# [1963] 2 S.C.R. 168

- **Citation:** [1963] 2 S.C.R. 168
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Bench:** S· l\:· ·DAS, M. HrnAYATULLAH, J. C. Siiah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1963-2-s-c-r-168-2666
- **Pages:** 15

## Headnote

· · Contract-Pro•-ince accepting performance from third per&m
in full Bali•faction of claim-If can Bue promisor for ba~nce- ·
~ndi'an ContractA~t, 1872 (9_of 1872), ss. 41, 63, illustration (c),
I
'
In January 1937 · one M & Co. sold and delivered ·
jewellery vahied at about .13 lakhs to the respondent, the
Prince of Berar. The Pririce acknowledged in
writing the
purchase of the jewellery and the price thereof and passed
variOus acknowledgments in respect of the debts due · and the
last of such acknowledgments was -made. for sum of
RS. 27,79,000. In April 1948, the appellants presented their
bill and 'wer~ informed in January, 1919, that the Nizam had
passed the bill. In February, 1949,
when Hyderabad was
under military occupation, a Committee was set up by the·
Military Governor to scrutinise all debts of the Prince of Berar
and his younger brother. The claim. of the appellants was
considered by the. Committee which recommended that the
appellants should be paid a sum of Rs. 20 lakhs in full satisfaction of their claim •. The appellants were paid the sum ·or
Rs: 20 lakhs in two instalments. The appellants tried to pas•
a·r(ceipt when the}' received the second instalment r~sciving
v:e,fr ICi~h.t fo ICCO\Cf t.he bruance !'nder the pronote frOJU thy
2 s.c.R,
SUPREME OOURT REPORTS
169
Prince ofBcrar.
J~hc relevant authorities refused
1to make
payment on the ~aid receipt. Thereupon the appellants discharged all the previous pronotes and on each one of them
recorded a satisfaction of the full amount. The appellants
thereafter sued• the respondent for the recovery of the balance
of the monies due to them on the pronote.
The trial court
decreed the su'it on the ground that there was no accord and
satisfaction when the plaintiff received the second cheque from
the Accountant General, Hyderabad.
In appeal by the
respondent . the Appellate Court set aside the decree holding
that the appellants had accepted the sum of Rs. 20 lakhs in
full satisfaction of their claim and duly discharged the pro·
misory notes by endorsing full satisfaction thereon.
.
I
The appellants came up to the Supreme Court in appeal
by cct.i\icate granted by the High Court.
'
/Held, that when payment is accepted on the condition
on ,~hich it is offered, it is not ope:v to the person receiving
the P!'yment to say, either in fact or in law, that they have
ai:cepeted the money but not the condition.
A promisee accepting performance of the promise from
a third person, can not afterwards enforce it against the
prom,lser.
,., '\
·In the present case the appellants had given a full
discharge when they received the second instalment; and as
they accepted the money in full satisfaction of their claim,
they were not entitled to sue the respondent for the balance.
Obiter : When a statute clearly covers the case it is
hardly necessary to refer to a decision.
C1vrr. APPELLATE JumsDICTION: Civil Appeal
"
No. 52 of 60.
~
Appeal from the judgment and deeree dated
April 15, 1958, of the Bombay High Court in Appeal
No. 25 of 1957.
J: ....
B. R. L. Iyengar, for the appellants.
M. O. Setalvad, Attorney General of India
S. R. Vakil, K. H.
Bhabha, J. B. Dadachanj/
0. O. Mathur and Ravindra Narai:n, for the respon'.
dent.
·
J96B
Kapur Chand Go4~•
v;
Mi.r Nawob
Him'lyalalik.hm
Azamjah
Kotur CMnJ God/la
Vo
i\1ir Notod
Him, yt la/ikl,t.1&
Azonljah
Da1J.
170
SUPREME OOURT BE.PORTS [1963]
1962. April 12. The Judgment of the Court
was delivered by
S. K. DAB, J .-Thia is an appeal on a certificate granted by the High Court of Bombay under
e. I 10 of the Code of Civil Procedure, and arises
out of a suit which the 11.ppellants had brought for
recovery of Ra. !l,!09,940/- with interest and coat
from Mir Nawab Himayatalikhan Azamjah, who
was then known as the Prince of Berar, being
the eldest. son of the Nizam of Hyderabad. The
circumstanooa in which the appeal has arisen are
these.
On or about January 31, 1937 Baboo Mull
and Co. sold and delivered to the Prince of Berar
in Bombay various articleR o

## Text

'•
l~~
SUI'RE~IE COURT REPORTS [1963) -
.
'
.
.
1112_ .
by, the Ai:bitrator; But, however, unusual the rule
,..----,-...
m.a. y · a
.. ·P· ·p· e .. ar .·.t.o be, it would not open to the Court
Jl/s~ 8wllj,,.ull. '·
Nirc•·••IF'
to ,«:~:tend ·the . right- to appeal and to enable a
o~.; >.,!· -1·•
1 / claimant whose claim has been rejected completely
··~• .,_.,." ~••:• ·t
1 t tb H. h C
Th
. b
· -.,-,- ·
. o ap.1,1e~ . .o . e
1i;
ourt.
e ng t to appeal
s~.?!·
IS exercISable only 1£ the amount awarded ·exceeds
Rs: 5,000/'.
"
·
·
1112 --
...
,
. I_n ,that ;yiew of the case, the High Court was
right i,J:l_ not . ente~taining . the appeal. The appeal
· fails .and jfl dismissed.
Appeal dismissed.
. KAPUR CHAND GODHA
v.
. ' -
,,,,;1 It.
l\IIR NAWAB HIMAYATALIKHAN AZAIIIJAH
(1
(S· l\:· ·DAS, M. HrnAYATULLAH and J. C. SIIAH, JJ.)
· · Contract-Pro•-ince accepting performance from third per&m
in full Bali•faction of claim-If can Bue promisor for ba~nce- ·
~ndi'an ContractA~t, 1872 (9_of 1872), ss. 41, 63, illustration (c),
I
'
In January 1937 · one M & Co. sold and delivered ·
jewellery vahied at about .13 lakhs to the respondent, the
Prince of Berar. The Pririce acknowledged in
writing the
purchase of the jewellery and the price thereof and passed
variOus acknowledgments in respect of the debts due · and the
last of such acknowledgments was -made. for sum of
RS. 27,79,000. In April 1948, the appellants presented their
bill and 'wer~ informed in January, 1919, that the Nizam had
passed the bill. In February, 1949,
when Hyderabad was
under military occupation, a Committee was set up by the·
Military Governor to scrutinise all debts of the Prince of Berar
and his younger brother. The claim. of the appellants was
considered by the. Committee which recommended that the
appellants should be paid a sum of Rs. 20 lakhs in full satisfaction of their claim •. The appellants were paid the sum ·or
Rs: 20 lakhs in two instalments. The appellants tried to pas•
a·r(ceipt when the}' received the second instalment r~sciving
v:e,fr ICi~h.t fo ICCO\Cf t.he bruance !'nder the pronote frOJU thy
2 s.c.R,
SUPREME OOURT REPORTS
169
Prince ofBcrar.
J~hc relevant authorities refused
1to make
payment on the ~aid receipt. Thereupon the appellants discharged all the previous pronotes and on each one of them
recorded a satisfaction of the full amount. The appellants
thereafter sued• the respondent for the recovery of the balance
of the monies due to them on the pronote.
The trial court
decreed the su'it on the ground that there was no accord and
satisfaction when the plaintiff received the second cheque from
the Accountant General, Hyderabad.
In appeal by the
respondent . the Appellate Court set aside the decree holding
that the appellants had accepted the sum of Rs. 20 lakhs in
full satisfaction of their claim and duly discharged the pro·
misory notes by endorsing full satisfaction thereon.
.
I
The appellants came up to the Supreme Court in appeal
by cct.i\icate granted by the High Court.
'
/Held, that when payment is accepted on the condition
on ,~hich it is offered, it is not ope:v to the person receiving
the P!'yment to say, either in fact or in law, that they have
ai:cepeted the money but not the condition.
A promisee accepting performance of the promise from
a third person, can not afterwards enforce it against the
prom,lser.
,., '\
·In the present case the appellants had given a full
discharge when they received the second instalment; and as
they accepted the money in full satisfaction of their claim,
they were not entitled to sue the respondent for the balance.
Obiter : When a statute clearly covers the case it is
hardly necessary to refer to a decision.
C1vrr. APPELLATE JumsDICTION: Civil Appeal
"
No. 52 of 60.
~
Appeal from the judgment and deeree dated
April 15, 1958, of the Bombay High Court in Appeal
No. 25 of 1957.
J: ....
B. R. L. Iyengar, for the appellants.
M. O. Setalvad, Attorney General of India
S. R. Vakil, K. H.
Bhabha, J. B. Dadachanj/
0. O. Mathur and Ravindra Narai:n, for the respon'.
dent.
·
J96B
Kapur Chand Go4~•
v;
Mi.r Nawob
Him'lyalalik.hm
Azamjah
Kotur CMnJ God/la
Vo
i\1ir Notod
Him, yt la/ikl,t.1&
Azonljah
Da1J.
170
SUPREME OOURT BE.PORTS [1963]
1962. April 12. The Judgment of the Court
was delivered by
S. K. DAB, J .-Thia is an appeal on a certificate granted by the High Court of Bombay under
e. I 10 of the Code of Civil Procedure, and arises
out of a suit which the 11.ppellants had brought for
recovery of Ra. !l,!09,940/- with interest and coat
from Mir Nawab Himayatalikhan Azamjah, who
was then known as the Prince of Berar, being
the eldest. son of the Nizam of Hyderabad. The
circumstanooa in which the appeal has arisen are
these.
On or about January 31, 1937 Baboo Mull
and Co. sold and delivered to the Prince of Berar
in Bombay various articleR of jewellery the aggregate value of which was Ra.
13,~0,750/-. Lala
Kapurchand Goclha, who was the first plaintiff in
the action and Lala Heeralal Godha, the original
second plaintiff, carried on busineaa in jewellery
in partnel""hip with their father and one Lala
Baboo ~foll (sinec deceased) in the name and style
of Ba.boo lliull and Co.
It is not disputed that
the appellants now before us own the entire interest in the Subject matter of the suit and instead
of using the name of Ba.boo Mu II and Co. we shall
name the appellants a.a the persona who sold the
jewellery to the" Prince of Berar on January 31,
1937.
A writing dated January 31, 1937 w&e
executed by the Prince of Berar, respondent before
us, by which he declared and acknowledged having purchased the jewellery specified in a schedule
from the appellants at the aggregate price of
Rs. 13,20,750/-. In that writing {Ex. A) the respondent stated:
·~ .
"I promise on behalf of myself and my
heirR, executor~. administrators and successors
:4.
to pay to you or to your order at my •
'' ptiou and le<surn at your abovementioued
I
2 s.c.R.
SUPREME COURT REPORTS
171
address the said sum of rupees thirteen lacs
twenty thousand seven hundred and fifty
only together with simple interest thereon @
10% ten per cent. per annum."
-
It is not disputed that the jewellery was iu fact
delivered by the appellants to the respondent, and
after January 31, 1937 the respondent passed
various acknowledgements in respect.of the debt
due'. at the time of the passing of the respective
acknowledgments. These documents consisted of
an acknowledgement of liability and a promise to
pay on behalf of the respondent and the la.lit of
such acknowledgments was passed on February
15/16,.1948. By that time the debt of Rs.13,20,
750/-with ten per cent. interest thereon bad increased to about Rs.27,79,000/-. By that last document the respondent admitted bis liability for the
amount of Rs .. 27, 79,078-2-0 and promised to pay
the amount, again at his option and leisure. On
April 30, 1948, the appellants presented their bill
a.nd some time in January, 1949, one of the
appellants bad an interview with the respondent
and was told that the Nizam had passed the bill. ·
In 1949 when Hyderabad was under military
occupation after the Police Action, a Comll!ittee
. was set up on February 8, 1949, by the Military
Governor known as the Princes Debts Settlement
Committee. The report of this Committee shows
that it was set up in accordance with a resolution
made by the Military Governor in order to scrutinise all debts of the Prince of Berar and his
younger
brother.
On
Ft>bruary
19, 1949, .the
appellants presented a petition tq the Military
Governor with regard to their claim and asked for
p~ yment of the amount due to them or in the
al ternative for the return of the.jewellery. The
claim of the appellants was
considered by the
Committee in para. l l of their report. The Committee recommended that the appellants should
1942
Kap"' Ohand Godha
v.
Mi1 Nat»1b
Hima1<1ltJ.lilehan
AZamjah
DasJ.
19Q
IC .... r Chand GodiltJ
v.
Mir NotoaO
Bim.,y1taliklton
A:amjah
lJ•s J,
172
SUPREME COURT REPORTS [1963]
be paid a sum of Re. 20 lacs in full satisfaction of
their claim. The Committee further stated that
they did not recommend the return of the jewellery.
It may be here stated that the Committee consisted of two persons, namely, Zaheruddin Ahmed,
who was the Controller of Accounts to the Nizam and
A. N. Shah, a member of the. Indian Civil Service.
It may also be stated that the report of the Com·
ruittee shows that it made a reduction of about
ten per cent. In the case of all suppliers of goods
to the two Princes because the Committee thought
that in most of the cases the eupplie.rs inflated the
price for the ~upply of goods to the two Princes.
The Committee also thought that the reasonable
rate of interest would be six per cent. in the case
of creditors who had to wait for a number of years
for payment of their dues. On September 27,1949,
a sum of Rs.11,25,000/-was paid to the appellants.
At that time there wr.s a dispute going on as tQ
"1'1-hether the appellants were entitled to the entire
amount of Rs.20 lacs or to only 9/ 16th share there·
of. That dispute having been finallysettled in favour
of the appellant·, the appellants received a second
payment of Re.8,75,000/- on February 14, 1950.
This amount along with the earlier amount paid
to the appellants came to the total of Re.20 lacs.
which the Committee bad recommended should be
paid to the appellants in full satisf~ction of their
claim. On February 14, 1950, a receipt was passed
by the appellants for the sum of Re.8,75,000/-
(Ex. C) and this receipt ran in the following terms:
"Received from the Controller General
of Ac:counts and Audit, Hyderabad Government the sum of Rs.8,76,000/- (Rupees eight
•
lacs ~nd seventy-five thousand) only in full
and final
payment of the balance of rupees
twenty lacs allowed by the Government in
;
respect of my claim under the pronote •
dated 15 February 1948 passed by the Prince
•
'.
·1
" ••
~$.C.R.
SlJPREME COURT REPORTS
173
of Berar in my fovour, reserving however my
right to recover the balance amount due to
me under tbe said pronote from the Prince
of Berar."
·
The relevant authorities refused, however, to make
payment on the receipt Ex. C in which the appellan'ts reserved their right to recover the balance
amount due from the Prince of Berar. Thereupon,
the appellants discharged all the previous pronotes
and on each one of them recorded a satisfaction of
full payment. We may refer to the last of them,
namely, the one dated February 15/16, 1948. This
was for a sum of Rs.27, 79,078·2-0 and on this docu·
ment Kapurchand Godha, one of the appellants
recorded "received payment in full".
Then, on Au!!ust 14, 1950, the appellants
served through their Rolicitors a notice on the respondent asking him to make payment'of the balance of Rs.9,99,940/- with interest at ten per cent.
The respondent not having paid the amount a
suit was instituted on February 5, 1951, in the
High Court of Bombay for recovery of the amount.
The suit was tried ·by Coyajee, J.
The
principal issue for trial was issue No. 6, namely,
whether the appellants had accepted payment of
Rs. 20 lacs in full satisfaction of their claim against ·
the respondent . and surrendered all tbe writings
duly dischaTged and there was ab~olute release of
the debt as stated in paras. 7, 8 and 11 of the
written-statement.
On a consideration of the oral
and documentary evidence given. in the case and
relying particularly on Ex. C, Coyajee, J, came to
the conclusion that the appellants did not take the
sum of Rs. 20 lacs in full satisfaction of their claim,
The learned Judge said:
"Ordinarily, a plaintiff wou,ld. have been
in a most difficult and unenviable position to
1196l
E o;u, Clr4M GNho
v.
Jl/,N.,.d
Hima.μtdi ....
Az•j.h
lJaJ.
Kajur Oharrd fJodh'l
v.
Mi, Nawab
If i.7'/arvll,;;Jik '; n
A.zamjoh
Vas J.
174' SUPREME COURT REPORTS [1963]
enforce this claim after having endorsed those
rlocuments namely 'Ex. No. 1 as payment in
full satisfaction. But evidently "payment in
fu II Aatiafaction" there mE>ant full satisfaction
as regards the liability of tbe Hyderabad
State and that would naturally be the meaning if taken in conjunction with Ex. C where
he reserved liberty to proceed personally
against the Prince of Berar. I have therefore
come to the conclusion on the main iasue in
the suit namely, that there was no accord and
satisfaction when the plaintiff' received the
second cheque from the Accountant-General
of Hyderabad St ate."
Then there was an appeal by the respondent
which was heard by the appellate court (Chagla,
C. J. and Mody, J.) By its judgment datt.d
April 15, 1958, the appellate court came to a contrary
conclusion and held that on the evidence, oral and
documentary,
given in the case it was clearly
established that the appellants accepted the sum of
Re. 20 lacs in full Ratisfaction of their claim and
duly discharged tho promissory notes by endorsing
fu II satisfaction thereon; therefore, s. 63 of the
Indian Contract Act, 1872, applied and the suit of
the appellants was lia.ble to be dismissed.
It
accordingly allowed the appeal and dismissed the
suit with costs.
In the appeal before us Mr. B. R. L. Iyengar
appearing on behalf of the appellants has very
strongly contended tha.t the view of Coyajee, J. is
the correct view on the evidence given in the case.
He has emphasised two points in connection therewith: (I) the crucial question is-what does the
evidence show as to the intention of the creditor in
accepting Rs. 20 lacs? and (2) what is the effect of
Ex. C, a receipt executed contemporaneously with
the payment of the second instalment of Rs. 8,
75,000 T Mr. Iyengar has argued that the appellate
I
I
"' '
••
•·
...: .
2 S.C.R.
SUPREME COURT REPORTS
175
court did not attach sufficient importance to these
two points and the conclusion which it reached is
vitiated for that reason. As the judgment of th11
appellate court is a judgment in reversal and the
question raised are essentially questions of fact on
which there are conflicting findings, we allowed
counsel for the parties to place before us the relevant evidence along with the pleadings of the parties.
Two ''Of the witnesses whose evidence appears to
be decisive of the questions raised were Putt&
Madhava Rao who was examined on behalf of the
appellants and Kapurchand Godha, one of the
appellants.
Putta Madhava Rao was at the
relevant
time,
Assistant
Accountant-General,
Hyderabad and he was present before the Committee
on more than one occasion when the claim of the
appellants was considered. Before Coyajee, J. a
questson was raised whether the statements of this
witness as to what transpired before the Committee
were admissible in evidence, when none of the two
members of the Committee was called for examination. Madhava Rao was undoubtedly competent to
prove what he himself heard or saw if such hearing
or seeing was a fact in issue, and we consider it
unnecessary to determine the further question as to
whether be was competent to prove the statements
alleged to have been made by one or other of the
two members of the Committee. Therefore, we
confine. ourselves. to the · statements of Madhava
Rao as to what happened before him. Madhava Rao
said that before the Committee the appellants
insiste~ on payment of their full claim, but the
Committee decided that the appellants must take
Rs. 20 lacs in full satisfaction of thQir claim; on
this Kapurchand Godha protested and sai<l that he
would have to reserve· his right for the balance.
The Committee thereupon ma<le it clear that they
could not recomwe.ud payment of anything more,
because a specific amount for distribution had been
allotted to them.
The reference to "& specific
1962
Kapur Chand Godha
Y,
Mir.N~w.b
-If imd,atali!han
Azamjah
l/16J
K ,,,,, C!••ul Goi!•
•·
Mir J(auab
ll'-t•Jolalikhan
Aurnj1h
D•sJ.
176
SUPREME OOURT REPORTS [1963)
amount" was to a sum of rupees two orores earmarked for the liquidation of the debts of the two
Princes out of a. fund known as Sa.rf-e· Kha.n_ Wha.t
happened after tho Committee had mw:le
its
recommendation is very important.
The first
instalment of Rs. 11,25,000/-was paid on September
27, 1949. At that time a dispute was going on
a.bout the share of the appellants to the money.
The receipt which wa.s pa.BBed for the payment of
Rs. 11,25,000/· is nia.rked Ex. B.
That receipt does •
not show whether the appellants had a.greed to
accept Ra. 20 la.cs in full satisfaction of thc>ir ola.im.
As to the second instalment of Ra. 8,75,000/- which
was pa.id on February 14, 1950, Ma.dha.va. Ra.o give
the following evidence.
He said that when Ex. C
was brought to him by Ka.purcha.nd Godha., the
witness told the 'latter tha.t he could not make
payment against that receipt as the receipt recited,
reservation of the right of the appellants for the
balance. The witneBB took the document, Ex. C,
to Za.heruddin Ahmed who W&S the Accountant.
Genera.I then. Za.heruddin Ahmed suggested that
the ola.ima.nt should endorse full satisfaction and
payment of all the promissory notes a.nd then only
the payment would be ma.de.
The witness then
said:
"Thereupon I obtained these endorsements
(on the promissory notes)
from
Ka.puroha.nd. Ka.pur(,ha.nd whilst endorsing
these documents protested tha.t he had been
forced to endorse these and he wa.s not a.t a.II
sa.ti.stied.
This happened on the 14th of
February, 1950."
We may here state tha.t no plea wa.s raised by the
a.ppella.nts to the effect tha.t tho endorsements on
the promissory notes had been obtained by
coercion, and no issue waa struck between the
~
parties a.s to the endorsements on the . promissory •
notes having been obtained by ooeroioi:.
That
·-
2 S.C.R.
SUPREME COURT REPORTS 177
being the position, what is the effect of Madhava
Rao ~s evidence ?
The clear effect is that the
authorities who were paying the money in disoha.rge
of the debt of the respondent made it clear that
they would pay the money only if a full satisfaction
of the claim was given by the appellants. The
appellants after some initial protests a!!l"eed e.nd
duly discharged all the promissory notes by endorsing thereon full payment and satisfaction. The
question of coercion was introduced as and by way
of after-thought. Two facts seem to be clearly
established by the evidence ofMadhava Rao. One
is that the authorities r13fused to pay the second
instalment unless full satisfaction of the claim was
endorsed in accordance with the recommendation
of the Committee; the second is that the appellants
did record full payment in satisfaction of the
promissory notes before they received· the money.
In our
opinion,
these
two
facts
clearly
establi~hed
the
case
of
the
respondent
that the appellants had given a full discharge when
they received the second instalment. Indeed, the
evidence of Madhava Rao is supported by the evidence of Kapurchand Godha. Kapurchand Godha
said that when he presented the receipt, Ex. C, to
Madhava Rao the latter said that he would not
accept the receipt in that form .. Madhava Rao then
took
Kapurchand to the
Accountant-General.
Kapurchand was asked to product> the promissory
notes and was told that unless the promissory
notes were endorsed with full satisfaction, no payment would be made. Kapurcband then said :
"I was told that unless I signed the receipt for full payment, no cheque would be
issued to me.
Thereupon I endorsed the
receipt for full payment. By that I mean I
was asked to endorse full payment on the
vouchers and I did so. I protested and said
that. as I was asked to endorse full payment, I
Kapur Chand Go4/w.
••
Mir Nawab
H/mayalal1khan I
Azamjah
1
D,1J.
lr•fJU• t:AtJlld CHA.
v.
Mir Nawab
H""o]Ot.I ........
Azamjlf/I
178
SUPREME COURT REPORTS [1963]
was doing so despite the fact that I was not
reoeiving full payment. Thereafter I signed the
receipt as the vouchers and handed over the
documents to the Accountant-General."
This evidence is in accord with the evidence of
Madhava Rao and :\gain establishes that appellants
when they received the second and the last instalment of Hs. 8,75,000/-gave a full discharge of their
claim and the plea of coercion was later introduoed '
as and by way of an after-thought.
There was some difference of evidence as to
whether Ex. C bore the signature of Kapurchand
when it was first presented to Madhava Rao or
whether the signature wes later put on it. With
that difference we are not now coni'erned. Nor are
· we concerned with certain minor discrepancies
between the evidence of the two witneSBes refeued
to above. The substantial result of the evidence
of the two witnesses to whom we have referred is
that whatever reluctance Kapurohand might have
had in accepting· Rs. 20 lacs in full satification of
the claim of the appellants, he ultimately agreed to
do so. Not only did be agree, but be actually endorsed full satisfaction and payment on all the
promiBBory notes and thereafter he receive payment of the second instalment of ·Ra. 8,75,000/-
wbich
along
with
the
first
instalment
of
Rs. 11.25,000/-marle up the sum of Rs. 20 laca. On
these facts which are established by tho evidence
given on behalf of the appellants themeelvee, the
only conclusion is that there was full satisfaction
of the claim of the appellants.
The legal position is clear enough. Section 63
of the Indian Contract Act reads :
,.
..-...
"Every promisee may dispense with or
remit, wholly or in part, the performance of ; ,•
the promise made to him, or may extend the
time for euch performance, or may· accept
...
S.C.R.
SUPREME COURT REPORTS
179
instead of it any sa.tisfaotion which he thinks
JNJ
fit."
Illustration (c) to the section ea.ye :
"A owes B 5000 rupees. C pays t.o B
1000 rupees, and B accepts them in satiefao.
tion of his claim on A. 'l'his payment is a
discharge of the whole claim."
It seems to us that this case is completely covered
by 1. 63 and illustration ( c) thereof. The appellants
having accepted payment in full eatisfactJon of
their claim, are not now Antitled to sue the respondent for the balance. A reference may also be
made in tbiq conn'-'ction to s. 41 of the Contract Act
under which when a promisee accepts performanGe
of the promise from a third person. he cannot afterwards enforce it against the promisor. There is
some English authority 'to the t>ft'eot that discharge
of a contract by a third person is effectual only if
authorised or ratified by the debtor. In India,
however, the words of s. 41 of the Contract Act
leave no room for doubt. and when the appellants
have accepted performance of th'3 promise from
a third .person, they cannot afterwards enforce it
against the promiser, namely, the respondent.
'When a statute clearly covers a case, it is
hardl,v necessary to refer to decisions.1 In deference
however, to the arguments advanced on behalf of
the appellants, we refer to tbe two decisions on
which learned counsel for the appellant has relied.
One is the decision in Day v. Mc Lea (1), In that case
the plaintiffs made a claim against the defendants
for a sum of money as damages for breach of contract ; tbe defendants sent a cheque for a less
amount stating that it was in full payment of all'
demands.
'J he plaintiffs kept the cheque stating
they did so on account and brought an action for
('I) (1899) 32 Q. B. D. 610. 613,
Kapur Cha•d God/llJ
- v.
MirNowab
H/mayatalifchan
Azom1ah
Du.I.
1ssr
Karr CMn~ Go !ho
••
Mir N awa I
'lima1.s'olik-'1m
..1umjU
Das.I.
l~O
SUPREME COURT REPORTS (1963J
the ha.la.nee of their claim. It wa.9 held that keep·
ing the cheque wa.s not a.s a. matter of h.w conclusive that there was a.n a.ocord a.nd satisfaction of
the cla.im ; but tha.t it was a. question of fa.ct on
wha.t terms the cheque wa.e kept. We do not think
that that decision is of any help to the appellant.
As Lord Justice Bowen said in Day v. Mc Lea(') :
"If a person sends a sum of money on the
terms that it is to be taken, if at all. in ea.tis·
faction of a. larger claim ; and if the money is
• -I
kept,
i~ is a question of fact as to the terms
upon which it is so kept. Accord and satisfaction imply an argeement to take the money
in satisfaction of the claim in respect of
which it is sent.
If accord is a question of
agreement there must be either two minds
agreeing or one of the two persons acting in
such a. wa.y a.s to induce tho other to think
tha.t the money is ta.ken in satisfaction of the
claim, a.nd to ca.use him to act upon that view.
In either case it is a. question of fact."
We ha.ve already Mferred to the facts which a.re
clt>arly established by the evidence in this case.
Those facts clearly established that the appellants
took the second instalment in full sa.tisf11ction of
their claim. The second decision relied on on behalf
of the appellants Ne:uchat,el Aspkalt,e Co. Ltd. v.
Barnett (') also proceded on a similar ground. In
that case ibe claim of the plaintiff company amounted to £259, but the defendant raised some minor
question which might reduce it by £14 or £15.
The
defendant then sent a cheque
for
£125 and
stated in covering letter that this sum was "on
account" pending the receipt of the pla.intifrs reply
to outstancling queries in connection with the work
done. Some time later the defendant enclosed a
further cheque for £75 and on the back of the
J_
(I) (1899) 32 Q.B. D.6100 613.
(2) [19S7J I AU. R.R. 362.
,.
2 S.C.R.
SUPREME COURT RE.PORTS
181
1961
cheque was endorsed "in full and final settlement
of the account". 'lhe l·heque was accepted by the Kopur -;;;.:;; Gadho
plaintiff company, which later sued for the balanoe
of the amount of the claim. It was held that having
regard to the correspondence and the surrounding
circumstances, there was no intention on the part
of the plaintiff company to accept the cheque for
£75 in full satisfaction of the plaintiff's claim, because the words "in full and final settlement of the
account" typed on the back of the cheque were
inconsistent with the main object and intention of
the transaction, pa.rticular ly since (a) the covering
letter sent by tbs defendants plainly imported that
the cheque was sent only on account and not in full
and final settlement, and (b) it could not reasonably
be supposed that, in the circumstances,. the plaintiff
company had agreed to a reduction of the amount
claimed. The facts of the case before us are entirl'lly
different. The appellants were clearly and unambiguously told that unless they gave a full satisfaction of their claim, they would not be paid the
amount. The appellants were left in no doubt as
to the condition on which payment would be ma.de
to them. The appellants clearly accepted the con·
dition and recorded· full .satisfaction on all the promissory notes. It is now impossible to accept the
position that the appellants reserved their right to
· sue the respondent for the balance of the amount.
In Hirachand Punamchand v. Temp'le (1) the father
of a debtor wrote to the creditor offerfog
an
amount less than that of the debt in full settlement
of the debt and enclosing a draft for that amount. _
Tha creditor cashed and retained the proceeds of
the draft and afterwards brought an action against
the debtor for the balance of the debt. It was held
that the creditor must be takan to have accepted
the amount received by him on the terms upon
which it was offered and therefore he could not
(1) [1911] Z K.B. 330.
v.
Mir No.wob
Him'lyotal1khon
Azamjoh
DuJ.
1962
Kotur CA.nd Godlao
v.
Mi, Nowt.I>
Himoyatnli.t.\an
...tumjo,\
182
SUPREME COURT REPORTS [1963J
maintain the action. The 0&86 was considered ond"'r
the English law and it was observed that assuming
that there was no aooord and satisfaction in the
strict sense of the law in England, it could still be
held that the creditor had ceased really to be holder
of the negotiable instrument on which he sued.
With the nicetirs of English law in the matter of
accord and satisfaction we are not concerned. The
position in the present case is the.t the appellants
must have known that they could receive the second
instalment and retain the first instalment by accep·
ting the condition OD which the sum or Rs. 20 lacs
was offered to them, namely that they must record
a full satisfaction or their claim. They accepted the
money on the condition OD which it was offered and
it is not now open to them to say, either in fact or
in law, that they accepted the money but not the
condition.
For these reasons we are satisfied that the
appellato court was right in the view which it took.
Therefore, the appeal raile and is dismiased with
COfltM.
'
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..