Case: Hari Chand Madan Gopal And Others Vs. State Of Punjab

the appellants. The letter says that the Clearing Agents were unable to pay the amounts debited to the Joint accounts of the Punjab Government before March, 1948, because they had been uprooted from West Punjab where they had huge property worth Rs. 27 lakhs in the shape of mills, agricultural lands and other movable and immovable properties, because large amounts were due to them from West Punjab Government on account of the supply of food grains by them, because there were also other dues payable to them on account of securities and shares in wholesale Pacca Ahrties Association and Syndicate in West Punjab and because the commission due to them to the tune of Rs. 7 lakhs by Undivided Punjab was not being paid to them. It is said that on account of their financial difficulties the Government had decided that Rs. 12,55,214/6/3 payable by them should be debited to the Joint Account of the Undivided Punjab and that all recoveries in respect of those dues relating to the pre-partition period and payable at Lahore should be credited to the Joint Account. Second, the Government was not legally liable to pay the sellers from whom the appellants had purchased rice. Shri H. S. Achreja, Secretary to the Governor, has deposed that there was "no legal liability of the Government to pay sellers, whose goods were supplied to the consignees through the sellers at Shahadara. The Syndicate had filed a suit against the Government. That suit was dismissed." Third, the Government was likely to get mere 40% of the recovery from the appellants. Any recovery in excess of it was likely to benefit West Punjab. So the Government could afford to take a magnanimous decision without the likelihood of any loss to itself that only 40% of the amount debited to the Joint Punjab Account before March 1948, should be recovered from the appellants. 21. According to counsel for the respondent, the minutes of the meeting would show that the decision to recover only 40% of the aforesaid amount was subject to the condition that the appellants should pay the sellers for whom the Government has already recovered certain amounts from the consignees. We are diffident to draw that inference from the minutes of the meeting held on July 28 and 29, 1953. It is important to notice the difference in the language of the Directors letter dated January 17, 1951 and the minutes of the aforesaid meeting. The language of the former clearly evinces that payment to the sellers by the appellants was an essential term of the proposed settlement. The language of the minutes of the meeting does not show that payment to the sellers was a condition precedent to the limitation of recovery to 40%. The minutes of the meeting can be split up in two parts; (1) limiting the appellants liability to 40%, and (2) payment of the amounts due to sellers by the appellants. The first part is not dependent on the performance of the second part as in the Directors letter of January 17, 1951. 22. This inference is supported by the subsequent conduct of the Government Officers. After January 17, 1951, the Government has sent letters to the appellants indicating that payment to sellers was an essential term of the proposed settlement of January 17, 1951. A similar letter was never sent to the appellant after July 28-29, 1953. On the other hand, letters of the Director, Food and Civil Supplies, dated April 21, 1954 and May 11, 1954 show that the Government was paying the sellers from the amount with it to the credit of the appellants and asking them to give their consent to such payment. The Director, Food and Civil Supplies, sent five letters to the appellants on April 21, 1954. They are exhibits D-6 to D-11. In each of them he has stated that if no reply was received within a fortnight, it would be presumed that the appellants had agreed to the payment being made to the sellers mentioned in the letters. The appellants replied to those five letters on May 3, 1954. They said that unless a detailed account of their post-partition dealings was made available to them, it would not be possible to reply to the Directors letters. The Director was requested to send a complete copy of the accounts. In his reply letter of May 11, 1954, the Director said that the appellants had already been given details of the accounts in the meeting of July 28 and 29, 1953. He concluded by saying that if no reply was received by him upto May 20, 1954, it would be presumed that they had no objection to the payment being made to the sellers and that "this office would proceed to make payment to the parties concerned." These letters indicate that in spite of the absence of consent by the appellants, the Government was paying sellers from the amount with it to the credit of the appellants. These letters show that instead of insisting upon payment to the sellers by the appellants, the Government was accepting and acting according to the appellants proposal of January 17, 1951 that the sellers should be paid by the Government from the money with it to the credit of the appellants. 23.In view of the foregoing discussion, we are of the view, that the Government had decided to recover only 40% and no more. The Governments decision would amount to remitting a part of the debt due by the appellants. Under S. 63 of the Contract Act, a promisee can remit a promise in part. It is not necessary under the Contract Act that such remission should be supported by consideration. If the decision of the Government amounts to remitting a part of the debt, as we think, then the Government cannot seek to recover more than 40%. Admittedly more than 40% of the total liability has already been paid to the Government. Therefore nothing remains due by the appellants. 24.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]we are of opinion that the two Orders did not over-lap. They operated in different fields. Clause 8 (2), (3) and (4) of the Governor-Generals Order dealt with any contract made "on behalf of the Province of West Bengal", "the Province of Punjab" and the "Province of Assam" before the appointed day. Clauses 2, 3, 4 and 7 of the Governors Order dealt with various contracts "made by or on behalf of the Governor of Punjab in accordance with Section 175 of the Government of India Act, 1935", or rights and obligations of the Governor arising under those contracts. The aforesaid difference in the phraseology of the two Orders is purposive. The phrase "on behalf of the Province of Punjab" in Clause 8 (3) of the Governor-Generals Order shows that the contracts dealt with in that clause were the contracts which formed the subject-matter of Section 177 (1) of the Government of India Act, 1935. Section 177 (1) provided that any contract made before the commencement of Part III of the said Act by or on behalf of the Secretary of State in Council would from that date, if made for purposes which would after the commencement of Part III of the Act be purposes of the Government of a Province, have effect as if it had been made "on behalf of that Province" and reference in any such contract to the Secretary of State in Council would be construed accordingly. According to Section 179 (1) of that Act, such a contract could be enforced in a suit against the Province concerned. So clause 8 (3) of the Governor-Generals Order dealt with contracts made by or on behalf of the Secretary of State in Council for purposes of the Punjab Province before March 1937 when Part III of the Government of India Act, 1935 was brought into force. Clause 8 (3) has nothing to do with the contracts made by or on behalf of the Governor of Punjab under Section 175 (3) of the Government of India Act, 1935, after March 1937. Clause 2 (d) of the Governors Order dealt with the contracts made by or on behalf of the Governor under Section 175 (3). It would thus appear that the fields of operation of Clause 8 (3) of the Governor-Generals Order and Cl. 2 (d) of the Governors Order were distinct and discrete. They did not overlap and there was no conflict between themThis argument is completely negatived by cl. 2 (d) of the Governors Order. Clause 2 (d) provides that any contract made by the Governor of Punjab in accordance with S. 175 of the Government of India Act, 1935, in so far as it related, inter alia, to services to be rendered "in or for the benefit of areas situated within both the new Provinces, would be deemed to have been made, executed or entered into with the West Punjab Province and the East Punjab Province, as two separate contracts". Each such separate contract would have effect only in relation to "such services as are to be rendered in or for the benefit of the West Bengal or East Punjab Province." Obviously cl. 2 (d) itself provided for the bifurcation of a single and indivisible contract into two separate contractsThe arbitration award brought about a financial adjustment between the West Punjab and the East Punjab. It did not deal with the liabilities of third parties like the appellants to one or the other Province. It did not direct that any amount due by a third party could be recovered only to the extent of 40% of his total liability. According to the award, if more than 40% is recovered from the appellants, the excess over 40% would become payable by the Government to the West Punjab. Secondly, it is said that by virtue of a settlement between the Government and the appellants, the former can recover only 40% of the amount found due by the latter. The trial Court and the High Court have found that there was no settlement between the parties and we agree with them. The so-called settlement is spelt out by the appellants from two letters, dated January 17, 1951. One of the letters was written by the Director of Food, Civil Supplies, Punjab to the first appellant and the other was a reply to it by the second appellant on behalf of the first appellant. The subject-matter of the Directors letter is "settlement of accounts". The letter opens with the statement that "the question of settlement of claims of Government and all sellers against your agency has been discussed at length", in the presence of certain Government representatives and Hari Chand, the second appellantAccording to the Directors proposal, the appellants should pay the sellers, on whose behalf certain amounts had been realised from purchasers by the Government. They should also pay the sellers to whom payments were to be made according to the decision of the Delhi Committee. Hari Chand, on the other hand, suggested that excess over 40% recovered by the Government should be paid to the sellers for whom the Government has recovered the amounts and that the balance, if any, should be utilised in paying the remaining sellers. There is plainly substantial difference between the terms proposed by the Director and the alternative term proposed by Hari Chand. It has not been argued that the Government accepted the alternative proposal of Hari Chand. In the result, we are of opinion, that there was no settlement between the parties. The things did not move beyond the stage of proposal and counter-proposal. This inference is supported by three letters sent to the appellants by the Director, Food and Civil Supplies, the Controller of Food Accounts and the Director General, Food and Civil Supplies, dated September 22, 1951, November 22, 1951 and September 18, 1952 respectively. In all these letters it is insisted upon that the appellants should settle the claims of sellers. The appellants can derive no advantage from the word "settlement" in those letters. We are satisfied that the said word has been loosely used thereinThis argument cannot be raised at this stage. The plea of estoppel was not taken by the appellants in their two written statements filed on January 15, 1957 and June 2, 1959. No issue was framed on estoppel. No argument founded on estoppel was advanced by the appellants in the trial court and the High Court. The argument is not raised even in the statement of case filed by the appellants in this Court. As we are not allowing the appellants to raise the plea of estoppel at the stage of hearing,This inference is supported by the subsequent conduct of the Government Officers. After January 17, 1951, the Government has sent letters to the appellants indicating that payment to sellers was an essential term of the proposed settlement of January 17, 1951. A similar letter was never sent to the appellant after July 28-29, 1953. On the other hand, letters of the Director, Food and Civil Supplies, dated April 21, 1954 and May 11, 1954 show that the Government was paying the sellers from the amount with it to the credit of the appellants and asking them to give their consent to such payment. The Director, Food and Civil Supplies, sent five letters to the appellants on April 21, 1954. They are exhibits D-6 to D-11. In each of them he has stated that if no reply was received within a fortnight, it would be presumed that the appellants had agreed to the payment being made to the sellers mentioned in the letters. The appellants replied to those five letters on May 3, 1954. They said that unless a detailed account of their post-partition dealings was made available to them, it would not be possible to reply to the Directors letters. The Director was requested to send a complete copy of the accounts. In his reply letter of May 11, 1954, the Director said that the appellants had already been given details of the accounts in the meeting of July 28 and 29, 1953. He concluded by saying that if no reply was received by him upto May 20, 1954, it would be presumed that they had no objection to the payment being made to the sellers and that "this office would proceed to make payment to the parties concerned." These letters indicate that in spite of the absence of consent by the appellants, the Government was paying sellers from the amount with it to the credit of the appellants. These letters show that instead of insisting upon payment to the sellers by the appellants, the Government was accepting and acting according to the appellants proposal of January 17, 1951 that the sellers should be paid by the Government from the money with it to the credit of the appellantsview of the foregoing discussion, we are of the view, that the Government had decided to recover only 40% and no more. The Governments decision would amount to remitting a part of the debt due by the appellants. Under S. 63 of the Contract Act, a promisee can remit a promise in part. It is not necessary under the Contract Act that such remission should be supported by consideration. If the decision of the Government amounts to remitting a part of the debt, as we think, then the Government cannot seek to recover more than 40%. Admittedly more than 40% of the total liability has already been paid to the Government. Therefore nothing remains due by the appellants.