Saji Koduvath, Advocate Kottayam

Key Takeaways

• Waiver being a Statutory Right, recognised in Sec. 63, Indian Contract Act (independent of Estoppel) –
  • it is an ‘Enforceable Right’, and may constitute a Cause of Action; and
  • if the promisee withdraws the ‘Waiver’ as to the performance of contract , the burden to show that he had validly withdrawn the ‘Waver’, and that no prejudice or injustice is caused to the other party (promisor) is upon the promisee .
• Neither consideration nor an agreement would be necessary to attract Waiver.
• In the matters of Waiver and its ‘withdrawal’, following aspects will be serious concern for the court
  • ‘Public Policy’ (Sec. 23 Contract Act)
  • terms in the basic contract,
  • capacity of the person who Waived,
  • bargaining power,
  • injuries,
  • language used,
  • delay in withdrawal,
  • nature of declaration of Waiver,
  • malafides (if any) behind the withdrawal of Waiver.

What is Waiver?

• Waiver is a unilateral act of abandonment of a right or claim against another.
• It may arise as election between two alternatives, or as an unconditional promise. 
• The waiver must be clear and unambiguous.
• If it is communicated to the other person and if that person, on the basis of the waiver, proceeds to perform his part, if any remains, the party who waived the right cannot assert the original contract.
• Waiver being a statutory right, recognised in Sec. 63 Contract Act, independent of estoppel, it can give rise to a cause of action.

Sec. 63 Contract Act

The principles of waiver is contained in Sec. 63 of the Indian Contract Act.  

It reads as under:

• 63. Promise may dispense with or remit performance of promise. Every promisee may dispense with or remit, wholly or in part, the performance of the promisee made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.

In Waman Shriniwas Kini v. Ratilal Bhagwandas & Co.(1959 Supp. 2 SCR 217)  it is observed that Waiver is the abandonment of a right which normally everybody is at liberty to waive.

• “A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right.” (Quoted in Jagad Bandhu Chatterjee Vs. Nilima Rani 1969)

Doctrine of Waiver and Promissory Estoppel

The doctrine of Waiver and the Doctrine of Promissory Estoppel are legally recognised principles of law that arise from similar postulations. In both these cases, if one party (promisee) represents to, or made believe, the other party (promisor) that he had waived the burden of the first party (promisee), or he will not insist performance of a part of their contract, he (promisee) is barred from insisting the waived part of the contract.

Burden on who waived to show that he had validly withdrawn

Waiver being a statutory right ( Sec. 63, Contract Act) the burden is upon the party who waived the performance of contract (promisee) to show that he had the right to withdraw the ‘Waiver’ and that he had validly withdrawn the ‘Waver’. An unconditional and ‘communicated’ Waiver may give rise to a cause of action to the promisoer, and if delay, prejudice or injustice (to the other party – promisor) is a question, the burden as to the same is upon the person who Waived (i.e. promisee).

In the matters of Waiver and its ‘withdrawal’, following aspects will be serious concern for the court –

• ‘Public Policy’ (Sec. 23 Contract Act)
• terms in the basic contract,
• capacity of the person who Waived,
• bargaining power,
• injuries,
• language used,
• delay in withdrawal,
• nature of declaration of Waiver,
• malafides (if any) behind the withdrawal of Waiver.

Principle that “Admission cannot be Permitted to be Withdrawn” Applies

In Izhaar Ali v. Prescribed Authority, (2014) 107 And LR 88, 2014-144 AIC 910, it is observed that the principle that “admission cannot be permitted to be withdrawn by amendment” will apply in withdrawal of ‘Waiver’ also. It is held as under:

• “5…. The petitioners filed his written statement and has not raised the plea regarding six months’ previous notice. Thus the petitioners waived their right as contemplated under the proviso to Sec. 21(1)(a). Proposed amendment amounts to withdrawal of the waiver of the petitioner which cannot be permitted to be withdrawn by way of amendment.
• Supreme Court in Modi Spinning and Weaving Mills Co. Ltd. v. Ladha Ram and Company [(1976) 4 SCC 320.] , Heera lal v. Kalyan Mal [1998 (32) ALR 442 (SC); 1998 RD 140.] , Gautam Swaroop v. Leela Jetly [(2008) 7 SCC 85.] , Sumesh Singh v. Phoolan Devi [2009 (75) ALR 789 (SC).] and Vishwanath Agrawal v. Savitri Bera [(2009) 15 SCC 693.] held that an admission cannot be permitted to be withdrawn by amendment. Same principle will apply in this case also.”

Promissory Estoppel is neither in the realm of Contract nor in the realm of Estoppel

The Doctrine of Promissory Estoppel is explained in M/S Motilal Padampat Sugar Mills v.State Of Uttar Pradesh, AIR 1979 SC 621,  as under:

• “This doctrine has been variously called ‘promissory estoppel’, ‘equitable estoppel’, ‘quasi estoppel’ and ‘new estoppel’. It is a principle evolved by equity to avoid injustice and though commonly named ‘promissory estoppel’, it is, as we shall presently point out, neither in the realm of contract nor in the realm of estoppel.”

Waiver Clause

A contract may expressly state as to the right or option of ‘Waiver’. The Waiver conditions can be laid down in the contract; such as – it must be in writing, failure of conditions may make the ‘waiver’ ineffective, etc.

Waiver is ‘Enforceable Right’, and may constitute a Cause of Action

In Jagad Bandhu Chatterjee Vs. Nilima Rani, (1969) 3 SCC 445, it is held as under:

• “Waiver is contractual, and may constitute a cause of action; it is an agreement to release or not to assert a right”
• “In India the general principle with regard to waiver of contractual obligations is to be found in s. 63 of the Indian Contract Act. Under that section it is open to a promise to dispense with or remit, wholly or in part, the performance of the promise made to him or he can accept instead of it any satisfaction which he thinks fit. Under the Indian law neither consideration nor an agreement would be necessary to constitute waiver.”

In Krishna Bahadur v. Purna Theatre, (2004) 8 SCC 229, also it was held – though Estoppel will not give rise to a cause of action, and it is a rule of evidence, waiver is contractual and may constitute a cause of action. It is held as under:

• “The principle of waiver although is akin to the principle of estoppel; the difference between the two, however, is that whereas estoppel is not a cause of action; it is a rule of evidence; waiver is contractual and may constitute a cause of action; it is an agreement between the parties and a party fully knowing of its rights has agreed not to assert a right for a consideration.
• A right can be waived by the party for whose benefit certain requirements or conditions had been provided for by a statute subject to the condition that no public interest is involved therein. Whenever waiver is pleaded it is for the party pleading the same to show that an agreement waiving the right in consideration of some compromise came into being. Statutory right, however, may also be waived by his conduct.”

In PTC India Financial Services Limited Vs. Venkateswarlu Kari,  2022 SCC OnLine SC 608, also it is held – Waiver is contractual and Waiver may constitute a cause of action. It is held as under:

• “7.10. Section 63 of the Contract Act governs the domain of waiver. It is a general principle of law that everyone has a right to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity. (Cuilibet licet renuntiare juri pro se introducto i.e., Any one may waive or renounce the benefit of a principle or rule of law that exists only for his protection.) However, such a waiver cannot infringe any public right or public policy.
• In. Krishna Bahadur v. Purna Theatre and Others, (2004) 8 SCC 229, this Court observed that –
  • “10. A right can be waived by the party for whose benefit certain requirements or conditions had been provided for by a statute subject to the condition that no public interest is involved therein. Whenever waiver is pleaded it is for the party pleading the same to show that an agreement waiving the right in consideration of some compromise came into being. Statutory right, however, may also be waived by his conduct.”
• In Halsbury’s Laws of England, (Vol. 8, Third Edn., para 248 at p. 143.) it is stated thus:
  • “As a general rule, any person can enter into a binding contract to waive the benefits conferred upon him by an Act of Parliament, or, as it is said, can contract himself out of the Act, unless it can be shown that such an agreement is in the circumstances of the particular case contrary to public policy. Statutory conditions may, however, be imposed in such terms that they cannot be waived by agreement, and, in certain circumstances, the legislature has expressly provided that any such agreement shall be void.”
• However, there is a difference between statutory provisions meant for the benefit of a person and statutory provisions which mandate contracts to be in a specific manner. One cannot waive  the statutory obligations where the statute restraints explicitly or mandates parties to contract in a particular manner. Formalities and requirements for making contracts have generally been held to be mandatory.  (G.P. Singh, Principles of Statutory Interpretation, 14th Edition, Lexis Nexis (2016) at page 462) Where a statute prescribes that a contract shall be in a specific form or shall or shall not contain certain terms, the statutory form must be followed. (Craies on Statute Law by S.G.G. Edgar, 7th Edition, Sweet & Maxwell Limited (1971) at page 255.)  In reference to pledge, waiver by contract and statutorily mandated terms, the High Court of Calcutta in The Co-Operative Hindusthan Bank, Ltd. v. Surendranath De, (1931 SCC OnLine Cal 224.) observed:
  • “Section 176 of the Contract Act, unlike some other sections, e.g., sections 163, 171 and 174, does not contain a saving clause in respect of special contracts contrary to its express terms. The section gives the pawnee the right to sell only as an alternative to the right to have his remedy by suit. Besides, section 177 gives the pawner a right to redeem even after the stipulated time for payment and before the sale. In our opinion, in view of the wording of section 176 as compared with the wordings of the other sections of the Act, to which we have referred, and also, in view of he right which section 177 gives to the pawner, and, in order that the provision of that section may not be made nugatory, the proper interpretation to put on section 176 is to hold that, notwithstanding any contract to the contrary, notice has to be given.”
• Even when the general law provides liberty to contract, the parties cannot contract contrary to express provisions of law. In Park Street Properties Private Limited v. Dipak Kumar Singh and Another, (2016) 9 SCC 268 in reference to Section 106 of the Transfer of Property Act, 1882, this Court held:
  • “While the agreement dated 7-8-2006 can be admitted in evidence and even relied upon by the parties to prove the factum of the tenancy, the terms of the same cannot be used to derogate from the statutory provision of Section 106 of the Act, which creates a fiction of tenancy in the absence of a registered instrument creating the same. If the argument advanced on behalf of the respondents is taken to its logical conclusion, this lease can never be terminated, save in cases of breach by the tenant. Accepting this argument would mean that in a situation where the tenant does not default on rent payment for three consecutive months, or does not commit a breach of the terms of the lease, it is not open to the lessor to terminate the lease even after giving a notice. This interpretation of Clause 6 of the agreement cannot be permitted as the same is wholly contrary to the express provisions of the law. The phrase “contract to the contrary” in Section 106 of the Act cannot be read to mean that the parties are free to contract out of the express provisions of the law, thereby defeating its very intent.”