Section – 116. Estoppel of tenant; and of license 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 license of the person in possession thereof, shall be permitted to deny that such person had a title to such possession at the time when license was given.

Tenant- landlord relationship

A relationship between a tenant and a landlord can be created either by written contract or verbal contract. The beginning of the tenancy can be marked by the taking of possession of the land, or by the payment of rent, or other circumstances.

If X leases his land to Y and Y takes the possession and starts paying the rent and later on X sales the land to Z, then Y can make his payment to Z. Here, Y and Z have formed the tenant-landlord relationship.

Scope of section 116 It is concerned with those estoppels which occurs between:

Tenant and his landlord
Licensor and licensee

Title of the landlord cannot be denied

Once a tenant enters into a relationship of landlord and tenant, receives the possession of the property and finally enters into the premise, during the period of such possession may deny to things or course of action by the landlord which is against to what was mentioned in the agreement. A tenant in no case claim that the landlord has no title over the property

In Moti Lal v. Yar Md, the judge said that the tenant cannot say that the landlord has no more interest in the property when the landlord filed a suit for default payment and ejectment. I

In Sri S.K. Sharma v. Mahesh Kumar Verma, where defendant upon attaining a higher post was allotted a premise by the railway company. In the case, it was said that even when it was not known whether the land belonged to the railway company or not, the officer will have to evacuate the premises after retirement.

Can landlord plead estoppel?

In the following situations, the landlord can plead estoppel:

a) When the tenancy itself stands disputed then the tenant can challenge the landlord’s title on the property. The tenant would not be estopped from doing so.

b)In cases where the tenancy has been moved by fraud, coercion, misrepresentation or mistake.

If no such circumstances occur than the tenants would be restricted by the doctrine of estoppel. However, the tenants are always at liberty to overturn the lease or change its status as a lessee.

Can landlord plead estoppel?

In the following situations, the landlord can plead estoppel:

a) When the tenancy itself stands disputed then the tenant can challenge the landlord’s title on the property. The tenant would not be estopped from doing so.

b)In cases where the tenancy has been moved by fraud, coercion, misrepresentation or mistake.

If no such circumstances occur than the tenants would be restricted by the doctrine of estoppel. However, the tenants are always at liberty to overturn the lease or change its status as a lessee.

Title at the beginning

The tenant cannot deny the title to the landlord at the beginning of the tenancy. However, tenants can exercise certain powers like:
He would not be estopped from claiming that on the death of the landlord the property would be transferred or the title would be delegated to the tenant and not to some third party.
He can prove that till the day before signing the lease, the landlord had no title over it.
The tenant can prove that during the tenancy period the landlord lost his title over the property either through his acts or because he was barred by the law.

Estoppel in mortgagor- mortgagee relationship

When upon the contract of mortgage, a property has been mortgaged by one person to another and the person to whom it has been mortgaged, i.e. the mortgagee, has taken possession, then the parties to the contract cannot deny the right of each other under the contract as proposed in Arjun Singh v. Mahasaband.

117. 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 authority to draw such bill or to endorse it; nor shall any bailee or licensee be permitted to 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.

Explanation 1 .- The acceptor of a bill of exchange may deny that the bill was really drawn by the person by whom it purports to have been drawn.

Explanation 2 .- If a bailee 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.

Section – 117 deals with estoppel in respect of movable property. An estoppel under this section is based on an agreement. The section is supplemented by Section 41 and 42 of the NI ACT . It is applicable

1) Against the acceptor of abill of exchange
2) Against the Bailee
3) Against the licensee

Acceptor of a bill of exchange:

An acceptor of a bill of exchange is not permitted to deny that the drawer had authority to draw or to endorse it. But there is an exception laid down in Explanation-I which provides that the acceptor of a bill of exchange may deny that the bill was really drawn by the person by whom it purports to have been drawn.

Bailee:

A bailee of goods cannot be permitted to say that at the time of commencement of the bailment, the bailor has no authority to bail or to take them back.

Under the Explanation-II, if a bailee delivers the goods bailed to a person other than the bailer, he may prove that such person had a right to them as against the bailor.

A garage owner receiving a car for repairs is estopped from challenging the title of the person from when the car was received