Estoppel of acceptor of bill of exchange, bailee or licensee.

What this section does

An acceptor of a bill of exchange cannot deny that the drawer had authority to draw or endorse it. A bailee or licensee cannot deny that the bailor or licensor had authority to make the bailment or grant the licence at the time it commenced. However, the acceptor may deny that the bill was actually drawn by the person it purports to be drawn by, and a bailee who delivers goods to a third party may prove that third party had a superior right against the bailor.

AI-generated plain-language summary. For the binding statutory text, see India Code (official).

The rule in one line

Acceptors of bills of exchange and bailees/licensees are estopped from denying the authority of the drawer/bailor/licensor at the time of the transaction.

When it applies

• A bank that accepts a bill of exchange cannot later claim the drawer had no authority to draw it in order to avoid liability.
• A warehouse keeper (bailee) cannot deny the depositor's authority to make the bailment when sued for non-delivery, but may prove a third party had superior title if goods were delivered to that party.

Derived from IEA s.117.