2006 (5) TMI 476 - SC - Indian Laws

Whether the acceptance of the two cheques by the appellant and their encashment by it did not amount to acceptance of the offer contained in the two letters of April 7, 1993?

Summary

Issues Involved:
1. Whether the acceptance and encashment of cheques by the appellant amounted to acceptance of the offer in full and final settlement of the claim.
2. Applicability of Section 8 of the Contract Act regarding acceptance by conduct.
3. Evaluation of previous judgments and their relevance to the present case.

Issue-wise Detailed Analysis:

1. Acceptance and Encashment of Cheques:
The core issue was whether the appellant's acceptance and encashment of the cheques sent by the Railways amounted to acceptance of the offer in full and final settlement of the claim. The Railways had sent cheques along with a letter stating that if the cheques were not acceptable in full and final settlement, they should be returned forthwith. The appellant encashed the cheques but wrote letters of protest stating that the claims were placed under protest and demanded the balance amount. The Railway Claims Tribunal and the High Court concluded that by encashing the cheques without returning them, the appellant had accepted the offer in full and final settlement.

2. Applicability of Section 8 of the Contract Act:
Section 8 of the Contract Act states, "Acceptance by performing conditions, or receiving consideration - 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." The High Court and the Supreme Court applied this section to conclude that the appellant's act of encashing the cheques constituted acceptance of the Railways' offer. The appellant's subsequent protest did not alter the fact that the offer had been accepted by conduct.

3. Evaluation of Previous Judgments:
The Supreme Court evaluated several previous judgments to determine the applicability of principles regarding acceptance by conduct:
- Rameshwarlal Bhagchand Case: The court held that the plaintiff had accepted the offer by encashing the cheque without prior protest, thus signifying acceptance by conduct under Section 8 of the Contract Act.
- Assam Bengal Cereals Limited Case: The facts differed as the claimant had protested and demanded reasons before encashing the cheque, thus not accepting the offer by conduct.
- Amar Nath Chand Prakash Case: The endorsement of "under protest" before encashment indicated non-acceptance of the offer, thus no accord and satisfaction.
- Gangaram Bhagwandas Case: The plaintiff did not accept the cheque in full satisfaction and continued the suit for the balance amount, indicating non-acceptance of the offer.

Conclusion:
The Supreme Court concluded that in the absence of evidence showing that the protest letters were sent before encashing the cheques, it must be held that the appellant accepted the offer by conduct. The appeals were dismissed without any order as to costs, affirming the decisions of the Railway Claims Tribunal and the High Court that the appellant had accepted the offer in full and final settlement by encashing the cheques.