Discharge of contractual obligation follows return of the original instrument and acceptance of another satisfaction in its place.

A discharged bankers receipt and the promisee's acceptance of an alternative receipt created a rebuttable presumption that the original obligation had been satisfied. The burden shifted to the promisee to prove any conditional discharge, but no evidence rebutted that presumption and no explanation was given for accepting the third-party receipt. Section 41 of the Indian Contract Act was held inapplicable because there was no actual performance by the third party, while Section 63 applied because the promisee accepted another satisfaction in place of the original obligation. The obligor was therefore discharged and the original claim could not be sustained.

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Issues: Whether the appellant bank was discharged from liability when the original bankers receipt was returned to it with an endorsement of discharge and the respondent accepted the other bankers receipt; whether the respondent could still claim the original consideration on the footing that the discharge was conditional and that the appellant's obligation continued.

Analysis: A bankers receipt is a commercial instrument evidencing an obligation to deliver securities or their value. The respondent had returned the original bankers receipt duly discharged and accepted the other bankers receipt issued by the third party bank along with the appellant's fresh receipt. The Court held that the endorsement of discharge, the return of the original receipt, and the appellant's possession of that receipt gave rise to a rebuttable presumption under Section 114 of the Indian Evidence Act, 1872 that the obligation had been discharged. The burden lay on the respondent to prove that the discharge was conditional, but no evidence was led to rebut that presumption. The respondent also failed to explain why it voluntarily accepted the non-transferable third-party receipt. The Court further held that Section 41 of the Indian Contract Act, 1872 was inapplicable because there was no actual performance by the third party in satisfaction of the original obligation, whereas Section 63 of the Indian Contract Act, 1872 applied because the promisee had accepted another satisfaction in place of the original one.

Conclusion: The appellant was held to have been discharged from its obligation, and the respondent's claim against it could not be sustained.

Final Conclusion: The decrees against the appellants were set aside, the suits were dismissed, and restitution consequentially followed in favour of the successful appellants, with one connected appeal rendered infructuous.

Ratio Decidendi: When a promisee voluntarily returns the original instrument of obligation, accepts another satisfaction in its place, and fails to rebut the statutory presumption arising from the obligor's possession of the discharged instrument, the obligor is discharged and the promisee cannot revive the original claim on a theory of conditional discharge.

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