Sarat Chunder Dey v Gopal Chunder Laha

Facts

Umed Ali Shah Ostagar died leaving a widow, Arju Bibi, a son Ahmed Hossein and a daughter Rahimunnissa Bibi. Relying on a hiba (gift deed) in her favour, Arju Bibi mortgaged the whole property to Kalimuddin, Ahmed acting on her behalf under a power-of-attorney; the mortgagee's interest was bought at an execution sale in May 1882 by the defendants' predecessor. In July 1885 Ahmed and Rahimunnissa sold their inherited shares to the plaintiff Gopal Chunder Laha, who sued the purchasers (Sarat Chunder Dey and others) to recover the property, contending the hiba was benami and the mortgage void.

Issues

• Whether the heirs (and their successor, the plaintiff) were estopped under Section 115 of the Indian Evidence Act from denying Arju Bibi's title to mortgage the property.
• Whether estoppel can operate where the person making the representation was himself mistaken and had no intention to deceive.

Arguments

The plaintiff (Gopal Chunder) argued the hiba was benami so the mortgage passed no title, and that mere participation by the heirs without knowledge of its invalidity or intent to mislead created no estoppel. The defendants (Sarat Chunder Dey) argued that Ahmed, by acting as attorney in granting the mortgage and otherwise treating Arju Bibi as owner, induced the lender to advance money on the faith of her title, and so he and his successor the plaintiff were estopped.

Held

The Privy Council held that the plea of estoppel was good against Ahmed, and consequently against the plaintiff to the extent of the share Ahmed could have claimed by succession. Their Lordships held that Section 115 of the Indian Evidence Act did not enact anything different from English law on estoppel, and that the law gives no countenance to any doctrine that the person whose acts or declarations induced another to act must himself have been under no mistake or must have acted with an intention to mislead. Since Ahmed, by his acts and the declarations they involved, intentionally caused the lender to believe that Arju Bibi was entitled to mortgage, neither he nor his representative could deny the truth of what was represented, believed and acted upon. The Board discharged the decrees of all the courts below and decreed in favour of the plaintiff only for Rahimunnissa's share (against whom estoppel did not lie), with costs in proportion.

Ratio decidendi

Where a person by his acts or declarations intentionally causes or permits another to believe a thing to be true and to act on that belief, he and those claiming under him are estopped from denying its truth; it is immaterial that he was himself mistaken or had no intention to deceive, the test being the effect of his conduct on the person who acted on it.

Significance

A leading Privy Council exposition of estoppel by representation/conduct under Section 115 of the Indian Evidence Act, settling that fraud or intention to mislead is not essential and that estoppel binds successors-in-interest, and that the Indian provision mirrors the English doctrine; it has been consistently followed in Indian estoppel jurisprudence. The same principle now sits under Section 121 of the Bharatiya Sakshya Adhiniyam, 2023, which re-enacts Section 115 IEA in substantially identical terms.

Related