Section 123 BSA: Estoppel of acceptor of bill of exchange, bailee or licensee

Bharatiya Sakshya Adhiniyam, 2023

Section 123 BSA at a Glance

Section 123 BSA deals with estoppel of acceptor of bill of exchange, bailee or licensee. It replaced Section 117 IEA on 1 July 2024.

Was IEA

Section 117 →

Section 123 BSA Bare Act Text

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.

Source: Section 123, Bharatiya Sakshya Adhiniyam, 2023

Section 123 BSA in Simple Words

Section 123 of the Bharatiya Sakshya Adhiniyam, 2023 sets out rules of estoppel (a legal bar against denying an accepted fact). It stops acceptors of bills of exchange, bailees, and licensees from denying the authority of the person they dealt with.

In a bill of exchange (a written order to pay money), an acceptor agrees to pay the bill. The acceptor cannot deny that the drawer (the maker of the bill) had authority to draw or endorse (sign to transfer) it. However, under Explanation 1, the acceptor can deny that the named drawer actually drew the bill.

A bailee (a person holding delivered goods) cannot deny that the bailor (the giver) had authority when the bailment began. A licensee (a person given permission) similarly cannot deny that the licensor had authority to grant the licence when it started. Under Explanation 2, a bailee who delivers the goods to someone else can prove that receiver had a right against the bailor.

When Section 123 BSA Applies

  • Applies to a person who accepts a bill of exchange, stopping a denial of the authority of the drawer to draw or endorse it.
  • Applies to a bailee, stopping a denial that the bailor had authority to make the bailment when it started.
  • Applies to a licensee, stopping a denial that the licensor had authority to grant the licence when the licence started.

Example of Section 123 BSA

In September 2024, Farhan accepts a bill of exchange in Chennai that Priya drew and endorsed. When payment is claimed in court on the bill of exchange, Farhan tries to argue that Priya lacked authority to draw or endorse the bill. Under Section 123 BSA, the court does not permit Farhan to deny that Priya had authority to draw or endorse the bill of exchange in Chennai.

When Section 123 BSA Does Not Apply

  • Under Explanation 1, a person who accepts a bill of exchange can deny that the named drawer truly drew the bill.
  • Under Explanation 2, a bailee who hands over the bailed goods to someone other than the bailor can prove that receiver had a right to the goods against the bailor.

Section 123 BSA in the IEA (Previous Law)

Section 123 BSA replaces Section 117 IEA from the old criminal code.

Section 117 of the Indian Evidence Act, 1872 became Section 123 of the Bharatiya Sakshya Adhiniyam, 2023 on 1 July 2024 without any change in wording.

FAQs on Section 123 BSA

What is Section 123 BSA?▼

Section 123 of the Bharatiya Sakshya Adhiniyam, 2023 is a rule of estoppel for bills of exchange, bailments, and licences. It stops an acceptor on a bill of exchange from denying the authority of the drawer to draw or endorse the bill. It also stops a bailee or licensee from denying that the bailor or licensor had authority when the bailment or licence started.

Can the acceptor on a bill of exchange deny that the named drawer actually drew the bill under Section 123 BSA?▼

Yes. While the acceptor cannot deny the authority of the drawer to draw or endorse the bill, Explanation 1 to Section 123 BSA allows a narrow denial. The acceptor can deny that the named person truly drew the bill.

Can a bailee who delivers goods to someone other than the bailor prove that person had a right to them under Section 123 BSA?▼

Yes. Under Explanation 2 to Section 123 BSA, if a bailee hands over the bailed goods to someone other than the bailor, the bailee can prove that receiver held a right to the goods against the bailor.

What is Section 123 BSA in IEA?▼

Section 117 IEA is the earlier provision that became Section 123 BSA on 1 July 2024 without any change in wording. The same rule applied under Section 117 IEA.

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Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Bharatiya Sakshya Adhiniyam, 2023 ·