd.[3], it was held that government representations within export schemes create equitable obligations enforceable against arbitrary administrative actions.[3] The Madhya Pradesh High Court in Gajanan Saw Mill v. State Of M.P And Others[4] also elucidated the doctrine: "When 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 one who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations..."[4]

However, promissory estoppel does not create new causes of action where none existed before; it only prevents a party from insisting upon strict legal rights when it would be unjust. As Lord Denning observed in Combe v. Combe, cited in Govindan Chengaiath v. Cochin Shipyard Ltd.[5], "It only prevents a party from insisting upon his strict legal rights, when it would be unjust to allow him to enforce them, having regard to the dealings which have taken place between the parties."[5]

Estoppel by Conduct and Representation

Estoppel by conduct arises where a party's actions (or omissions) lead another to believe in a certain state of affairs, causing the latter to act to their detriment. In B.L Sreedhar And Others v. K.M Munireddy (Dead) And Others[6], the Supreme Court upheld the High Court's application of estoppel where the plaintiff's conduct and prolonged litigation history implicitly indicated consent to land sale transactions, thereby estopping them from later challenging these sales.[6]

The text from M. Ramnarain Private Limited And Another v. State Trading Corporation Of India Limited[7] (quoting Halsbury's Laws of England) outlines the circumstances for estoppel by "standing by":

"(1) B must be mistaken as to his own legal rights; if he is aware that he is infringing the rights of another, he takes the risk of those rights being asserted; (2) B must expend money, or do some act, on the faith of his mistaken belief: otherwise, he does not suffer by A's subsequent assertion of his rights; (3) acquiescence is founded on conduct with a knowledge of one's legal rights, and hence A must know of his own rights; (4) A must know of B's mistaken belief; with that knowledge it is inequitable for him to keep silence and allow B to proceed on his mistake; (5) A must encourage B in his expenditure of money or other act, either directly or by abstaining from asserting his legal right."[7]

Lord Denning M.R. in Moorgate Mercantile Co. Ltd. v. Twitchings, as quoted in Bibi Amna Khatun And Others v. Zahir Hussain And Another Opposite Parties[8], described estoppel as: "Estoppel is not a rule of evidence. It is not a cause of action. It is a principle of justice and of equity. It comes to this. When a man, by his words or conduct, has led another to believe in a particular state of affairs, he will not be allowed to go back on it when it would be unjust or inequitable for him to do so."[8]

Acquiescence

Acquiescence is closely related to estoppel and laches. The term 'acquiescence' is used where a person refrains from seeking redress when a violation of his rights, previously unknown, is brought to his notice.[7] More properly, it occurs "where a person having a right, and seeing another person about to commit or in the course of committing an act infringing upon the right, stands by in such a manner as really to induce the person committing the act... to believe that he assents to its being committed."[7] In this sense, "the doctrine of acquiescence may be defined as quiescence under such circumstances that assent may be reasonably inferred from it, and is no more than an instance of the law of estoppel by words or conduct."[7]

In M/S Power Control Appliances And Others v. Sumeet Machines Pvt. Ltd.[9], the Supreme Court rejected a defense of acquiescence in a trademark infringement case, emphasizing that it requires compelling evidence that the plaintiff knowingly allowed the infringement over a substantial period.[9] The Bombay High Court in Essel Propack Ltd. v. Essel Kitchenware Ltd.[10] elaborated that acquiescence "means assent to an infringement of rights, either express or implied from conduct, by which the right to equitable relief is normally lost. It takes place when a person, with full knowledge of his own rights and of any acts which infringe them, has either at the time of infringement or after infringement, by his conduct led the persons responsible for the infringement to believe that he has waived or abandoned his rights."[10] The plaintiff's failure to sue after a cease and desist notice and abandoning opposition to the defendant's trademark registration were considered indicative of acquiescence.[10]

A plea of acquiescence must be specifically pleaded and proved by the party relying on it. As held in Pallavan Transport Corporation (Metro), Madras v. First Additional Labour Court, Madras, And Others[11], "They are questions of fact which have got to be pleaded and have got to be proved. The burden of proof of the ingredients of acquiescence or waiver is on the person who relies on the same."[11]

The principle of acquiescence can also bar subsequent challenges in procedural matters. For instance, in Vijendra Kumar Verma v. Public Service Commission, Uttarakhand And Others[12], a candidate who participated in a selection process without protest was estopped from later challenging its validity.[12] This was echoed in Dr Manjula M v. State Of Karnataka[13] and Shwiti Gupta v. State Of J. & K.[14]. Similarly, in SMT Lakshmamma v. The State Of Karnataka[15], a second petition on the same cause of action was held barred by principles of estoppel, acquiescence, abandonment, and waiver.[15]

Waiver

Waiver is the intentional and voluntary relinquishment or abandonment of a known right or privilege. The Supreme Court in Motilal Padampat Sugar Mills[1] defined waiver as the voluntary relinquishment of a known right. In Waman Shriniwas Kini v. Ratilal Bhagwandas And Co.[16], the Court stated, "waiver is the abandonment of a right which normally, everybody is at liberty to waive. A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right."[16]

Waiver is often described as contractual in nature. In Bibi Amna Khatun[8], it was noted that "waiver is contractual and may constitute a cause of action." This distinction was also highlighted in Pallavan Transport Corporation[11]. The Supreme Court in Krishna Bahadur v. Purna Theatre And Others[17], dealing with retrenchment compensation, emphasized that for a waiver to be valid, it must be explicitly raised and substantiated, and it is contractual in nature.[17]

A waiver can be express or implied from conduct or acquiescence.[8] However, like acquiescence, a plea of waiver must be specifically raised and proved.[11]

Limitations on Waiver

A crucial limitation is that a right cannot be waived if such waiver is against public policy or statutory mandate. In Waman Shriniwas Kini[16], the Court held that "an agreement to waive an illegality is void on grounds of public policy and would be unenforceable."[16] This principle was affirmed in Indira Bai v. Nand Kishore[18], where the Court distinguished between rights that are purely private, which can be waived, and those involving public interest or general welfare, which cannot.[18]

Most significantly, fundamental rights enshrined in the Constitution of India cannot be waived. The Supreme Court in Basheshar Nath v. Commissioner Of Income Tax Delhi & Rajasthan And Another[19] unequivocally held that fundamental rights are not subject to waiver by individuals, as they are for collective protection and rooted in public policy.[19]

Furthermore, waiver, estoppel, or acquiescence cannot confer jurisdiction upon a court or tribunal that inherently lacks it. In Hasham Abbas Sayyad v. Usman Abbas Sayyad And Others[20], the Supreme Court held that procedural principles like estoppel, waiver, and acquiescence have no application where an order is passed by a court lacking inherent jurisdiction, rendering such an order a nullity.[20] This was also noted in M/S Src Company v. M/S Rites Ltd.[21], where alleged waiver would not automatically confer authority on an arbitrator. Similarly, in Alliance Credit And Investments Ltd. v. Khaitan Hostombe Spinels Ltd.[22], it was held that estoppel, acquiescence, and waiver cannot override the strict compliance required for statutory fictions like the service of notice under the Companies Act.[22]

Interplay and Distinctions

While estoppel, acquiescence, and waiver are distinct, they are often intertwined. Acquiescence, as noted, can be an instance of estoppel by conduct[7] and may also be evidence from which a waiver can be implied.[8]

The primary distinctions lie in their nature and effect.

  • Estoppel is primarily a rule of evidence (though promissory estoppel has expanded this) or a principle of equity preventing a party from denying a state of affairs they previously asserted or induced another to believe.[8, 11] It generally acts as a shield, not a sword (i.e., it does not typically create a new cause of action, though promissory estoppel can be used to enforce a promise).[5]
  • Waiver is contractual in nature and involves the intentional relinquishment of a known right. It may constitute a cause of action or a defense.[8, 11]
  • Acquiescence involves passive assent or failure to object, from which assent to an infringement or abandonment of rights may be inferred. It often forms an element of estoppel or evidence of waiver.

In Pallavan Transport Corporation[11], the Madras High Court clarified: "Estoppel, on the other hand, is a rule of evidence and it may have the effect of creating substantive rights as against the person estopped... Waiver as contractual, will be germane..."[11]

Application in Specific Contexts

Against Government and Public Authorities

The doctrine of promissory estoppel has been significantly applied against the government and public authorities. As established in Motilal Padampat Sugar Mills[1] and Union of India v. Indo-Afghan Agencies Ltd.[3], the State can be held bound by its promises if citizens have acted upon them to their detriment. The defense of "executive necessity" is generally not available to the government to resile from its promises.[1, 3] However, in Adinarayan Naik And Others v. State Of Orissa And Others[23], it was clarified that no person has a fundamental right to insist that the State Government must enter into a contract with him, and a writ application is not the appropriate remedy for impeaching contractual obligations unless statutory rules or legal duties are violated.[23] The applicability of estoppel against the government was also discussed in Rachapudi Subrahmanyam v. District Collector, East Godavari[24].

Property and Land Disputes

In property law, estoppel by conduct is frequently invoked. B.L. Sreedhar[6] is a case in point, where a party's prior conduct estopped them from challenging property alienations. In Indira Bai[18], the Supreme Court held that the right of pre-emption, being a personal and weak right, could be lost by waiver or acquiescence, such as by assisting the vendee in construction after knowing of the sale.[18] The Allahabad High Court in Shri Ram & Ors. Petitioners v. Deputy Director Of Consolidation, Allahabad & Ors.[25] considered whether estoppel and acquiescence could create an implied bar against asserting rights under land reform/consolidation acts due to prior failure to assert them.[25]

Intellectual Property

In intellectual property disputes, acquiescence can be a crucial defense. As seen in M/S Power Control Appliances[9], a successful defense of acquiescence requires showing that the IP owner, with knowledge of infringement, allowed it to continue for a significant time, leading the infringer to believe the rights were waived. Essel Propack[10] further detailed how conduct like abandoning opposition to trademark registration could constitute acquiescence.[10]

Service and Employment Law

In service law, these doctrines often arise in challenges to selection processes or conditions of service. As held in Vijendra Kumar Verma[12], Dr Manjula M[13], and Shwiti Gupta[14], candidates who participate in a selection process without protest are generally estopped from later challenging its validity or criteria if unsuccessful. In Krishna Bahadur[17], the Supreme Court examined the principles of waiver concerning retrenchment compensation under the Industrial Disputes Act, 1947, emphasizing that non-compliance with mandatory provisions like Section 25-F renders retrenchment void, and any waiver must be clearly established.[17] The effective communication of administrative orders, such as dismissal, is also critical, as highlighted in State Of Punjab v. Amar Singh Harika[26], failing which the order may not take effect, touching upon principles of fairness akin to legitimate expectation.[26]

Procedural Matters

Estoppel, acquiescence, and waiver frequently feature in procedural contexts. The principle that these doctrines cannot cure a lack of inherent jurisdiction was affirmed in Hasham Abbas Sayyad[20]. In SMT Lakshmamma[15], a second application on the same cause of action regarding land under the PTCL Act was dismissed based on estoppel, acquiescence, abandonment, and waiver. The Debts Recovery Tribunal in JAYA SURESH GANGAR v. UNION BANK OF INDIA[27] considered whether a borrower's conduct could amount to a waiver of mandatory provisions under the SARFAESI Act.[27] The case of Dr. Dhananjay Singh v. State Of U.P. And 5 Others[28] also noted that estoppel, acquiescence, and waiver could come into play regarding a statutory right if an individual declined to exercise it.[28]

Conclusion

The doctrines of estoppel, acquiescence, and waiver are dynamic equitable principles that play a vital role in the Indian legal system. They serve to promote honesty, fairness, and finality in legal relationships and proceedings. While estoppel primarily prevents a party from denying a previous representation or conduct that has been relied upon, waiver involves the intentional relinquishment of a known right, and acquiescence signifies silent assent or failure to act in the face of an infringement. Indian courts have meticulously developed the jurisprudence surrounding these concepts, delineating their individual contours, their interplay, and their limitations, particularly concerning governmental accountability, protection of statutory and fundamental rights, and the sanctity of judicial processes. A nuanced understanding of these doctrines is essential for legal practitioners and adjudicators to ensure that justice is not only done but is also seen to be done, balancing individual rights with broader considerations of public policy and equity.

References

  1. Motilal Padampat Sugar Mills Co. Ltd. v. State Of Uttar Pradesh And Others (1979 SCC 2 409, Supreme Court Of India, 1978).
  2. Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & Etio And Others (2007 SCC 5 447, Supreme Court Of India, 2007).
  3. Union Of India And Others v. Indo-Afghan Agencies Ltd. (1968 AIR SC 718, Supreme Court Of India, 1967).
  4. Gajanan Saw Mill v. State Of M.P And Others (Madhya Pradesh High Court, 1973).
  5. Govindan Chengaiath v. Cochin Shipyard Ltd. (Kerala High Court, 1982).
  6. B.L Sreedhar And Others v. K.M Munireddy (Dead) And Others (2003 SCC 2 355, Supreme Court Of India, 2002).
  7. M. Ramnarain Private Limited And Another v. State Trading Corporation Of India Limited . (Supreme Court Of India, 1983) - Extract provided.
  8. Bibi Amna Khatun And Others v. Zahir Hussain And Another Opposite Parties. (Patna High Court, 1979).
  9. M/S Power Control Appliances And Others v. Sumeet Machines Pvt. Ltd. . (1994 SCC 2 448, Supreme Court Of India, 1994).
  10. Essel Propack Ltd. v. Essel Kitchenware Ltd. (Bombay High Court, 2016).
  11. Pallavan Transport Corporation (Metro), Madras v. First Additional Labour Court, Madras, And Others (Madras High Court, 1984).
  12. Vijendra Kumar Verma v. Public Service Commission, Uttarakhand And Others (2011 SCC 1 150, Supreme Court Of India, 2010).
  13. Dr Manjula M v. State Of Karnataka (Karnataka High Court, 2012).
  14. Shwiti Gupta v. State Of J. & K. (Jammu and Kashmir High Court, 2013).
  15. SMT Lakshmamma v. The State Of Karnataka (2024 KHC 25195, Karnataka High Court, 2024).
  16. Waman Shriniwas Kini v. Ratilal Bhagwandas And Co. . (1959 AIR SC 689, Supreme Court Of India, 1959).
  17. Krishna Bahadur v. Purna Theatre And Others (2004 SCC 8 229, Supreme Court Of India, 2004).
  18. Indira Bai v. Nand Kishore . (Supreme Court Of India, 1990).
  19. Basheshar Nath. v. Commissioner Of Income Tax Delhi & Rajasthan And Another. (1959 SUPP SCC 1 528, Supreme Court Of India, 1958).
  20. Hasham Abbas Sayyad v. Usman Abbas Sayyad And Others (2007 SCC 2 355, Supreme Court Of India, 2006).
  21. M/S Src Company v. M/S Rites Ltd. (Patna High Court, 2018).
  22. Alliance Credit And Investments Ltd. v. Khaitan Hostombe Spinels Ltd. (1996 SCC ONLINE ALL 782, Allahabad High Court, 1996).
  23. Adinarayan Naik And Others v. State Of Orissa And Others (Orissa High Court, 1986).
  24. Rachapudi Subrahmanyam v. District Collector, East Godavari (Andhra Pradesh High Court, 1973).
  25. Shri Ram & Ors. Petitioners v. Deputy Director Of Consolidation, Allahabad & Ors. S (2011 SCC ONLINE ALL 417, Allahabad High Court, 2011).
  26. State Of Punjab v. Amar Singh Harika (1966 AIR SC 1313, Supreme Court Of India, 1966).
  27. JAYA SURESH GANGAR v. UNION BANK OF INDIA (Debts Recovery Tribunal, 2022).
  28. Dr. Dhananjay Singh v. State Of U.P. And 5 Others (Allahabad High Court, 2023).