Explain the estoppel of the acceptor of a bill of exchange

Question: Explain the estoppel of the acceptor of a bill of exchange.

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Answer

Section 117 of the Indian Evidence Act provides for the Estoppel of acceptor of a bill of exchange, bailee or licensee. It reads as:

“No acceptor of a bill of exchange shall be permitted to deny that the drawer had the 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.”

Section 117 provides that no acceptor of a bill of exchange can deny that the drawer had the 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 (it can always be shown that the drawer’s signature was forged).

Likewise, no bailee/licensee can deny that his bailor/licensor had, at the time when the bailment/licence commenced, authority to make such bailment or grant such licence. But, if a bailee of the goods bailed to a person other than the bailor, he may prove that such person has a right to them as against the bailor.

This section deals with further instances of estoppel by agreement. Under this section, an acceptor of a bill of exchange cannot deny that the drawer had the authority to draw such a 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.

A bailee or licensee cannot deny that his bailor or licensor had, at the commencement of the bailment or license, authority to make the bailment or grant the license. But a bailee, if he delivers the goods bailed to a third person, may prove that such person had a right to them as against the bailor,

It must be noted that in Estoppel by attestation, an attestor ordinarily knows nothing of the contents of the document, and so he is not estopped from denying the truth in the document. But, if he knows about contents, then estoppel operates.

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