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Indian Contract Act, 1872 · Chapter IV: Of the Performance of Contracts · Contracts which need not be performed

Section 63: Promise may dispense with or remit performance of promise

In plain words

A promisee can waive or reduce performance of a promise made to them, wholly or in part, extend the time for performance, or accept any other satisfaction they think fit.

Example: A owes B 5,000 rupees. B accepts 2,000 rupees, paid at the agreed time and place, in full settlement. The whole debt is discharged.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Read the in-depth explanation, with key Supreme Court rulings ↓

Official text

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 performance1, or may accept instead of it any satisfaction which he thinks fit.

Illustrations

(a) A promises to paint a picture for B. B afterwards forbids him to do so. A is no longer bound to perform the promise.

(b) A owes B 5,000 rupees. A pays to B, and B accepts, in satisfaction of the whole debt, 2,000 rupees paid at the time and place at which the 5,000 rupees were payable. The whole debt is discharged.

(c) A owes B 5,000 rupees. C pays to B 1,000 rupees, and B accepts them, in satisfaction of his claim on A. This payment is a discharge of the whole claim2 .

(d) A owes B, under. a contract, a sum of money, the amount of which has not been ascertained. A, without ascertaining the amount, gives to B, and B, in satisfaction thereof, accepts, the sum of 2,000 rupees. This is a discharge of the whole debt, whatever may be its amount.

(e) A owes B 2,000 rupees, and is also indebted to other creditors. A makes an arrangement with his creditors, including B, to pay them a [composition] of eight annas in the rupee upon their respective demands. Payment to B of 1,000 rupees is a discharge of B's demand.

Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Understanding this section

Section 63 lets a promisee dispense with or remit performance, wholly or partly, extend the time for performance, or accept any other satisfaction instead. Unlike English law, no fresh consideration is needed.

Key points

  • Remission: accepting less than is due discharges the whole debt (illustration (b)). The English rule in Pinnel's case does not apply in India.
  • Extension of time is a matter for the promisee alone.
  • Accord and satisfaction: accepting a different performance in full settlement discharges the contract.

Full and final settlement and arbitration

Whether a settlement was voluntary or extracted under economic pressure is a common fight, for instance where an insurer insists on a discharge voucher before paying anything. The Supreme Court has held that such a dispute about the settlement itself is still a dispute under the contract. It can go to arbitration, and the arbitral tribunal decides whether there really was accord and satisfaction.

Key Supreme Court rulings

  • SBI General Insurance Co. Ltd. v. Krish Spinning 2024 INSC 532

    Ordinarily no arbitrable dispute survives a full and final settlement, but a dispute about the settlement itself arises under the contract and is not barred from arbitration; the arbitration agreement survives discharge of the main contract by accord and satisfaction.

  • Citibank N.A. v. Standard Chartered Bank 2003 INSC 534

    Section 63 was applied where a bank, knowing a transfer form had been dishonoured, voluntarily accepted a different performance; the original liability stood discharged.

Common mistakes

  • Applying the English requirement of fresh consideration for remission.
  • Treating every signed discharge voucher as conclusive when coercion is alleged.

Read with: Section 62 Indian Contract Act, 1872, Section 25 Indian Contract Act, 1872

Prepared with AI assistance as a study aid. Every ruling listed was checked against the Supreme Court's own judgments on this site, and quoted words appear in those judgments; linked names open the full judgment. Read the judgments themselves before relying on them. Not legal advice.

Supreme Court judgments citing the section 63