Appeal No 52 of 60
Appeal from the judgment and decree dated April 15 1958 of the Bombay High Court in Appeal  No 25 of 1957
B R L lyengar for the appellants
M C Setalvad Attorney General of India section R Vakil K H Bhabha J B Dadachanji O C Mathur and Ravindra Narain for the respondent 170 1962
April 12
The Judgment of the Court was delivered by section K DAS J
This is an appeal on a certificate granted by the High Court of Bombay under section 110 of the Code of Civil Procedure and arises put of a suit which the appellants had brought for recovery of Rs 999940 with interest and cost from Mir Nawab Himayatalikban Azamjah who was then known as the Prince of Berar being the eldest son of the Nizam of Hyderabad
The circumstances in which the appeal has arisen are these
On or about January 31 1937 Baboo Mull and Co sold and delivered to the Prince of Berar in Bombay various articles of jewellery the aggregate value of which was Rs 1320750 
Lala Kapurchand Godha who was the first plaintiff in the action and Lala Heeralal Godha the original second plaintiff carried on business in jewellery in partnership with their father and one Lala Baboo Mull since deceased in the name and style of Baboo Mull and Co It is not disputed that the appellants now before us own the entire interest in the Subject matter of the suit and instead of using the name of Baboo Mull and Co we shall same the appellants as the persons who sold the jewellery to the Prince of Berar on January 31 1937
A writing dated January 31 1937 was executed by the Prince Of Berar respondent before us by which be declared and acknowledged having purchased the jewellery specified in a schedule from the  appellants at the aggregate price of Rs 1320750 
In that writing exhibit A the respondent stated I promise on behalf of myself and my heirs executors administrators and successors to pay to you or to your order at my option and leisure at your abovementioned 171 address the said sum of rupees thirteen lacs twenty thousand seven hundred and fifty only together with simple interest thereon  10 ten per cent
per annum
 It is not disputed that the jewellery was in fact delivered by the appellants to the respondent and after January 31 1937 the respondent passed various acknowledgements in respect of the debt due at the time of the passing of the respective acknowledgments
These documents consisted of an acknowledgement of liability and a promise to pay on behalf of the respondent and the last of such acknowledgments was passed on February 1516 1948
By that time the debt of Rs1320 750 with ten per cent
interest thereon had in oreased to about Rs2779000 
By that last document the respondent admitted his liability for the amount of Rs 2779078 2 0 and promised to pay the amount again at his option and leisure
On April 30 1948 the appellants presented their bill and some time in January 1949 one of the appellants had an interview with the respondent and was told that the Nizam had passed the bill
In 1949 when Hyderabad was under military occupation after the Police Action a Committee was set up on February 8 1949 by the Military Governor known as the Princes Debts Settlement Committee
The report of this Committee shows that it was set up in accordance with a resolution made by the Military Governor in order to scrutinize all debts of the Prince of Berar and his younger brother
On February 19 1949 the appellants presented a petition to the Military Governor with regard to their claim and asked for payment of the amount due to them or in the at ternative for the return of the jewellery
The claim of the appellants was considered by the Committee in para 11 of their report
The Committee recommended that the appellants should 172 be paid a sum of Rs 20 lacs in full satisfaction of their claim
The Committee further stated that they did not recommend the return of the jewellery
It may be here stated that the Committee consisted of two persons namely Zaheruddin Ahmed who was the Controller of Accounts to the Nizam and A N Shah a member of the Indian Civil Service
It may also be stated that the report of the Committee shows that it made a reduction of about ten per cent
In the case of all suppliers of goods to the two Princes because the Committee thought that in most of the cases the suppliers inflated the price for the supply of goods to the two Princes
The Committee also thought that the reasonable rate of interest would be six per cent
in the case of creditors who had to wait for a number of years for payment of their dues
On September 27 1949 a sum of Rs1 125000 was paid to the appellants
At that time there was a dispute going on as to whether the appellants were entitled to the entire amount of Rs20 lacs or to only 916th share there
That dispute having been finally settled in favour of the appellant  the appellants received a second payment of Rs875000 on February 14 1950
This amount along with the earlier amount paid to the appellants came to the total of Rs20 lacs
which the Committee had recommended should be paid to the appellants in full satisfaction of their claim
On February 14 1950 a receipt was passed by the appellants for the sum of Rs875000Ex
C and this receipt ran in the following terms Received from the Controller General of Accounts and Audit Hyderabad Government the sum of Rs875000 Rupees eight lacs and seventy five thousand only in full and final payment of the balance of rupees twenty lacs allowed by the Government in respect of my claims under the pronote dated 15 February 1948 passed by the Prince 173 of Berar in my fovour reserving however my right to recover the balance amount due to me under the said pronote from the Prince of Berar
 The relevant authorities refused however to make payment on the receipt exhibit C in which the appellants reserved their right to recover the balance amount due from the Prince of Berar
Thereupon the appellants discharged all the previous promotes and on each one of them recorded a satisfaction of full payment
We may refer to the last of them namely the one dated February 1516 1948
This was for a sum of Rs2779078 2 0 and on this document Kapurch and Godha one of the appellants recorded received payment in full
Then on August 14 1950 the appellants served through their solicitors a notice on the respondent asking him to make payment of the balance of Rs999940 with interest at ten per cent
The respondent not having paid the amount a suit was instituted on February 5 1951 in the High Court of Bombay for recovery of the amount
The suit was tried by Coyajee J
The principal issue for trial was issue No 6 namely whether the appellants had accepted payment of Rs 20 lacs in full satisfaction of their claim against the respondent and surrendered all the writings duly discharged and there was absolute release of the debt as stated in paras
7 8 and 11 of the written statement
On a consideration of the oral and documentary evidence given in the case and relying particularly on exhibit C Coyajee J came to the conclusion that the appellants did not take the sum of Rs 20 lacs in full satisfaction of their claim
The learned Judge said Ordinarily a plaintiff would have been in a most difficult and unenviable position to 174 enforce this claim after having endorsed those documents namely exhibit No 1 as payment in full satisfaction
But evidently payment in full satisfaction there meant full satisfaction as regards the liability of the Hyderabad State and that would naturally be the meaning if taken in conjunction with exhibit C where he reserved liberty to proceed personally against the Prince of Berar
I have therefore come to the conclusion on the main issue in the suit namely that there was no accord and satisfaction when the plaintiff received the second cheque from the Accountant General of Hyderabad State
 Then there was an appeal by the respondent which was heard by the appellate court Chagla C J and Mody J By its judgment dated April 151958 the appellate court came to a contrary conclusion and held that on the evidence oral and documentary given in the case it was clearly established that the appellants accepted the sum of Rs 20 lacs in full satisfaction of their claim and duly discharged the promissory notes by endorsing full satisfaction thereon therefore section 63 of the  applied and the suit of the appellants was liable to be dismissed
It accordingly allowed the appeal and dismissed the suit with costs
In the appeal before us Mr B R L Iyengar appearing on behalf of the appellants has very strongly contended that the view of Coyajee J is the correct view on the evidence given in the case
He has emphasised two points in connection therewith 1 the crucial question is what does the evidence show as to the intention of the creditor in accepting Rs 20 lacs and 2 what is the effect of exhibit C a receipt executed contemporaneously with the payment of the second instalment of Rs 8 75000  Mr Iyengar has argued that the appellate 175 court did not attach sufficient importance to these two points and the conclusion which it reached is vitiated for that reason
As the judgment of the appellate court is a judgment in reversal and the question raised are essentially questions of fact on which there are conflicting findings we allowed counsel for the parties to place before us the relevant evidence along with the pleadings of the parties
Two of the witnesses whose evidence appears to be decisive of the questions raised were Putta Madhava Rao who was examined on behalf of the appellants and Kapurchand Godha one of the appellants
Putta Madhava Rao was at the relevant time Assistant Accountant General
Hyderabad and he was present before the Committee on more than one occasion when the claim of the appellants was considered
Before Coyajee J a question was raised whether the statements of this witness as to what transpired before the Committee were admissible in evidence when none of the two members of the Committee was called for examination
Madhava Rao was undoubtedly competent to prove what he himself heard or saw if such hearing or seeing was a fact in issue and we consider it unnecessary to determine the further question as to whether be was competent to prove the statements alleged to have been made by one or other of the two members of the Committee
Therefore we confine ourselves to the statements of Madhava Rao as to what happened before him
Madhava Rao said that before the Committee the appellants insisted on payment of their full claim but the Committee decided that the appellants must take Rs 20 lacs in full satisfaction of their claim on this Kaparchand Godha protested and said that he would have to reserve his right for the balance
The Committee thereupon made it clear that they could not recommend payment of anything more because a specific amount for distribution had been allotted to them
The reference to a specific 176 amount was to a sum of rupees two crores earmarked for the liquidation of the debts of the two Princes out of a fund known as Sarf e Khan
What happened after the Committee had made its recommendation is very important
The first instalment of Rs 1125000 was paid on September 27 1949
At that time a dispute was going on about the share of the appellants to the money
The receipt which was passed for the payment of Rs 1125000 is marked exhibit B That receipt does not show whether the appellants had agreed to accept Rs 20 lacs in full satisfaction of their claim
As to the second instalment of Rs875000 which was paid on February 14 1950 Madhava Rao give the following evidence
He said that when exhibit C was brought to him by Kapurchand Godha the witness told the latter that he could not make payment against that receipt as the receipt recited reservation of the right of the appellants for the balance
The witness took the document exhibit C to Zaheruddin Ahmed who was the Accountant General then
Zaheruddin Ahmed suggested that the claimant should endorse full satisfaction and payment of all the promissory notes and then only the payment would be made
The witness then said Thereupon I obtained these endorsements on the promissory notes from Kapurchand
Kapurchand whilst endorsing these documents protested that he had been forced to endorse these and he was not at all satisfied
This happened on the 14th of February 1950
 We may here state that no plea was raised by the appellants to the effect that the endorsements on the promissory notes had been obtained by coercion and no issue was struck between the parties as to the endorsements on the promissory notes having been obtained by coercion
That 177 being the position what is the effect of Madhava Rao s evidence  The clear effect is that the authorities who were paying the money in discharge of the debt of the respondent made it clear that they would pay the money only if a full satisfaction of the claim was given by the appellants
The appellants after some initial protests agreed and duly discharged all the promissory notes by endorsing thereon full payment and satisfaction
The question of coercion was introduced as and by way of after thought
Two facts seem to be clearly established by the evidence of Madhava Rao
One is that the authorities refused to pay the second instalment unless full satisfaction of the claim was endorsed in accordance with the recommendation of the Committee the second is that the appellants did record full payment in satisfaction of the promissory notes before they received the money
In our opinion these twofactsclearly established the case of the respondent that the appellants had given a full discharge when they received the second instalment
Indeed the evidence of Madhava Rao is supported by the evidence of Kapurchand Godha
Kapurchand Godha said that when he presented the receipt exhibit C to Madhava Rao the latter said that he would not accept the receipt in that form
Madhava Rao then took Kapurchand to the Accountant General
Kapurchand was asked to produce the promissory notes and was told that unless the promissory notes were endorsed with full satisfaction no payment would be made
Kapurechand then said I was told that unless I signed the receipt for full payment no cheque would be issued to me
Thereupon I endorsed the receipt for full payment
By that I mean I was asked to endorse full payment on the vouchers and I did so
I protested and said that as I was asked to endorse full payment I 178 was doing so despite the fact that I was not receiving full payment
Thereafter I signed the receipt as the vouchers and handed ever the documents to the Accountant General
 This evidence is in accord with the evidence of Madhava Rao and again establishes that appellants when they received the second and the last instalment of Rs 875000 gave a full discharge of their claim and the plea of coercion was later introduced as and by way of an after thought
There was some difference of evidence as to whether exhibit C bore the signature of Kapurchand when it was first presented to Madbava Rao or whether the signature was later put on it
With that difference we are not now concerned
Nor are we concerned with certain minor discrepancies between the evidence of the two witnesses referred to above
The substantial result of the evidence of the two witnesses to whom we have referred is that whatever reluctance Kapurchand might have had in accepting Rs 20 lacs in full satification of the claim of the appellants he ultimately agreed to do so Not only did he agree but he actually en dorsed full satisfaction and payment on all the promissory notes and thereafter be receive payment of the second instalment of Rs 875000which along with the first instalment of Rs 1125000 made up the sum of Rs 20 lacs
On these facts which are established by the evidence given on behalf of the appellants themselves the only conclusion is that there was full satisfaction of the claim of the appellants
The legal position is clear enough
Section 63 of the reads  Every promisee may dispense with or remit wholly or in part the performance of the promise made to him or may extend the time for such performance or may accept 179 instead of it any satisfaction which he thinks fit
 Illustration c to the section says A owes B 5000 rupees
C pays to B 1000 rupees and B accepts them in satisfaction of his claim on A
This Payment is a discharge of the whole claim
 It seems to us that this case is completely covered by section 63 and illustration c thereof
The appellants having accepted payment in full satisfaction of their claim are not now entitled to sue the respondent for the balance
A reference may also be made in this connection to section 41 of the Contract Act under which when a promisee accepts performance of the promise from a third person
he cannot afterwards enforce it against the promiser
There is some English authority to the effect that discharge of a contract by a third person is effectual only if authorised or ratified by the debtor
ID India however the words of section 41 of the Contract Act leave no room for doubt and when the appellants have accepted performance of the promise from a third person they cannot afterwards enforce it against the promisor namely the respondent
When a statute clearly covers a case it is hardly necessary to refer to decisions
In deference however to the arguments advanced on behalf of the appellants we refer to the two decisions on which learned counsel for the appellant has relied
One is the decision in Day vs Mc Lea 1
In that case the plaintiffs made a claim against the defendants for a sum of money as damages for breach of contract the defendants sent a cheque for a less amount stating that it was in full payment of all demands
The plaintiffs kept the cheque stating they did so on account and brought an action for 1 180 the balance of their claim
It was held that keeping the cheque was not as a matter of law conclusive that there was an accord and satisfaction of the claim  but that it was a question of fact on what terms the cheque was kept
We do not think that that decision is of any help to the appellants As Lord Justice Bowen said in Day vs Mc Lea 1  If a person sends a sum of money on the terms that it is to be taken if at all in satis faction of a larger claim  and if the money X X 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
 We have already referred to the facts which are clearly established by the evidence in this case
Those facts clearly established that the appellants took the second instalment in full satisfaction of their claim
The second decision relied on on behalf of the appellants Neuchatel Asphalte Co Ltd vs Barnett 2 also proceded on a similar ground
In that case the claim of the plaintiff company amounted to pound 259 but the defendant raised some minor question which might reduce it by E14 or pound 15
The defendant then sent a cheque for pound 125 and stated in covering letter that this sum was on account pending the receipt of the plaintiffs reply to outstanding queries in connection with the work done
Some time later the defendant enclosed a further cheque for pound 75 and on the back of the 1 1899 32 QD D610 613
2 1957 1 All
RR 362
181 cheque was endorsed in full and final settlement of the account
The cheque was accepted by the plaintiff company which later sued for the balance of the amount of the claim
It was held that having regard to the correspondence and the surrounding circumstances there was no intention on the part of the plaintiff company to accept the cheque for pound 75 in full satisfaction of the plaintiff s claim because the words in full and final settlement of the account typed on the back of the cheque were inconsistent with the main object and intention of the transaction particularly since a the covering letter sent by this defendants plainly imported that the cheque was sent only on account and riot in full and final settlement and b it could not reasonably be supposed that
in the circumstances the plaintiff company had agreed to a reduction of the amount claimed
The facts of the case before us are entirely different
The appellants were clearly and unambiguously told that unless they gave a full satisfaction of their claim they would not be paid the amount
The appellants were left in no doubt as to the condition on which payment would be made to them
The appellants clearly accepted the condition and recorded full satisfaction on all the pro missory notes
It is now impossible to accept the position that the appellants reserved their right to sue the respondent for the balance of the amount
In Hirachand Punam chand vs Temple 1 the father of a debtor wrote to the creditor offering an amount less than that of the debt in full settlement of the debt and enclosing a draft for that amount
The creditor cashed and retained the proceeds of the draft and afterwards brought an action against the debtor for the balance of the debt
It was held that the creditor must be takan to have accepted the amount received by him on the terms upon which it was offered and therefore he could not 1 19112 K B 330
182 maintain the action
The case was considered under the English law and it was observed that assuming that there was no accord and satisfaction in the strict sense of the law in England it could still be held that the creditor had ceased really to beholder of the negotiable instrument on which he sued
With the niceties of English law in the matter of accord and satisfaction we are not concerned
The position in the present case is that the appellants must have known that they could receive the second instalment and retain the first instalment by accepting the condition on which the sum of Rs 20 lacs was offered to them namely that they must record a full satisfaction of their claim
They accepted the money on the condition on which it was offered and it is not now open to them to Jay either in fact or in law that they accepted the money but not the condition
For these reasons we are satisfied that the appellate court was right in the view which it took
Therefore thus appeal fails and is dismissed with costs
Appeal dismissed


Summary:
In January 1937 one M  Co sold and delivered jewellery valued at about 13 lakhs to the respondent Prince of Berar
The Prince acknowledged in writing the purchase of the jewellery and the price thereof and passed various acknowledgments in respect of the debts due and the last of such acknowledgments was made for sum of Rs 2779000
In April 1948 the appellants presented their bill and were informed in January 1949 that the Nizam had passed the bill
In February 1949 when Hyderabad was under military occupation a Committee was set up by the Military Governor to scrutinise all debts of the Prince of Berar and his younger brother
The claim of the appellants was considered by the Committee which recommended that the appellants should be paid a sum of Rs 20 lakhs in full satisfaction of their claim
The appellants were paid the sum of Rs 20 lakhs in two instalments
The appellants tried to pass a receipt when they received the second instalment reserving their right to recover the balance under the pronote from the 169 Prince of Berar
The relevant authorities refused to make payment on the said receipt
Thereupon the appellants dis charged all the previous pronotes and on each one of them recorded a satisfaction of the full amount
The appellants thereafter sued the respondent for the recovery of the balance of the monies due to them on the pronote
The trial court decreed the suit on the ground that there was no accord and satisfaction when the plaintiff received the second cheque from the Accountant General Hyderabad
In appeal by the respondent the Appellate Court set aside the decree holding that the appellants had accepted the sum of Rs 20 lakhs in full satisfaction of their claim and duly discharged the promisory notes by endorsing full satisfaction thereon
The appellants came up to the Supreme Court in appeal by certificate granted by the High Court
Held that when payment is accepted on the condition on which it is offered it is not open to the person receiving the payment to say either in fact or in law that they have accepeted the money but not the condition
A promisee accepting performance of the promise from a third person can not afterwards enforce it against the promiser
In the present case the appellants had given a full discharge when they received the second instalment and as they accepted the money in full satisfaction of their claim they were not entitled to sue the respondent for the balance
Obiter  When a statute clearly covers the case it is hardly necessary to refer to a decision