Patna High Court
Tata Locomotive And Engineering Co. ... vs Sardar Kartar Singh on 10 May, 1960
Equivalent citations: AIR1961PAT37, AIR 1961 PATNA 37
JUDGMENT V.N. Sinha, J.
1. (After stating the allegations of the plaintiff and the defendant and the issues arising thereon His Lordship proceeded).
(1) The first question that has been urged in this appeal is one of estoppel and acquiescence covered by issue No. 22. The facts necessary tor the determination of this question are as follows: On the 19th of September, 1952, the defendant Company sent a letter to the plaintiff contractor to the following effect:
"Sub:-- Our orders Nos. 338 and 373 for installation of Machine Tools in our Works. With reference to your claims on the above two contracts and your subsequent discussion with us in our office on the 21st June, 1952, and 17th September 1952, on this subject, we are sending herewith our cheque for Rs. 31,302-8-0 (Rupees thirtyone thousand three hundred and two and anas eight only) in full and final settlement of all your claims against the Company on the above two. contracts.
For your information we are enclosing herewith a statement showing complete details as to how the above sum of Rs. 31,302-8-0 has been arrived at after re-checking some of the bills as desired by you in the course of our discussion on the 21st June, 1952 and in the light of the fresh evidence of your claims put forward by you.
Kindly sign the enclosed receipt and return to us for our records."
The letter has been marked as Exhibit A(23). A cheque for Rs. 31,302-8-0 was enclosed with the letter, with a statement showing the details and the amounts payable together with a receipt. Exhibit A (23) was followed by a letter from the Company to the contractor, dated the 27th of September, 1952, which was an answer to the Contractor's letter to the Company, dated the 22nd of September, 1952. The Company's letter has been marked as exhibit 1(g). The relevant portion of the letter runs as follows:
"With reference to your letter No. L/903/52 dated 22nd September. 1952, it was made quite clear in our letter referred to by you that our cheque for Rs. 31.302-8-0 (Rupees thirty-one thousand three hundred and two and annas eight only) was sent to you in full and final satisfaction of all your claims against us on the contracts PWO/ 338 and PWO/373 and all the other works done by you for us. We have nothing further to add in this connection.
We shall, therefore, be glad if you will please sign and return the receipt form sent with our above letter at an early date.
In spite of the above, if you are taking recourse to legal action, you will be doing the same at your sole risk and responsibility.
Yours faithfully,"
A third letter from the Company to the Contractor, dated the 21st of October, 1952 has been exhibited as Exhibit l(f). The relevant portion of the letter runs thus:
"With reference to your letter No. L/932/52 dated 6th October 1952, it is a misrepresentation of facts that our Controller of Accounts asked you to seek legal advice to realise what you state as balance amount due to you and to which we do not agree. In his letter No. TAB/L/134/5897 of 27th September, 1952 addressed to you, and with which I fully concur, the Controller of Accounts stated that the amount of Rs. 31,302-8-0 paid to you was in final settlement of all your dues, and, as this figure was worked out after very careful examination of all your claims, there is no balance whatever due to you from us. and as such, if you took legal action as indicated in your letter No. L/903/52 of 22nd-September 1952, it will be at your sole risk and responsibility."
2. It was argued before the learned Subordinate Judge, as it has been argued before us, that the acceptance "of Rs. 31,302-8-0 by the Contractor, paid by cheque, in full and final settlement of his claim, estopped him from making any further claim from the Company. This argument was not accepted by the learned Judge, who has held, upon oral and documentary evidence in this connection, that the Contractor had not accepted the money sent by the cheque in question, in full and final settlement of his claim, and as such, the suit is not barred by estoppel and acquiescence.
3. Learned Counsel for the appellant has contended that the decision of the learned Subordinate Judge under issue No. 22 is incorrect, and that upon the facts mentioned above, the plaintiff cannot successfully claim that further amounts are due to him under the two contracts. Learned Counsel has urged that the plaintiff was paid Rs. 31,302-8-0 ''in full and final settlement of his claim against the Company under the two contracts. Having accepted the money, it is urged, the plaintiff cannot turn round and say that he had accepted Rs. 31,302-8-0 but not in full and final settlement of his claims.
Learned Counsel has strongly contended that the plaintiff was not entitled to accept the defendant's money amounting to Rs. 31,302-8-0, on his own terms. He could have, it is urged, accepted the defendant's money on the defendant's terms or he should have refused to accept the defendant's money on the defendant's terms. In this connection, learned Counsel has relied upon Sheikh Ma-homad Jan v. Munshi Ganga Bishun Singh, 38 Tnd App 80 and Chotu Mia v. Mt Sundri, AIR 1945 Patna 260 (FB).
4. Learned Counsel for the plaintiff respondent, on the other hand, has submitted that the decisions relied upon by learned Counsel for the appellant do not apply to the facts of the instant case. He has urged that the two letters, namely. Exhibits 1 (g) and 1 (f), clearly indicate that the plaintiff had accepted Rs. 31,302-8-0 only in partial satisfaction of his claim and that the plaintiff had always taken the stand that he did not agree with the Company that the payment was in full and final settlement of his dues. Under these circumstances, it is submitted, that, no question of estoppel or acquiescence arises.
Learned Counsel has further urged that it is clear from the evidence of Venkatasan (D.W, 5) that a certificate stating that the plaintiff had no further claim in respect of the contracts was re quired by the defendant from the plaintiff, but that the plaintiff had never made such a declaration. In this connection learned Counsel for the respondent has relied upon the decision, Firm Basdeo Ram Samp v. Finn Dilsukhrai Sewak Ram, AIR 1922 All 461. Our attention has also been drawn to Article 320 in Volume 7 of Halsbury's Laws of England (Hailsham Edition) and to Section 63 of the Indian Contract Act and learned Counsel for the respondent has submitted that whether there was accord and satisfaction in this particular case is a question of fact upon the evidence on record, and that the learned Subordinate Judge has correctly held that there is no estoppel and acquiescence debarring the plaintiff from instituting the present suit.
5. After giving a careful consideration to the respective contentions raised by learned Counsel for the parties, I have come to the conclusion that the argument of learned Counsel for the appellant cannot be accepted in this case. The two decisions relied upon by learned Counsel for the appellant are distinguishable on their facts. The facts of Sheikh Mahomed Jan's case, 38 Indian Appeal 80 and the decision thereon were as follows: The appellant, who was liable for instalments of revenue falling due after June, 1901, had paid in January 1902, Rs. 73/- on account of the instalment of revenue due. But the Collector applied a portion of this amount on account of the instalment due in the previous September and then advertised the property for sale to realise Rs. 16-12-2 pies, the unpaid balance of the January instalment.
The property was sold and purchased by the first respondent. The appellant thereafter sued to annul the sale held under Act XI of 1859, for default of payment of Government revenue. The Subordinate Judge, who decided the suit, set aside the sale upon certain grounds, although he held that the Collector was fully competent to deduct from the plaintiff's payment, for the January kist, arrears then due for the September kist. The High Court on appeal also held that the Collector was competent to set off the amount paid against the September kist then due, but the decree of the Subordinate Judge was reversed on other grounds and it was held that the sale was valid.
The decree of the High Court was reversed by their Lordships of the Judicial Committee. It was held that no arrears were due in respect of the January kist and that, therefore, the sale was without jurisdiction. It was stated by their Lordships, that, the plaintiff in that case had paid into the Treasury a sum of Rs. 73/-, appropriating that payment in the document which accompanied the payment to the Government, to the January Kist and that the payment was received and accepted on that account. Upon these facts their Lordships held that:
"The money in question in the present case was expressly paid to satisfy the January kist, and it was received and acknowledged on that account. It requires no statutory provision to show that, when money has been so paid and received and appropriated, it is not in the power of one of the parties to the transaction, without the assent of the other, to vary the effect of the transaction by altering the appropriation in which both originally concurred."
The ratio decidendi of Mohamed Jar's case, 38 Ind App 80, is to be found in the quotation given above. It is clear that when the plaintiff in that suit had appropriated his payment to the January kist and the payment was received and acknowledged on that account, the January Kist was fully paid. The effect of the full payment of the January kist, could not, as was held by their Lordships be altered to the disadvantage of the plaintiff, by unilateral conduct of the officers of the Treasury. In the instant case, although the defendant Company had sent a cheque for Rs. 31,302-8-0 in full and final settlement of the plaintiffs claim, the acceptance of the money by the plaintiff, in my opinion, did not amount to full payment of his claim until the plaintiff had signed and returned the receipt containing the declaration required.
The plaintiff had not done so and, on the contrary, what happened has been deposed to by the only witness on behalf of the plaintiff, Swam Singh (P. W. 1). He stated that the cheque had, of course, been cashed, but before that, a letter had been sent to the defendant through a pleader in connection with that matter. It is clear, therefore, that the plaintiff received Rs. 31,302-8-0 but refused to accept it in full and final satisfaction of his claims. It was the defendant's contention in September and October, 1952 that the plaintiff was entitled only to the amount of Rs. 31,302-8-0 and it was the plaintiff's contention, in that connection, that he was entitled to more than that amount upon his contracts. The decision of Ma-homed Jan's case, 38 Ind App 80 (supra) to my mind does not support the contention, that the acceptance and encashment of the cheque for Rs. 31,302-8-0 by the plaintiff had amounted to a full discharge of his dues against the defendant.
6. The facts of Chotu Mia's case, AIR 1945 Pat 260 (FB) are as follows:-- The plaintiff had instituted a suit for possession of certain land which was leased out by his predecessor-in-interest to the ancestors of the defendant, on the ground that there had been a forfeiture of the lease. The question was whether there was a waiver of the forfeiture by the plaintiff when he accepted the rent from the defendant on the 25th of November, 1938. In pursuance of a notice sent by the plaintiff, the defendant had remitted a sum of Rs. 9/- by money order to the plaintiff and on the 25th of November, 1938, a son of the plaintiff had accepted the payment. The money had been remitted as rent, and, under the form of the money order used for the purpose, the defendant had intended that he was remitting Rs. 9/- as payment of rent.
Upon a review of a large number of decisions, this Court held that there had been a waiver of forfeiture and the acceptance of rent which had accrued due subsequent to a forfeiture and prior to the institution of the suit in ejectment, operated as a waiver of forfeiture. Shearer, J., in coming to that conclusion referred to the decision Croft v. Lumley, (1858) 10 ER 1459. Learned Counsel for the appellant has also laid great stress upon the decision of (1858) 10 ER 1459. In my opinion, however, the ratio decidendi of Croft's case, (1858) 10 ER 1459, and that of Chotu Mia's case, AIR 1945 Pat 260(FB) do not apply to the facts of the instant case. In Croft's case, Mr. Baron Chan-nell stated thus:
"The party paying the money had, in my judgment, a clear right to appropriate it. He distinctly paid the money as rent. He refused to pay it otherwise than as rent. Mr. Martelli refused ,in language to receive it as rent; but he did take it. What he did, not what he said, was in my humble opinion the all important matter. He should have declined to take the money at all, if he meant to elect to proceed for a forfeiture."
In the same case Mr. Baron Watson stated thus;
"The facts on this part of the case are, that Mr. Martelli by his correspondence asserted that he would not take the money as rent, or receive it under protest. Mr. Barnes on the part of the lessee offered to pay the rent, and offered and tendered it to Mr. Martelli, the plaintiff's agent, as and for the rent, and required that it should be received, if at all, as rent. Mr, Martelli took the money up, making the observation that he would take it for the occupation. In my opinion he received it as it was tendered, viz, as rent. It.
was not offered as for use and occupation, or mesne profits; indeed, it could not be, as the amount or value of the occupation had not been ascertained.
The money was tendered as rent, and being received, it is the receipt of rent, and, therefore, I am of Opinion that there was a waiver of any of the supposed forfeitures."
The basis of the decision of Croft's case, (1858) 10 ER 1459 which was followed in Chotu Mia's case, AIR 1945 Pat 260(FB) upon similar facts, was that payment had been made on one particular account and the person receiving the money received it and credited it to another account, which he was not entitled to do. In the instant case, there is no such situation. Here, the defendant sent a cheque for Rs. 31,302-8-0. in connection with Work orders Nos. 338 and 373. The plaintiff received the money and credited it towards the very same contracts. Therefore if the plaintiff had never agreed that Rs. 31,302-8-0 had been! paid in full and final settlement of his claims, it ought not to be held that acceptance of the money amounted to a full and final settlement of his claims.
7. The decision of Firm Basdeo Ram Sarup, AIR 1922 All 461, relied upon by learned Counsel for the respondent, is very much in point. The facts of that case are these: The plaintiff firm a,s agent of the Standard Oil Company had sold 900 tins of kerosene oil to the defendant. The price of the oil was Rs. 3982-13-0. The defendant had paid a sum of Rs. 2,717 by cheque and the balance was claimed by suit. The defendant's case was that Rs. 2,717 had been paid in full payment of the plaintiff's claim and that the plaintiff firm having accepted that amount, was no longer entitled to claim the balance.
The suit having been decreed, the defendant appealed to the Allahabad High Court. It was contended in the High Court, that as the defendant had sent the cheque with a condition that the sum of Rs. 2,717 was being paid in full discharge of the plaintiff's claim, and as the plaintiff had retained the cheque and cashed it, the plaintiff was debarred from suing for the balance. It was urged that the fact that the plaintiff, had intimated two days after cashing the cheque, that they did not agree to receive the amount in full discharge, did not make any difference. Section 63 of the Indian Contract Act was relied upon on behalf of the defendant to prove a case of accord and satisfaction. The arguments on behalf of the defendant-appellant were, however, repelled by their Lordships of the Allahabad High Court, Their Lordships stated thus "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.
* * * * The rule of English law undoubtedly seems to "be in favour of the respondent's contention, and lays down that if the sum of money sent by a debtor to a creditor is less than the amount actually due, the creditor is not bound to refuse it and may accept the debtor's offer without prejudice to his claim such as it may be. The case of W. Willis v. Davies which is an unreported case but is referred to in the judgment in the case of Day v. McLea, (1889) 22 QBD 610: 37 WR 483: 58 LJ QB 263: 53 JP 532, is a case which is very much similar to the case before us. In that case a solicitor was entitled to a sum of £ 50/- as costs.
The defendant however sent a cheque for £ 25 with a letter stating that in order to put an end to the matter he sent the cheque for £ 25 on the terms that the plaintiff would receive it in full settlement The plaintiff kept the cheque and gashed it but wrote to the defendant that he de-clined to accept it in full satisfaction of the payment of the amount due and that he required a cheque for the balance. The plaintiff then brought a suit to recover the balance and the defendant pleaded that there was an accord and satisfaction of the claim but it was held that it was a question of fact on what terms the cheque was kept.
The verdict of the jury was that there was no accord and satisfaction and that was held to be final in the matter. The same principle was accepted in the reported case of Day v. McLea, (1889) 22 QBD 610 which, also was a similar one in that the plaintiffs were claiming damages and the defendants sent a cheque to them, for a sum less than the amount claimed, which cheque the plaintiff retained. Nevertheless, it was held that this did not amount to full accord and satisfaction of the claim. It was further remarked that if a person sends a sum of money on the terms that it fa to be taken, if at all, in satisfaction of a larger claim and if the money is kept, it is a question of fact as to the terms upon which it is so kept.
Accord and satisfaction imply an agreement 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 way as to induce the other to think that the money is taken in satisfaction of the claim and to cause him to act upon that view. In either case it is a question of fact."
The decision reported in (1889) 22 QBD 610, also supports the contention of learned counsel for the respondent in this case, to the effect, that, whether there was an accord and satisfaction of the plaintiff's dues, is a question of fact depending on the terms on which the plaintiff had retained and encashed the cheque in the instant case. It is quite clear, to my mind, upon the correspondence quoted above, that the plaintiff had not retained the cheque for Rs. 31,302-8-0 in full discharge of his dues. It appears from Exhibit Kg) that after receiving Exhibit A(23), dated the 19th of September 1952 along with the enclosed cheque, the plaintiff had sent letter No. L/903/52, dated the 22nd September, 1952, intimating that the plaintiff had not accepted the payment of Rs. 31,302-8-0 in full discharge of his claim. Section 63 of the Indian Contract Act also makes it clear, in my Opinion, that when the plaintiff had not accepted the cheque in full satisfaction of his claim, it cannot be held, as a matter of law, that he had remitted the balance. Furthermore, the decision of Ackroyd v. Smithies, (1885) 54 LT 130 appears to be a complete answer to the argument of learned counsel for the appellant based on (1858) 10 ER 1459 dealt with above. Wills, J., concurring in the decision of Cave J., stated thus:
"I do not think that the cases of Croft v. Lumley, (1856) 5 E and B 648 and Davenport v. The Queen, (1877) 37 LT 727: 3 AC 115 are at all in point; but I mention them to show that I have no wish to decide this case contrary to the principles laid down in decided cases. In those cases the question was not between the whole amount of a debt and a smaller sum, but whether, money having been paid and received and no further money being due, the money paid and received was to be taken as paid in respect of rents under a lease on the terms on which it was offered by the person paying, or could be said to be received only in respect of compensation for use and occupation in consequence of a protest by the person receiving it. Those cases are, therefore, not in point. Again in Torrance v. The Bank of British North America, (1873) 29 LT 109: 5 PC 246, Messrs. Torrance had the bank's money, and that ease, therefore, do s not apply. In fact, to cite cases of this kind is beside the mark."
In the result, I am of the opinion that issue No. 22 has been rightly decided by the learned Subordinate Judge.
(The rest of the judgment is not material for reporting -- Ed.) Raj Kishore Prasad, J.
8. I agree.