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TMI Blog2006 (5) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the appellant. The first consignment consisted of 767 bags and the second 744 bags. These consignments were not delivered. The appellant, therefore, lodged two claims dated April 26, 1991 claiming the value of the said goods, namely ₹ 53,264/- and ₹ 51,686/- in respect of the two consignments. By letters dated April 7, 1993 (despatched in August, 1993) the Railways admitted the claims only to an extent of ₹ 9,111/- and ₹ 9,032/- and enclosed two cheques in favour of the appellant for the sum of ₹ 9,111/- and ₹ 9,032/- in respect of the two claims. Both the cheques were dated July 27, 1993. The letters contained the following condition :- In case the above offer is not acceptable to you, the Cheque should be returned forthwith to this office: failing which it will be deemed that you have accepted the offer in full and final satisfaction of your claim. The retention of this cheque and/or encashment thereof will automatically amount to acceptance in full and final satisfaction of your above claim without reason and you will be estopped from claiming any further relief on the subject . On receipt of two letters alongwith the two cheques, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal No. 77 of 1982 of March 11, 1991 (M/s. Assam Bengal Cereals Ltd. vs. Union of India). The matter was heard by a Division Bench of the High Court and by judgment and order of May 5, 2000 the appeal preferred by the appellant was dismissed. The moot question that arose for consideration of the High Court was 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. The aforesaid letters of April 7, 1993, as noticed earlier, offered the amounts contained in the two cheques in full and final settlement of appellant's claim and further provided that in case the offer was not acceptable, the cheques should be returned forthwith. It is the case of the Railways that by retaining the cheques and encashing them, the appellant signified its acceptance of the amounts comprised in the two cheques in full and final settlement of its claims. Such acceptance by conduct is recognized by Section 8 of the Contract Act. On the other hand the appellant contended that it had written a letter rejecting the offer and placing the claims under protest and called upon the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignee did not agree to the offer made by the General Manager in his communication dated May 5, 1964, it should have communicated its refusal to accept the offer, before encashing the cheque. Otherwise it would be assumed that the cheque was encashed on the terms offered by the General Manager, and only later the consignee changed its mind after realizing the proceeds of the cheque. The judgment of the Gauhati High Court in Assam Bengal Cereals Limited (supra) proceeded on a different set of facts. In that case the consignee/claimant had received an offer from the Railways to accept the cheque in full and final settlement of its claim. In response thereto, by letter addressed to the Railways, it informed the Railways that the cheque had been retained and the Railways should give reasons for withholding the balance amount. It was stated in the letter that if no reply was received within 15 days, the acceptance of the cheque would not amount to full and final settlement. In fact, the cheque was not encashed for 15 days after issuance of the letter by the claimant/consignee. In these facts it was held that that principle laid down in Rameshwarlal Bhagchand case (supra) was not appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ascertain the intention of the contractor in making such an endorsement and of the company in permitting such an endorsement to be made. In the facts of the case the High Court observed that the endorsement dispelled any intention to remit the performance in regard to the balance of the claim. On the contrary it clearly evinced that the receipt of the amount was not unconditional so as to effect the discharge of the contract. On the contrary it safeguarded the position of the contractor and indicated that he was not accepting the payment without any reservation. The appellant specifically stated that he was receiving the money 'under protest' which clearly amounted to making a reservation. The reservation could only be that the acceptance of payment was not in discharge of the contract. Consequently it could not be said that the appellant dispensed with, or remitted the performance of the contract, for the rest of his dues. Reliance was placed on the principle enunciated in (1889) 22 QBD 610 : Day vs. Mciea in which it was observed :- If a person sends a sum of money on the terms that it is to be taken, if at all, in satisfaction of a larger claim: and if the money is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole claim. The decision of this Court in AIR 1963 SC 250 : Lala Kapurchand Godha and others vs. Nawab Himayatalikhan Azamjah, may not be of much assistance as in that case apart from the fact that the appeal was decided with reference to Section 63 of the Contract Act, there was clear evidence on record that the plaintiffs therein had received the sum of ₹ 20 lakhs in full satisfaction of their claim and duly discharged the promissory notes by endorsement of full satisfaction and received payment in full. Section 8 of the Contract Act provides for acceptance by performing conditions of a proposal. In the instant case, the Railways made an offer to the appellant laying down the condition that if the offer was not acceptable the cheque should be returned forthwith, failing which it would be deemed that the appellant accepted the offer in full and final satisfaction of its claim. This was further clarified by providing that the retention of the cheque and/ or encashment thereof will automatically amount to satisfaction in full and final settlement of the claim. Thus, if the appellant accepted the cheques and encashed them without anything more, it would amount to an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the cheques, without reservation. Its subsequent change of mind and consequent protest did not matter. In the instant case there is neither pleadings nor evidence on record as to the date on which the cheques were received and the date on which the same were sent for encashment. It is, therefore, not possible to record a categoric finding as to whether the letters of protest were written after encashing the cheques or before encashing the cheques. It was for the appellant to plead and prove that it had not accepted the offer and had called upon the Railways to pay the balance amount. This it must have done before encashing the cheques. If the appellant encashed the cheques and then wrote letters of protest to the Railways, it cannot be held that it had not accepted the offer by conduct, because at the time when it sent the cheques for encashment, it had not conveyed its protest to the offerer. In the absence of any pleading or evidence to establish that the encashment of the cheques was subsequent to the protest letters by the appellant, it is not possible to hold that by encashing the cheques the appellant had not adopted the mode of acceptance prescribed in the letters of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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