Section 123 BSA: Estoppel of Acceptor of Bill of Exchange, Bailee or Licensee

Section 123 of the Bharatiya Sakshya Adhiniyam, 2023 forms part of Chapter VIII on estoppel. It prevents certain persons who have accepted a legal relationship or transaction from later denying the authority on which that relationship or transaction began, subject to the two statutory explanations stated below.

Text of Section 123

What Section 123 means

The provision applies a specific form of estoppel to three relationships: an acceptor of a bill of exchange, a bailee, and a licensee. In each case, the person who accepted the transaction or possession is ordinarily prevented from disputing the authority of the person from whom that transaction or possession originated.

1. Acceptor of a bill of exchange

An acceptor cannot ordinarily deny that the drawer had authority to draw or endorse the bill. However, Explanation 1 preserves a distinct defence: the acceptor may dispute whether the bill was in fact drawn by the person whose name it bears. The rule therefore distinguishes the drawer's authority from the authenticity of the drawing itself.

2. Bailee

A bailee is a person to whom goods are delivered under a bailment. Section 123 prevents the bailee from denying that the bailor had authority to create the bailment when it began. Explanation 2 nevertheless permits the bailee, where the goods are delivered to someone other than the bailor, to prove that the third person had a superior right to those goods as against the bailor.

3. Licensee

A licensee is similarly prevented from denying that the licensor had authority to grant the licence when the licence commenced. The focus is on the authority existing at the beginning of the relationship.

Purpose and practical effect

Section 123 supports consistency in legal relationships. A person who has acted on the basis of another person's authority in accepting a bill, taking goods as bailee, or entering under a licence cannot ordinarily turn around and deny that foundational authority. The statutory explanations ensure that the rule does not prevent proof of forgery or a superior title where the provision expressly permits such proof.

Related provisions on estoppel

Section 123 follows the general rule of estoppel in Section 121 and the rule concerning tenants and licensees of persons in possession in Section 122. Section 124 begins Chapter IX on witnesses.