Bharatiya Sakshya Adhiniyam, 2023
Section 123
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 licence commenced, authority to make such bailment or grant such licence. 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.
Why this exists
This rule comes from the English common-law doctrine of estoppel, carried into Indian law through the Indian Evidence Act, 1872 (Section 117), and now restated in the Bharatiya Sakshya Adhiniyam, 2023 (Section 123). Commercial transactions like bills of exchange, bailments, and licences depend on trust: a person who accepts a bill, takes goods as a bailee, or enters premises as a licensee benefits from the relationship and implicitly acknowledges the other party's authority to create it. Allowing them to later deny that authority — after enjoying the benefit — would let people go back on their word to escape liability, undermining commercial certainty and fair dealing.
Common misconceptions
- Myth: The acceptor of a bill can never dispute anything about it once accepted.
Fact: Explanation 1 allows the acceptor to still argue that the bill was not genuinely drawn by the person it claims to be from — that is a different question from denying the drawer's authority. - Myth: A bailee can never question who the goods really belong to.
Fact: Explanation 2 permits a bailee, if he hands goods to someone other than the original bailor, to prove that this other person had a better right to the goods than the bailor did.