TaxTMI 
TaxTMI 
TaxTMI 
2006 (5) TMI 476
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....ged two claims dated April 26, 1991 claiming the value of the said goods, namely Rs. 53,264/- and Rs. 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 Rs. 9,111/- and Rs. 9,032/- and enclosed two cheques in favour of the appellant for the sum of Rs. 9,111/- and Rs. 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, the appellant wrote to the Railways two identical letters of August 20, 1993 stating that the claims were placed under PROTEST and could not be accepted and that the balance amount shou....
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.... 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 respondent to pay the balance amount claimed by it. The appellant, therefore, submitted that there was no acceptance by conduct as envisaged by Section 8 of the Contract Act, and that its retention of the cheques must be v....
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....e 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 applicable to the case since the claimant had responded to the offer of the Railways demanding from them the reasons as to why the entire claim was not admitted, and further provided that unless reasons are assigned within 15 days from the re....
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....he 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 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 the accord is a question of agreement, there mu....
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.... Contract Act, there was clear evidence on record that the plaintiffs therein had received the sum of Rs. 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 acceptance of the offer made in the letters of the Railways dated April 7,. 1993. The offer prescribed the mode of acceptance, and by conduct the appellant must be held to have accepted the offer and therefore, could not make a claim later. However, if the appellant h....