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Union of India (Uoi) Vs. Rameshwarlall Bhagchand - Court Judgment

LegalCrystal Citation
Subject;Contract
CourtGuwahati High Court
Decided On
Judge
AppellantUnion of India (Uoi)
RespondentRameshwarlall Bhagchand
DispositionAppeal allowed
Excerpt:
- - the consignees cashed the cheque but subsequntly communicated to the general manager, by their letter dated 29-7-64, that the cheque received satisfied only a part of the claim made by them and that consequently he (the general manager) should reopen the case and remit the balance sum of rs. the general manager having failed to make payment of the balance money claimed by the consignees, the latter letter filed a suit for recovery of rs. , that 'nothing like the terms of section 8 occurs in the original draft of the indian law commissioners, nor, so far as known to us in any authoritative statement of english law',and that the terms of the section 'appear to have been taken from the draft civil code of new york with slight verbal alteration. hence i find the view taken by the..........served a notice on the railway administration claiming compensation in the sum of rs. 2368.25. the general manager, n.f. railway pandu, sent on 5-5-1964 a cheque in the amount of rs. 1173.19 to the consignees along with a letter stating that the cheque was being sent in full and final settlement of the claim. the consignees cashed the cheque but subsequntly communicated to the general manager, by their letter dated 29-7-64, that the cheque received satisfied only a part of the claim made by them and that consequently he (the general manager) should reopen the case and remit the balance sum of rs. 1195.06. it was stated further in that letter that if the balance amount was not paid legal steps should be taken to realise the same. the general manager having failed to make payment of the.....
Judgment:

R.S. Bindra, J.

1. The Short though somewhat vexing question that arises for determination in this second appeal filed by the Union of India relates to the interpretation of Section 8 of the Indian Contract Act Another consequential question that falls for decision is whether the provisions of that section apply to the facts of this case. The two courts below have concurrently held that Section 8 is not attracted to the facts of the case.

2. The plaintiffs-respondents M/s Rameshwarlall Bhagchand had imported 210 bags of ground-nuts in 1983 by railway from Risia to Gauhati and when they took delivery of the consignment on 26-7-1963 at the latter station, the consignment was found to be so damaged as not to be fit for human consumption. A certificate to that effect was issued on 26-8-1963 by the Railway officer concerned to the consignees. The dispute about compention having not been immediately setteled the consignees served a notice on the Railway Administration claiming compensation in the sum of Rs. 2368.25. The General Manager, N.F. Railway Pandu, sent on 5-5-1964 a cheque in the amount of Rs. 1173.19 to the consignees along with a letter stating that the cheque was being sent in full and final settlement of the claim. The consignees cashed the cheque but subsequntly communicated to the General Manager, by their letter dated 29-7-64, that the cheque received satisfied only a part of the claim made by them and that consequently he (the General Manager) should reopen the case and remit the balance sum of Rs. 1195.06. It was stated further in that letter that if the balance amount was not paid legal steps should be taken to realise the same. The General Manager having failed to make payment of the balance money claimed by the consignees, the latter letter filed a suit for recovery of Rs. 1200.00 made on of the balance amount of Rs. 1195.06 and Rs. 4.94 by way of interest.

3. The defendants resisted the suit primarily on the basis that the cheque of Rs. 1173.19 having been sent on the term that it represented full and final settlement of the claim and the plaintiffs having cashed the cheque, they were not entitled in law to claim any further amount.

4. The trial Court rejected the defence plea on the ground that there was no documentary evidence indicating that the plaintiffs had accepted the cheque in full and final settlement of the claim and that the plaintiffs were actually entitled to the recovery of the balance amount claimed by them. The Assistant District Judge held in the appeal by the defendants that the plaintiffs having communicated to the General Manager immediately after receipt of the cheque that the balance sum of Rs. 1195.06 was still due to them, they cannot be said to have waived the claim to the amount.

5. Shri P.P. Duara submitted for the appellants that the case falls within the ambit of Section 8 of the Contract Act, and urged on the authority of the decisions in Amrit Banspati Co. Ltd. v. Union of India : AIR1966All104 , Bihari La v. Radhye Shyam : AIR1953All745 , Sunder Lal v. Ram Krishan : AIR1960All544 , that the Courts below had legally erred in decreeing the suit. Shri N.M. Dam representing the plaintiffs respondents, canvassed on the other hand that Section 8 has no applicability to the facts of the case and to support that contention he placed reliance on S. Tin Factory (p) Ltd. v. S.W.F. Product Co. : AIR1965Cal541 . Dipchand v. M. Abhechand & Co. AIR 1902 Cal 166, Union of India v. J.J. Patel & Co. : AIR1960Pat30 , and Kapurehand v. Himayatatikhan : [1968]1SCR424 .

6. Sections provides that performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal. According to Section 2(a) of the Contract Act when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal; and Clause (b) of Section 2 states that when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise. Section 2(1) enacts that promises which form the consideration or part of the consideration for each others are called reciprocal promise.

It was canvassed by Shri Duara on the basis of these statutory provisions that since the General Manager had very specifically mentioned in the documents Exts. 6 and 7, along with which the cheque was sent to the plaintiffs, that the amount of Rs. 1173.19 was in full and final settlement of the claim made, and since the plaintiffs had cashed the cheque without first repudiating the term imposed by the General Manager that the sum of Rs. 1173.19 would liquidate the claim, they must be taken to have accepted the amount in terms of Section 8 and that acceptance amounts to acceptance of the proposal made by the General Manager.

The documents with which the cheque was sent are each dated 5-5-04. The letter Ext. 8 which the plaintiffs subsequently wrote to the General Manager claiming the balance amount of Rs. 1195, 06 is dated 29-7-64 and before that date, It was admitted at the. bar by Shri Dam, the cheque had been cashed by the plaintiffs. It was not disputed by Shri Dam that the facts of the case in hand are on all fours identical with those of Amrit Banspati Co. : AIR1966All104 (supra) decided by the Allahabad High Court. The High Court observed in that case that when was offer is made subject to condition, the offeree cannot accept the benefit under the offer without accepting the condition, nor can he take the attitude. 'I shall accept the benefit but reject the condition.' This view has been constantly taken by the Allahabad High Court even prior to the decision in Amrit Banspati Co's case. : AIR1966All104 .

7. The Patna and Calcutta decisions relied upon by Shri Dam, undoubtedly, at least prima facie, support the view propounded by him. However, a close study of the Patna case would bring out that it was decided on the basis of Section 63 of the Contract Act and that no reference at all was made to Section 8 of the Act. Section 63 enacts that 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 such performance, or may accept instead of it any satisfaction which he thinks fit. This section has in my opinion an altogether different import. It gives an option to the promisee to dispense with or remit the performance of the promise made to him or to accept instead of the promise made any satisfaction which he thinks fit. Illustration (c) appended to Section 63 would bring out its true scope and purport. The illustration states that if A owes Rs. 5000/- to B and C pays to B Rs. 1000/- and B accepts that smaller sum in full satisfaction of his claim against A the repayment would discharge the whole claim. It looks obvious that Sections 63 and 8 operate altogether in different fields. Nor they seem to overlap to any extent.

8. Some English decisions were reffered to with approval in the Patna case relied upon by Shri Dam. I think that those cases have no bearing on and relevancy to Section 8 of the Act. It is mentioned on page 59 of Pollock and Mulla's Commentary on the Indian Contract Act, 8th Edn., that 'nothing like the terms of Section 8 occurs in the original draft of the Indian Law Commissioners, nor, so far as known to us in any authoritative statement of English Law', and that the terms of the Section 'appear to have been taken from the draft Civil Code of New York with slight verbal alteration.' It follows from these excerpts that the English law has no provision parallel to Section 8 of the Act and as such recourse to English decisions for determining the scope of Section 8 may not be very apposite.

Sections 7 to 9 of the Indian Contract Act describe the various modes in which proposal may be accepted and if I may say so, Section 8 provides the acceptance of a proposal by conduct as against other modes of acceptance, such as verbal or written communication contemplated by Sections 7 and 9. Therefore, in a way Section 8 provides undoubtedly a unique provision in the Indian Contract Act. It embraces a case, to cite an instance, of a reward offered for the finder of a lost article. If a person restores the found article to the one who offered the reward, without accepting the latter's proposal in any other manner, the act or conduct or restoration itself is considered sufficient acceptance of the proposal to merit the reward. True that it is an ordinary rule of law that an acceptance of an offer made ought to be notified to the person who makes the offer. But since such notification is required for the benefit of the person making the offer the latter may dispenses with notice to himself if he deems that course to be desirable. If the person making the offer to another intimates hint expressly or impliedly a particular mode of acceptance the offeree can adopt that mode to conclude a binding bargain. If a man writes to another to send him certain goods, then the dispatch of goods would surely amount to acceptance of the offer.

9. Coming now to the facts of the case in hand, the General Manager sent a cheque of Rs. 1173.19 on 8th May, 1964, to the plaintiffs subject to the condition that it was in full and final settlement of the claim, and that ho did after receipt of a letter from the plaintiffs demanding a total compensation of Rs. 2368.25. If the plaintiffs believed that the amount of the cheque fell short of the sum legally due to them, the obvious course for them to adopt was to write immediately to the General Manager, while retaining the cheque with them, that they would not accept the amount of the cheque as fully settling their claim, and that if he (the General Manager) would not agree with them they would send back the cheque to him or each it in partial satisfaction of their claim. The plaintiffs should have proceeded to deal with the cheque after getting a reply from the General Manager to such a communication.

However, without taking any such step the plaintiffs cashed the cheque and about eleven weeks thereafter wrote to the General Manager per Ext. 8 that the cheque did not satisfy their claim which they fixed at Rs. 2368.25. Section 6 of the Act, it may be emphasised, provides for revocation of proposals made. If the plaintiffs had written to the General Manager before encashing the cheque, the General Manager might have withdrawn The Proposal Made by Him on 5th May, 1964. By getting the amount of the cheque first and then writing a letter to the General Manager that its amount did not satisfy their claim fully, the plaintiffs placed the General Manager in a stage where he could not be restored to his former position. Pollock and Mulla have expressed the opinion at Page 65 of their treatise that it is generally sound principle that what is offered on condition must be taken as it is offered. Hence I find the view taken by the Allahabad High Court more rational as also one corresponding with the provisions of Section 8. The Patna High Court decision is clearly distinguishable since it was rested on the provisions of Section 63 without adverting to Section 8 at all.

10. The Calcutta decision in the case of Shyamnagar Tin Factory : AIR1965Cal541 is also of no help for identical, reasons. That case too was decided on the strength of Section 63 besides Section 38, but without any reference to Section 8. In paragraph 7 of the report it is stated that the 'bone of contention between the plaintiff and the defendant is whether it was a case of accord and satisfaction as alleged by the defendant in the written statement or whether it was purely a case of payment by the defendant to the plaintiff on a condition as was urged by the counsel for the defendant at the trial'. Then in paragraph 21 of the report it is stated: 'In the present case the specific defence was accord and satisfaction and issues were framed and the defendant did not lead any evidence. The defendant in the present case failed to establish that there was any accord and satisfaction. The contention of the defendant was that keeping the cheque by the plaintiff amounted to acceptance of the money in full discharge because the defendant had paid the money on condition that it was in entire discharge of the debt.'

It is obvious that the defendant had taken the defence only of accord and satisfaction which is incorporated in Section 63 of the Act. but at the trial he wanted to change that defence which the High Court refused to permit him. Hence the case is clearly distinguishable. The other Calcutta authority, namely : AIR1962Cal166 , relied upon by Shri Dam is also distinguishable inasmuch as the decision in it turned on the provisions of Section 63 without any reference to Section 8. Nothing stated by the Supreme Court in the case of Kapurchand : [1963]2SCR168 is of help to the proposition debated in this Court. It was also in fact a case disposed of on the basis of illustration (c) to Section 63 of the Act.

11. It can bear repetitiiion to state that the cheque along with the documents Exts. 6 and 7 case sent to plaintiffs on the conditions already mentioned in reply to the claim for Rs. 2388.25 submitted by the plaintiffs. The plaintiffs having encashed the cheque without first communicating to the General Manager that they did hot agree to the proposal made by him they must be assumed in terms of Section 8 to have accepted his proposal by mere acceptance of the consideration of Rs. 1173.19. The fact that the plaintiffs wrote a letter on 29-7-64, which was after the cheque had been encashed, denying that the amount had fully settled their claim, would not alter the position in any manner to the detriment of the defendants. If the plaintiffs were not out to agree to the proposal made by the General Manager in his communication dated 5-5-64 they should in fairness, have withheld sending the cheque to their bankers and communicated their intention to the General Manager. As at present, it may be legitimately assumed that the cheque was encashed on the terms offered by the General Manager and that the plaintiffs changed their mind after they had realised the money of the cheque. The observation of the Allahabad High Court in the case of Amrit. Banspati Co. : AIR1966All104 that the plaintiffs cannot be permitted to take the attitude 'I shall accept the benefit but reject the condition' clearly brings out the significance and true meaning of Section 8.

12. In the result. I allow the appeal and on setting aside the decrees of the two Courts below dismiss the suit of the plaintiffs. However, I have decided to leave the parties to bear their own costs in all the three courts and order accordingly.


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