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Issues Involved:
1. Whether the appellants accepted Rs. 20 lacs in full satisfaction of their claim against the respondent. 2. Whether the endorsements on the promissory notes were obtained by coercion. 3. The applicability of Section 63 of the Indian Contract Act, 1872. 4. The legal effect of accepting performance from a third person under Section 41 of the Indian Contract Act, 1872. Detailed Analysis: Issue 1: Full Satisfaction of Claim The primary issue was whether the appellants accepted Rs. 20 lacs in full satisfaction of their claim against the respondent. The appellants sold jewellery worth Rs. 13,20,750/- to the Prince of Berar, which, with interest, amounted to Rs. 27,79,000/- by 1948. The Prince acknowledged the debt and promised to pay at his option and leisure. A Committee recommended that the appellants be paid Rs. 20 lacs in full satisfaction of their claim. The appellants received two installments totaling Rs. 20 lacs but reserved their right to recover the balance. The High Court initially ruled that the appellants did not accept Rs. 20 lacs in full satisfaction, but the appellate court reversed this decision, holding that the appellants accepted the sum in full satisfaction and discharged the promissory notes accordingly. Issue 2: Coercion in Endorsements The appellants argued that the endorsements on the promissory notes were obtained by coercion. However, no plea of coercion was raised initially, and no issue was struck regarding coercion. The evidence showed that the authorities made it clear that payment would only be made if full satisfaction was endorsed. Despite initial protests, the appellants endorsed full satisfaction and received the payment. The court found that the plea of coercion was introduced as an afterthought, and the appellants had indeed agreed to the condition of full satisfaction. Issue 3: Applicability of Section 63 of the Indian Contract Act, 1872 Section 63 of the Indian Contract Act states that a promisee may accept any satisfaction they think fit instead of the performance of the promise. The court held that this case was covered by Section 63 and its illustration (c), which states that accepting a lesser amount in satisfaction of a larger claim discharges the whole claim. The appellants accepted Rs. 20 lacs in full satisfaction, and thus, they could not claim any further amount. Issue 4: Legal Effect of Accepting Performance from a Third Person Under Section 41 of the Indian Contract Act, when a promisee accepts performance from a third person, they cannot enforce the promise against the promisor. The court noted that the appellants accepted payment from the Hyderabad authorities, who were third parties. Therefore, the appellants could not enforce the claim against the respondent after accepting the payment in full satisfaction. Conclusion: The Supreme Court upheld the appellate court's decision, concluding that the appellants had accepted Rs. 20 lacs in full satisfaction of their claim and had duly discharged the promissory notes. The plea of coercion was dismissed as an afterthought, and the case was found to be covered by Sections 63 and 41 of the Indian Contract Act. The appeal was dismissed with costs.
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