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Shyamnagar TIn Factory Private Ltd. Vs. Snow White Food Product Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata High Court
Decided On
Case NumberSuit No. 197 of 1964
Judge
Reported inAIR1965Cal541
ActsContract Act, 1872 - Sections 38 and 63
AppellantShyamnagar TIn Factory Private Ltd.
RespondentSnow White Food Product Co. Ltd.
Appellant AdvocateNiren De and ;Sachin Sinha, Advs.
Respondent AdvocateR.C. Deb, ;Somnath Chatterjee and ;Sanjib Dutt, Advs.
Cases ReferredRam Chandra Marwari v. Rani Keshobati Kumari
Excerpt:
- a.n. ray, j. 1. the plaintiff filed this unit for the recovery of rs. 21,778.98 np. the plaintiffs case, in short, is that the plaintiff and the defendant had transactions whereby the plaintiff sold and delivered to the defendant tin containers of divers sizes upon terms that the price would be payable within 30 days from the date of presentation of the bills. the aggregate of the bills for the goods supplied by the plaintiff to the defendant is set out in paragraph 3 of the plaint. in paragraph 6 of the plaint it is alleged that the defendant paid the plaintiff a sum of rs. 50,000/- in part liquidation of the defendant's liability to the plaintiff under the several bills. certain bills were returned by the defendant to the plaintiff and the plaintiff issued credit notes to the.....
Judgment:

A.N. Ray, J.

1. The plaintiff filed this unit for the recovery of Rs. 21,778.98 nP. The plaintiffs case, in short, is that the plaintiff and the defendant had transactions whereby the plaintiff sold and delivered to the defendant tin containers of divers sizes upon terms that the price would be payable within 30 days from the date of presentation of the bills. The aggregate of the bills for the goods supplied by the plaintiff to the defendant is set out in paragraph 3 of the plaint. In paragraph 6 of the plaint it is alleged that the defendant paid the plaintiff a sum of Rs. 50,000/- in part liquidation of the defendant's liability to the plaintiff under the several bills. Certain bills were returned by the defendant to the plaintiff and the plaintiff issued credit notes to the defendant.

2. On November 5, 1963 the defendant paid the plaintiff two several sums of Rupees 26,306.86 nP and Rs. 257.04 nP after deducting Rs. 18,791.64 nP. In paragraph 11 of the plaint it is alleged that the deduction was wrongful and that the deduction was in respect of the defendant's alleged claim for damages.

3. In paragraph 12 of the plaint the plaintiff alleges that the plaintiff duly appropriated the sum of Rs. 26,563.90 nP to the plaintiff's claim under the several bills without prejudice to the plaintiff's rights to recover the balance due under the bills.

4. The defendant in the written statement alleged in paragraph 11 following that the defendant sent sums of Rs. 26,306.86 nP and Rs. 257.04 nP to the plaintiff in full and final settlement of the plaintiff's all outstanding bills after deducting the sum of Rs. 18,791.64 nP being the loss and damages suffered by the defendant and further that the plaintiff accepted the said cheques in full and final settlement. The other contention in the written statement is denial by the defendant that the plaintiff was entitled to appropriate the sum of Rs. 26,563.90 nP without prejudice to the plaintiff's right. It is further alleged in the written statement that the sum was paid on the understanding and/or arrangement and on the condition that the sum would be accepted by the plaintiff in full and final settlement of the dues under the bills and the plaintiff had no right to appropriate the sum without the condition on which payment was made. The further allegation is that the plaintiff accepted the said sum pursuant to the understanding and/or arrangement and on the condition in full and final settlement of dues in respect of the bills and that the plaintiff waived right to recover the balance amount of the bills.

5. The following Issues were framed at the trial:

1. Was the plaintiff entitled to appropriate Rs. 26,563.90 nP paid by the defendant to the plaintiff without prejudice to the plaintiff's rights to recover the balance as alleged in paragraph 12 of the plaint?

2(a). Did the defendant pay Rs. 26,563.90 nP on the understanding and/or arrangement and on condition that the same would be accepted by the plaintiff in full and final settlement of the plaintiff's dues under the several bills and did the plaintiff accept the said sum pursuant to the understanding and/or arrangement and on the condition as alleged in paragraph 12 of the written statement?

2(b). Did the plaintiff waive right to recover balance amount of the bills as alleged in paragraph 12 of the written statement?

3. Did the plaintiff accept Rs. 26,306.86 nP and Rs. 257.04 nP in full and final settlement as alleged in paragraph 11 of the written statement?

4. Is the plaintiff entitled to interest as alleged in paragraph 14 of the plaint?

5. To what relief is the plaintiff entitled?

6. The onus of proof of Issues Nos. 2(a), 2 (b) and 3 is on the defendant. The onus of proof of Issue No. 1 as well as Issue No. 4 is on the plaintiff. There was no oral evidence adduced either by the plaintiff or by the defendant. The Brier of Documents was tendered and marked as Ex. A. Counsel made their submissions on the basis of correspondence.

7. Counsel for the defendant contended that it was not at all a case of accord and satisfaction but that it was a case where the defendant made payment to the plaintiff on a condition and the plaintiff having accepted the money was bound by that condition and could not prefer claim for the balance. 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 counsel for the defendant at the trial.

8. Counsel for the defendant contended that there was no evidence adduced by the plaintiff of wrongful deduction by the defendant and further that the plaintiff did not give any evidence as to when the cheque was encashed, particularly, when the matter of encashment of the cheque was within the special knowledge of the plaintiff and therefore the plaintiff accepted the payment in full and final settlement of claims. It should be stated here that there was no issue of fact as to whether deduction was wrongful or not.

9. In order to appreciate the rival contentions of the parties it is necessary to refer to the correspondence between the parties. The plaintiff entered into a contract with the defendant in writing on January 15, 1968. There is no dispute in the present case about the rates and quantities of goods supplied. It is only necessary to refer to one of the terms in the contract which related to damages if materials were not delivered within the time. The term was that the buyer could buy from the market and claim the difference from the supplier. It is necessary to refer to this term because claim had been preferred in the written statement that there was loss and damage suffered by the defendant and the defendant having deducted that amount sent the balance to the plaintiff who accepted the same in full and final settlement of the claim. But the defendant did not make any claim for loss and damages at the trial.

10. On January 31, 1963 the plaintiff wrote to the defendant and called upon the defendant to pay the bills within 30 days and gave notice that if bills were not paid, the plaintiff would claim interest at the rate of 12 per cent. On February 18, 1963 the plaintiff wrote to the defendant stating that some chalans had not been duly delivered by the defendant to the plaintiff. Correspondence went on between the parties until the months of August and September 1963 when the plaintiff received a letter from the defendant dated August 23, 1963 asking for credit note. Suffice it to say that the letter dated August 23, 1963 was answered by the plaintiff by letter dated August 29, 1963 sending the relevant credit notes. On September 7, 1963 the defendant wrote to the plaintiff that the defendant had suffered loss and damages because the plaintiff failed and neglected to deliver certain quantities of goods and the defendant preferred a claim for Rupees 18,791.64nP on that behalf. The defendant's letter was answered by the plaintiff on September 23, 1963. The plaintiff denied the defendant's claim for damages and claimed the sum of Rs. 47,598.04 nP and interest thereon at 12 per cent. There was no reply to the plaintiffs letter dated September 23, 1963 until the defendant by a fetter dated November 5, 1963, written by the defendant's solicitors Messrs. Khaitan and Co., stated as follows:

'Dear Sirs, Cits: Messrs, Snow White Food Products Co. Ltd., 18, Netaji Subhas Rd., Calcutta-1. Re: Bills Nos. 3881 dated 17-1-633884 dated 19-1-633863 dated 29-1-633874 dated 12-1-633899 dated 2-2-633912 dated 13-2-633935 dated 28-2-633940 dated 6-3-633977 dated 24-4-63

We are instructed by our clients that against your aforesaid 9 bills for Rs. 95,098.50 nP, our clients have deducted a sum of Rs. 59,000/- advanced to you on 8-6-1963 and Rupees 18,791.64 nP. being the sum due to them under their bill No. A 4189 dated 10th September 1963 submitted to you and thus a sum of Rs. 26,306.86 nP. is due and payable to you. Our clients' cheque No. CL 046126 dated the 4th November 1963 in your favour of the State Bank of Bikaner and Jaipur, Calcutta is enclosed in full and final settlement of your aforesaid 9 bills. As regards your bill No. 3875 dated the 15th January 1963 for Rs. 262.99 nP the rate should have been Rs. 2.16 nP per container and as such our clients cheque No. CL 101091 dated the 15th October 1963 on the aforesaid bank for Rs. 257.04 is enclosed in full and final settlement of your aforesaid bill. Please be good enough to acknowledge receipt.

Yours faithfully,

Sd. Khaitan and Co.'

Enclo: 2 cheques.

11. The plaintiff's solicitors Messrs. J. N. Mitra and Co. answered the defendant's solicitors by letter dated November 28, 1963. The material portions of the letter on which turns the controversy between the parties is as follows:

'*** ***

As regards our clients' bill No. 3875 dated 15th January 1963 the containers covered thereunder having been supplied against your clients' order No. 3685 at Rs. 2.21 nP each and not against the old order at Rs. 2.16 nP each which had already been completed, the bill was correctly made out. Hence the sum of Rs. 257.04 nP. paid by your clients through you under cheque No. 101091 on the Bank of Bikaner and Jaipur has been accepted in part payment of the aforesaid bill and you are requested to advice your clients to pay the balance amount of Rs. 5.95 nP in full and final payment of the bill within seven days from receipt hereof.

As regards our clients' bills Nos. 3881 dated 17-1-63, 3884 dated 19-1-63, 3863 dated 29-12-62 (Not 29-1-63 as erroneously stated in your letter), 3874 dated 12-1-63, 3899 dated 2-2-63, 3912 dated 13-2-63, 3935 dated 28-2-63, 3940 dated 6-3-63 and 3977 dated 24-4-63 together amounting to Rs. 97335.05 nP taking into account our Credit Notes for Rs. 2,237.15 nP the sum total of these bills comes down to Rupees 95097.90 nP. Adding to this the sum of Rupees 5840 approximately being interest accrued on account of your clients having failed to pay our client's bills in time (within one month from date of bills) the aggregate amount payable by your clients comes up to Rs. 100937.90 nP. Taking into account the sum of Rs. 50,000/-paid by your clients on 9th June, 1963, the balance due by your clients comes down to Rs. 50937.90 nP. Against this amount your clients have now paid through you the sum of Rs. 26306.86 nP by cheque No. CH 946126 on the State Bank of Bikaner and Jaipur leaving a balance of Rs. 24631.04 nP still due to be paid by your clients.

Your clients' claim for Rs. 18,791.64 nP is altogether baseless and false and therefore cannot be entertained as already pointed out in our clients' letter No. 61/1821 dated 23rd September 1963 and your clients' bill for the amount is returned herewith. It is significant that your clients have not sent any reply thereto or even acknowledged receipt thereof,

In the circumstances aforesaid our clients are advised to accept Rs. 26,306.86 nP in part payment of their dues.

** **'

12. Counsel for the defendant contended that in the letter dated November 5, 1963, the defendant sent the sum of Rs. 26,306.86 nP in full and final settlement of 9 bills and a further sum of Rs. 257.04 nP in full and final settlement of the bill No. 3875 dated January 15, 1963. Counsel for the defendant emphasised on those words in the letter and contended that the defendant paid the amount in full and final settlement and on the condition that it was full and final settlement and therefore the receipt of that sum by the plaintiff was on that condition which would disentitle the plaintiff to claim further sums of money. Counsel for the defendant relied on the Bench decision in Digambar Das v. Harendra Narayan, 14 Cal WN 617 and on the observations appearing at page 625:

'There is nothing to prevent the creditor from accepting the amount tendered in part payment and his doing so will not preclude him from afterwards claiming the residue of his account always provided that the debtor did not make it a condition of his tender that it be accepted in discharge of the whole.'

In Digambar Das's case the plaintiff a mortgagor deposited in court the entire principal amount under Section 83 of the Transfer of Property Act and filed a suit alleging that the mortgagees had purchased from one of the mortgagors his one-third share in the equity of redemption and prayed for a declaration that as the plaintiff had satisfied the entire mortgage debt, he had been subrogated to the rights of the mortgagees and was therefore entitled to a charge upon the shares of his co-mortgagors and that till such charge was extinguished by repayment of the sum paid by him and interest thereon and costs he was entitled to be placed in the possession of the mortgaged properties. The effect of the payment under Section 83 of the Transfer of Property Act was considered. The mortgagees contended that a mortgagee was not bound to accept any sum in part satisfaction because the amount deposited fell short of the amount calculated under the decree. This shortfall was because interest which had not been granted by the trial court but was allowed on appeal had not been deposited. In that context it was observed in Digambar's case that the plaintiff was not entitled to ignore the payment into court and that the plaintiff could accept the payment without prejudice to his rights. Thereafter it was said that if the debtor made the payment a condition of his discharge the position would be different.

13. It is essentially a question of fact as to whether the money was tendered and accepted as a condition of entire discharge of the debt as was contended by the defendant. The proposition on which counsel for the defendant relied in the Bench decision in 14 Cal WN 617, is extracted from the decision in Bowen v. Owen reported in (1847) 11 QB 130 corresponding to 75 RR 306 and 116 ER 425.

14. In (1847) 11 QB 130 the plaintiff proved in support of his plea of tender that he had sent a person to the defendant Owen, the landlord, with 26 pound. 5 s. 7 1/2 d., the whole sum due as the plaintiff contended, and the following letter signed by the plaintiff:--

'Dear Sir,

I have sent with the bearer, Thomas Thomas, a sum of twenty six pounds five shillings and seven pence half penny to settle one year's rent of NANT-Y-PAIR.

I am, etc. etc.'

15. In that case the defendant refused to take the amount saying there was more due to him. The messenger went away but returned and told the defendant that he had some pounds more in his pocket to pay. The defendant again refused to accept the money brought by the messenger saying that more was due. It was objected that these offers coupled with the plaintiff's letter amounted to no more than a conditional tender. It was held by Rolfe B, in the trial court that the tender was conditional and insufficient. But the Jury being of opinion that no more than the amount tendered was due, Rolfe B, reserved leave to the plaintiff to move to enter a verdict if the court held the tender sufficient, in the course of the argument in Bowen's case the decision in Eckstein v. Reynolds, reported in (1837) 7 A and E 80 was referred to. In Eckstein's case (1837) 7 A and E 80 a witness stated that he tendered 8 pounds to the plaintiff saying that at the time he came to tender it 'in settlement of Reynold's account,' Lord Denman, C. J. left it to the Jury to say whether the tender was conditional or unconditional. The Jury found it unconditional but Lord Denman was of opinion that it was conditional.

16. The decision in Bull v. Parker, (1842) 2 Dowl. N. S. 345 was also referred to in the course of the argument in Bowen's case. In Bull's case the tender was proved by the witness who said: 'I offered him '(plaintiff)' 4 pounds and I said: J went by the direction of Mr. C. Parker '(defendant)' to pay him 4 pounds in full discharge of his accounts; I did not say I will pay if yon will accept it in full discharge' The tender there was held to be sufficient. Wightman, J., during the course of hearing said of the decision in (1842) 2 Dowl NS 345: 'Here though it is true the words were not the same and might be capable of a different construction, yet as the case was not left to the Jury nor any objection made on the part of the plaintiff to the tender when it was proposed, I should take it that there was no such condition annexed to it when it was made as would make it amount to this: 'unless you accept this money in full discharge I will not pay it at all'.' Lord Denman, C. J. in course of argument in Bowen's case put the test thus: whether in an action for the residue, proof of payment and of receipt by the defendant, under the circumstances proved would have been proof that the whole was paid.

17. (1847) 11 QB 130 decides that the cardinal distinction between conditional and unconditional tender is this: to make a tender conditional there must be a distinct form of condition and it is not enough that the person tendering says 'I assert this to be all that is due' but he must say 'Take this in full discharge or take nothing'. It is manifest that persons making a tender do so for the purpose of extinguishing the debt. If in tendering it is merely proposed that the creditor should take the sum offered and leave it open to him to persist in his claim for more, such a tender is free from objection. But if a party says that he will not pay the money unless the creditor gives a receipt for it as the whole amount due that would not be legal tender. In Bowen's case the tender was held to be not conditional.

18. Counsel for the defendant contended that in Bowen's case the letter was not couched with any words of condition but that in the present case the words of condition were that the amount was enclosed in full and final payment.

19. Where a creditor sends a cheque to the debtor and the amount of the cheque is smaller than the amount due and the debtor sends the cheque in full and final payment of the dues it is a question of fact whether the cheque is accepted in satisfaction of the entire debt or merely as a payment on account leaving a balance due. Counsel for the defendant contended that the payment in the present case along with the letter dated November 5 indicated that it was a payment on the condition contained in the letter and the plaintiff was bound by such condition. Two questions are to be ascertained; first, did the defendant send the cheque on the condition that it was to be accepted in discharge of the entire debt? Secondly, did the plaintiff accept the cheque on the condition or was the plaintiff entitled to accept and appropriate it towards the plaintiffs dues leaving the plaintiff free to prefer claim for the balance? Where a creditor keeps a cheque which has been sent to him by the debtor in discharge of the amount due it is a question of fact whether the cheque is taken in satisfaction of the debt or merely as a payment on account leaving a balance due.

20. In order to ascertain whether there has been imposition of any condition it has to be found as to what the debtor did exactly state to the creditor. The root authority which illustrates this principle is Day v. McLea reported in (1889) 22 QBD 610. That was an action to recover damages for breach of contract. The defence was that the plaintiff had agreed to accept and had accepted a certain sum in full satisfaction of all demands in respect of the breach. The plaintiff there made a claim on the defendants who thereupon sent them a cheque for a sum less than the amount claimed and stated that it was 'in full of the demands' and enclosed a receipt in that form for signature by the plaintiff. The plaintiff wrote in reply that they took the cheque on account, and had placed it to the defendant's credit, at the same time enclosing a receipt on account, and asking for a cheque for the balance of the claim. In answer to that letter the defendant wrote stating that the payment was made in full of all demands, and asked for a receipt in full. It was contended on behalf of the defendant that the keeping of the cheque by the plaintiff was in law an accord and satisfaction of the claim. Charles, J. held that there was no accord and satisfaction and gave judgment for the -plaintiff. In the Court of Appeal consisting of Lord Esher M. R., Bowen L. J. and Fry L. J., Lord Esher M. R. said:

'This very question, however, came before this Court in Miller v. Davies (not reported). In that case the action was upon solicitor's bill of costs for pound 50 and there was a plea of accord and satisfaction. Before action the defendant sent the plaintiff a cheque for pound 25, with a letter stating that, in order to put an end to the matter, he sent cheque for pound 25, on the terms that the plaintiff would receives it in settlement. The plaintiff kept the cheque and cashed it, and wrote to the defendant that he declined to accept it in settlement and that he required a cheque for the balance. The defendant thereupon wrote in reply requesting the plaintiff to return the cheque if he would not accept it in satisfaction. The Jury found that there was no accord and satisfaction. It was contended there as in the present case that the fact of the plaintiff keeping the cheque was conclusive in law that he had taken it in accord and satisfaction of the claim, inasmuch as it had been sent in satisfaction and the plaintiff was bound either to keep it upon the terms on which it had been sent or to return it. This Court, however, held that the fact of keeping the cheque was not conclusive in law, that the question was one of fact, and that the Jury having found that there was no accord and satisfaction the Court would not interfere.'

21. This decision brings to the forefront the legal principle that the sending of a cheque for a smaller amount than the amount claimed by creditor along with a letter to the effect that it was in full settlement does not amount to a discharge of the entire debt, nor does it amount to payment or tender of the amount on any condition that acceptance of that amount is in full and complete discharge of the entire debt. Further, the fact of keeping the cheque is not conclusive in law. The entire matter is a question of fact. The Court has to find out the true character of the transaction, the real intention of the parties and the correct and essential transaction between the parties. In the case of (1889) 22 QBD 610, Bowen, L. J. said that if the money was kept it would be a question of fact as to the terms upon which it was so kept. Accord and satisfaction imply an agreement to take the money in satisfaction of the claim in respect of which it was sent. 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 them was any accord and satisfaction. The contention of the defendant was that keeking 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.

22. The Court in ascertaining the intention of the parties will rip open the entire transaction and that is laid down by Lord Denning in Neuchatel Asphalate Co. Ltd. v. Barnett, reported in (1957) 1 All ER 362 corresponding to (1957) 1 WLR 356. The defendant there employed the plaintiff company to put a new surface on the drive of his premises and to do certain other work. The company's bill amounted to pound 259, but the defendant raised queries which might reduce it by pound 14 or pound 15. The defendant sent a cheque for pound 125, & stated in a covering letter that this sum was 'on account' pending the receipt of the company's reply to outstanding queries in connection with the work. The defendant thereupon wrote to the company:

'With further reference to your account, in spite of repeated requests for allowance to which I am entitled you have failed to advise me in this matter. I am therefore enclosing my further cheque for pound 75 in respect of the work'.

On the back of the cheque enclosed with the letter the defendant had typed 'In full and final settlement of account'. The cheque was accepted by the company. The Secretary of the company signed a receipt on the back of the cheque, under the typed words, and the cheque was endorsed by the company's rubber stamp. The defendant had thus paid pound 200 in all against the bill for pound 259. The company afterwards offered to credit him with pound 4.10s. in respect of his queries. The defendant replied that his payment 'was in 'full and final settlement of your account and was indorsed accordingly and accepted by you. The matter must therefore now be considered as concluded.' The company brought an action to recover the balance sum.

23. Counsel for the defendant in the present case distinguished Neuchatel Asphalte Company case by contending first that the amount sent by the defendant to the plaintiff in that case was admittedly much smaller than the amount in respect or which the plaintiff had in fact preferred a valid claim and secondly that the letter in that case was entirely different to the letter in the present case. It should be borne in mind that in Neuchatel Asphalte Company case the Secretary who signed the receipt did not give evidence and yet Denning, L. J. said 'The whole question is: What is the proper interpretation of the transaction as it stands on the correspondence?' The Secretary could not come and state that he made a mistake because it would be a mistake of his own making of which the defendant knew nothing and the endorsement would stand and therefore, it would be essentially a matter of proper interpretation of the transactions as Denning L. J. said in Neuchatel Asphalte company case. The letter on which the defendant there relied was as follows:

'Dear Sirs, With further reference to accounts, in spite of repeated requests for allowance to which I am entitled you have failed to advise me in this matter. I am therefore enclosing my further cheques for pounds 75 in respect of this work.'

Anyone reading the defendant's letter of December 21 would reasonably think that the pounds 75 was a payment on account and nothing more; but with the letter the defendant enclosed his cheque payable to the company for pounds 75, and on the back of the cheque he had typed these words 'In full and final settlement of account,' Emphasis was placed by counsel for the plaintiff in the present case on the words 'In full and final settlement of account' appearing on the back of the cheque. Denning L. J. stated that the words 'In full and final settlement of account' there were inconsistent which the main object and intention of the transaction as disclosed by all the other circumstances of the case. It was further pointed out that in the circumstances the Secretary should not have intended to accept the cheque as final release of the defendant's indebtedness.

24. Hodson, L.J. referred to the judgment of the learned County Court Judge who said:

'I do not know what was in the mind of the Secretary when he said that and he has not been called, but if he had looked at the account I do not think he could, as a businessman have signed the cheque without making enquiries about the sum of pounds 59. 1 do not think he could have looked to the account. I think he just signed the cheque and passed it on to put to the account. He was accepting the cheque in full satisfaction of all outstanding claims on the defendant. I think that this suggests he was not conscious that it was reducing the amount by pounds 59. I do not think he even intended to do such a thing. I am not at all confident that I am right about this, but I think 1 am doing justice in the matter in [hose circumstances. I do not think I am satisfied the Secretary of the company did accept this cheque for pounds 75 in full discharge of the account.'

Later Hodson, L.J. referred to the observation of the learned County Court Judge and said:

I am of opinion that the learned county court judge was entitled to arrive at his conclusion on the facts of the case, looking at the surrounding circumstances, which are unusual'. The circumstances referred to in that case were that a man was writing to a company whose head office was in London without sending the account and he was making no reference in the covering letter to the fact that the cheque was to be accepted in full satisfaction of any claim and he was writing to London office in that way when the whole of the correspondence had been with the Birmingham Office.

25. Counsel for the defendant in the present case relied on the surrounding circumstances in Neuchatel company case and contended that there was no such unusual or special aspect in the present case. I am unable to accept the distinction in the present case because of two grounds. The first letter dated November 5, 1963 is couched with the words that the payment is in full and final settlement of the bill which words do not in the light of the principles laid down in the decisions to which I have referred amount to imposing any condition that the smaller amount is paid in entire discharge of the debt and if it is accepted by the creditor it will be accepted on that condition of entire discharge of the entire debt and secondly the plaintiff in accepting the cheque put the intention of the plaintiff in bold relief that the defendant's alleged reduction was not accepted and the payment made was accepted by the plaintiff without prejudice to the plaintiff's entire claim. As Morris L. J. said in Neuchatel Asphalte company case;

'If the defendant was putting forward a proposal that there should be an end of the matter on the basis that the plaintiff gave up pounds 59 of its claim, it seems to me that he should have made some express reference to that proposal. There was nothing to put the recipient of this letter on express notice that this was a proposal in that form, and no mention made in the body of the letter of the words that were on the back of the cheque.'

It is true that there is some distinction between the body of the letter and the words appearing in the back of the cheque in Neuchatel company ease but the surrounding circumstances and the intention of the parties are of paramount importance as to whether the defendant in the present case is putting forward to the plaintiff that the money is paid on condition that it is in entire discharge of the debt and the plaintiff in accepting it is giving release and satisfaction and discharge of the entire debt.

26. Counsel for the plaintiff also relied on the decision in Basdeo Ram Sarup v. Dilsukh Rai Sewak Ram, reported in ILR 44 All 718: (AIR 1922 All 461) in support of the same proposition that where the debtors, knowing that the creditors claimed a certain amount, sent them a cheque for a smaller sum, that it was to be taken as in full satisfaction of the claim and the creditor cashed it and then wrote intimating that they did not agree to the condition, it was held that the acceptance of the cheque by the creditors was not a conclusive proof of acceptance of the condition and did not preclude them from suing for the balance of their claim. The decision in (1889) 22 QBD 610 was relied upon in the Allahabad decision. In the Allahabad case the plaintiff brought a suit to recover a sum of money on the allegation that the plaintiff sold to the defendant certain quantities of Kerosene and the defendant paid a part of the amount leaving the balance sum due and owing. The defendant contended that the sum alleged by the plaintiff to have been paid by the defendant had been in full payment of the plaintiffs claim and they accepted the amount and the plaintiffs were not entitled to claim any balance. The defendant in that case sent a cheque with a condition that the same was being paid in full discharge of the total amount due to the plaintiff. The plaintiff retained the cheque and ultimately cashed it and then sent a letter to the defendant intimating the encashing of the cheque but they did not agree to receive the amount in full discharge of the payment. It was held:

'We are, however, of opinion that the mere fact that the plaintiffs retained the cheque and cashed it and at the same time refused to receive the amount in full discharge of the payment of their debt does not raise any conclusive presumption that they had accepted it as a conditional offer made by the defendants. Every case is to be adjudged on its special circumstances and in this particular case the lower appellate court has come to a finding that the plaintiffs did not really agree to accept the amount in full discharge of their debt. This is really a question of fact.'

27. The decision of the Judicial Committee in Ram Chandra Marwari v. Rani Keshobati Kumari, reported in 36 Ind App 85 (PC) was referred to in the Allahabad decision. In Ram Chandra Marwari's case the amount was deposited under Section 83 of the Transfer of Property Act and it was held that in the absence of proof that the mortgagor had assented to the withdrawal being in part and not in complete satisfaction of the mortgage debt the court had no jurisdiction and did not purport to permit withdrawal on those terms, and that in consequence the mortgagor's liability was fully discharged, and the statute did not permit acceptance of money on any condition other than that laid down in the statute and further the acceptance of the money would be a statutory discharge in respect of the amount deposited. The statute in Ramachandra Marwari's case laid down the condition of discharge of the debt and did not permit acceptance on any other term. All these decisions in my opinion support the plaintiff's contention in the present case. The letter relied upon by the defendant in the present case did not impose any condition and the acceptance of the cheque is not conclusive and it is essentially a question of fact as to what was the real transaction between the parties and what was their real intention.

28. I am unable to hold that the present case is not one of accord and satisfaction. The defence was based on accord and satisfaction. The defendant failed to prove that. The several decisions cited at the Bar show that the surrounding circumstances are to be looked into for proper interpretation of the transaction. The intention of the parties is expressed in the correspondence. The defendant tendered the money and the question is whether the plaintiff accepted it in full settlement of the bills or not. In the light of the several decisions discussed above I am unable to hold that the defendant sent the cheque on the condition that it was to be accepted in discharge of the entire debt. In Neuchatel Asphalte company case even the receipt signed in full and final settlement of account was held not to be so in the context of surrounding circumstances in the present case there was never any acceptance of the cheque in full and final settlement. It was said on behalf of the defendant that there was no evidence as to part payment and as to whether the cheque was encashed after the plaintiff's solicitor wrote on 28th November 1963. In my opinion it was a matter within the control of the defendant to produce the cheque. But the dominant intention of the plaintiff is expressed in the plaintiffs solicitor's letter dated 28th November 1963.

29. On the facts I am of opinion that the defendant has failed to prove that there was a case of accord and satisfaction. The contention on behalf of the defendant that the plaintiff should have led evidence of the encashment of the cheque to find out as to when it was encashed is rightly answered by the plaintiffs counsel that the cheques were within the special reach and knowledge of the defendant. No attempt was made by the defendant to produce or tender the cheques when they were encashed. The matter rests entirely on the correspondence. I have come to the conclusion that the plaintiff is entitled to claim the balance of the amount and that there was no payment by the defendant to the plaintiff in discharge of the entire debt. I therefore answer the issues as follows:

1. YES.

2. (a) NO. (b) NO.

3. No.

4. No argument was advanced as to why theplaintiff should not be entitled to interest. Onthe evidence it appears that the plaintiff gavenotice claiming interest. I am therefore ofopinion that the plaintiff is entitled to interest.There will therefore be a decree for the sum ofRs. 21,778.08 nP. There will be interest onjudgment at six per cent and costs. Certifiedfor two counsel.


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