Kapur Chand Godha v. Mir Nawab Himayatalikhan Azamjah

Vas J. State and that would naturally be the mean-ing 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 there-with: (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 court did not attach sufficient importance to these 1962 two points and the conclusion which it reached is vitiated for that reason. As the judgment of th11 Kapur Chand Godha Y, appellate court is a judgment in reversal and the Mir.N~w.b question raised are essentially questions of fact on -If imd,atali!han Azamjah which there are conflicting findings, we allowed counsel for the parties to place before us the relev-ant 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 examina-tion. 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

176 SUPREME OOURT REPORTS [1963)

l/16J amount" was to a sum of rupees two orores ear-K ,,,,, C!••ul Goi!• marked for the liquidation of the debts of the two

•· Princes out of a. fund known as Sa.rf-e· Kha.n_ Wha.t Mir J(auab happened after tho Committee had mw:le its ll'-t•Jolalikhan

Aurnj1h recommendation is very important. The first D•sJ. 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 endorse-ments (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 being the position, what is the effect of Madhava Rao ~s evidence ? The clear effect is that the Kapur Chand •• Go4/w. authorities who were paying the money in disoha.rge of the debt of the respondent made it clear that Mir Nawab H/mayalal1khan I they would pay the money only if a full satisfaction Azamjah of the claim was given by the appellants. The D,1J. appellants after some initial protests a!!l"eed e.nd duly discharged all the promissory notes by endors-ing 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 evi-dence 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 pay-ment would be made. Kapurcband then said :

"I was told that unless I signed the re-ceipt 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 was doing so despite the fact that I was not reoeiving full payment. Thereafter I signed the lr•fJU• t:AtJlld CHA. receipt as the vouchers and handed over the

v.

Mir Nawab documents to the Accountant-General."

H""o]Ot.I ........ This evidence is in accord with the evidence of

Azamjlf/I

Madhava Rao and :\gain establishes that appellants when they received the second and the last instal-ment 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 en-dorsed full satisfaction and payment on all the promiBBory notes and thereafter he receive pay-ment 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

instead of it any sa.tisfaotion which he thinks JNJ fit." Kapur Cha•d God/llJ - v. Illustration (c) to the section ea.ye : MirNowab H/mayatalifchan "A owes B 5000 rupees. C pays t.o B Azom1ah 1000 rupees, and B accepts them in satiefao.

tion of his claim on A. 'l'his payment is a Du.I. 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 respon-dent 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 after-wards 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 con-tract ; 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,

1ssr the ha.la.nee of their claim. It wa.9 held that keep· Karr Go !ho ing the cheque wa.s not a.s a. matter of h.w conclu-

CMn~ ••

sive that there was a.n a.ocord a.nd satisfaction of Mir N awa I the cla.im ; but tha.t it was a. question of fa.ct on 'lima1.s'olik-'1m

..1umjU wha.t terms the cheque wa.e kept. We do not think

that that decision is of any help to the appellant. Das.I. 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· -I faction of a. larger claim ; and if the money is kept, i~ is a question of fact as to the terms upon which it is so kept. Accord and satis-faction 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 amoun-ted 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.

cheque was endorsed "in full and final settlement 1961 of the account". 'lhe l·heque was accepted by the Kopur -;;;.:;; Gadho plaintiff company, which later sued for the balanoe v. of the amount of the claim. It was held that having Mir No.wob regard to the correspondence and the surrounding Him'lyotal1khon Azamjoh circumstances, there was no intention on the part of the plaintiff company to accept the cheque for DuJ. £75 in full satisfaction of the plaintiff's claim, be-cause 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 unam-biguously told that unless they gave a full satisfac-tion 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 pro-missory 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.

1962 maintain the action. The 0&86 was considered ond"'r

the English law and it was observed that assuming Kotur CA.nd Godlao that there was no aooord and satisfaction in the

v.

Mi, Nowt.I> strict sense of the law in England, it could still be Himoyatnli.t.\an held that the creditor had ceased really to be holder

...tumjo,\

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.