Banerjee, J.:— In the Court of Small Causes, Calcutta, the plaintiff, who is the petitioner before us, brought a suit against the defendants opposite parties claiming Rs. 1974-12-9, being the balance of price of 142 mds. 20 srs. of coriander seeds, sold by the former to the latter.
2. There is no dispute that the defendants contracted to buy from the plaintiff 300 bags of coriander seeds, each bag weighing 1 md. 10 srs; out of that the plaintiff sold and delivered to the defendants 142 mds. 20 srs. of coriander seeds, in 114 bags. There is also no dispute that the price agreed upon was Rs. 29-6/- per maund. For the quantity delivered, the agreed price would come upto Rs. 4173-11-6. Out of the same, the defendants paid to the plaintiff Rs. 2435-0-9, on December 20, 1955, leaving a balance of Rs. 1738-10-9. Adding interest on the unpaid price and sales tax the plaintiff laid his claim at Rs. 1974-12-9. The defence was that the sum of Rs. 2435-0-9 had been tendered by the defendants to the plaintiff in full and final settlement of all the dues and the plaintiff accepted the same as such and was, therefore, not entitled to claim more.
3. The trial Judge upheld the contention of the defendants and dismissed the suit. The plaintiff applied for new trial, under section 38 of the Presidency Small Cause Courts Act, to set aside the judgment and to enter another and a different judgment, but the application failed.
4. Against the order dismissing his application for new trial, the plaintiff moved this Court and obtained this Rule. When the Rule came up for hearing before P.N Mookerjee, J., his Lordship referred the matter to a Division Bench because it appeared to him that the case involved “a substantial question of law of sufficient importance.”
5. The point for our consideration is whether the manner of tender of Rs. 2435-0-9 by the defendants and the acceptance of the same by the plaintiff amounted to accord and satisfaction of the entirety of the defendants' liability for payment.
6. The reason which weighed with the court below in dismissing the plaintiff's claim is set out below:—
“The rule of law, as held in Bowen Against Owen as reported in Queen's Bench Reports, Volume 11, 130, lays down that a tender is valid if it implies merely that the party offers a given sum as being of that he admits to be due: but if it implies also, if the other party takes the money, ???he is required to admit that no more is due, the tender is conditional and, insufficient. In the latter case the principal has the option of refusing to accept that tender-being conditional. This rule was followed by their Lordships of the Calcutta High Court in the ruling reported in 14 C.W.N 617, at page 625 their Lordships held that it is well settled that though a tender of a smaller amount than that of which an indivisible and entire claim consists may be invalid as a tender, there is nothing to prevent the creditor from accepting the amount tendered in part payment and his doing so will not preclude him from afterwards claiming the residue of his accounts — always provided that the debtor did not make it a condition of his tender that it be accepted in discharge of the whole.”
(b) “We agree with the learned trial Judge that the plaintiff having accepted the tender made under the terms laid down in the letter, ext. 1(d) dated 20/12/55 that the defendants were tendering the said sum in full and final settlement of all dues of the plaintiff in respect of the sowda of 300 bags of coriander seeds after deducting Rs. 1694-8-6 due to the inferior quality of the seeds supplied, the plaintiff cannot be allowed to say that he accepted the same free of these terms nor can the plaintiff be allowed to lay down his own terms as he did by his letter dated 23/12/55, vide Ext. 1(f). We hold that the plaintiff's claim has been fully discharged by his acceptance of the aforesaid conditional tender.”
7. Before we examine the reasons given by the court below, it is necessary for us to look into Ex. 1(d), letter from defendants' solicitor to the plaintiff petitioner, dated December 20, 1955. The material portion of that letter was:—
“In connection with the 300 bags contracted to be supplied by you, you supplied only 114 or 142½ mds. of inferior quality and failed to supply in time the balance of 186 bags for which clients had supplied you with new gunny bags. By reason of your breach of contract as aforesaid clients have suffered damages to the extent of Rs. 1694-8-6 as per statement enclosed herewith.
You sent our clients a bill for Rs. 4129-9-3 as price of 114 bags supplied. Deducting therefrom the said sum of Rs. 1694-8-0, we are instructed to enclose herewith our clients' cheque for Rs. 2435-0-9 in your favour, in full and final settlement of all your dues against our clients in respect of the said sowda for 300 bags.”
8. To the above letter the Advocate for the plaintiff replied as follows, by a letter dated December 23, 1955, Ex. 1(f):—
“In this connection I refer you to the previous correspondence in the matter ending with my letter to you dated the 12th instant. As notified in the said letter, the goods, namely, 186 bags of coriander seeds have been resold at Rs. 25-8/- per maund on your clients' account on the 12th instant by public auction. The net sale price realised amounts to Rs. 5939/7/6. The contract value of the said goods at Rs. 29-6/- per maund comes to Rs. 6800-15-9. Thus, there has been a short fall of Rs. 861-8-3 and which my client is entitled to get from your client as resale damage.
Further, the price of 114 bags already supplied to your clients amounts to Rs. 4173-11-6 and not Rs. 4129-9-3 as stated in your letter. Thus my client has to get from your clients the total sum of Rs. 5035-3-9. The cheque for Rs. 2435-0-9 has been received by my client in part payment and without prejudice to his balance claim. Deducting this sum there remains a sum of Rs. 2600-8/- still due from your clients and which they are hereby called upon to pay with interest thereon at 9 per cent, per annum till payment.”
9. At the time of instituting the suit the plaintiff limited his claim to the balance of the contracted price of 114 bags, leaving out his other claims on other heads therefrom.
10. In our opinion the court below was not correct in its appraisement of the legal position and its reasonings were faulty in the facts and circumstances of the case.
“Accord and satisfaction” is the purchase of a release from an obligation arising under contract or tort by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative (vide British Russian Gazette and Trade Outlook Ltd. v. Associated Newspapers Ltd. (1) (1933) 2 K.B 616 per Scrutton, L.J). If accord is an agreement, then there must be two minds ad idem.
11. The correspondence, hereinbefore quoted, which passed between the plaintiff and the defendants at the time of payment of Rs. 2435/0/9, will go to show that their minds were not ad idem and the plaintiff made no secret of the fact that he accepted the money without prejudice to the balance of his claim for the contracted price.
12. The learned Advocate for the opposite parties strongly contended that the plaintiff was not entitled to accept the defendants' money amounting to Rs. 2435-0-9 on his own terms. He might have accepted the defendants' money on the defendants' terms or he should have refused to accept the same on the terms with which it was tendered. This argument is in substance not an argument on the law of appropriation of payments, as in sections 59 to 61 of the Contract Act, nor an argument based on section 63 of the Contract Act where the promisee dispenses with or remits performance of the promise, but an argument on the theory of estoppel.
13. We are, therefore, not troubled with the type of decisions as the Mahomed Jan's case (2) [L.R 38 I.A 80] which was a case of appropriation of payment, at first in satisfaction of a particular kist of revenue for which the same was tendered and thereafter appropriation of the same by the Treasury Officer in satisfaction of an earlier kist, in order to create the arrears for which the estate was put to sale — the latter action being held to be beyond the power of one of the parties to the transaction without the assent of the other.
14. We need, however, consider the type of case as in Digambar Das v. Harendra Narayan (3) (14 C.W.N 617) in which Mookerjee and Teunon, JJ. held that though a tender of a smaller amount than the amount of the entire claim may be invalid as a tender, there was nothing to prevent the creditor from accepting the amount tendered in part payment and his doing so will not preclude him from afterwards claiming the residue of his account, always provided that the debtor did not make it a condition of his tender that it be accepted in discharge of the whole. The aforesaid view was reiterated by Mookerjee and Rankin, JJ. in the case of Beharilal Biswas v. Nasimannessa Bibi (4) (37 C.L.J 222).
15. The real emphasis is, therefore, not on the acceptance of a smaller sum of money when a larger sum is due but on the acceptance of the debtor's condition that if the tendered money be at all accepted it must be so done in discharge of the entire debt. When a creditor does once accept the money on the debtor's condition, he is estopped claiming more.
16. In the instant case, there was in reality no condition attached to the tender. The cheque for Rs. 2435-0-9 was sent in full and final settlement of all the dues of the plaintiff, because the defendant believed or claimed that they were entitled to deduct a sum of Rs. 1694-8-6 by way of damages suffered by them. The plaintiff repudiated the claim for damages and disputed the right of the defendants to deduct any sum of money. The instant case is thus different from the case in Bowen v. Owen (5) (11 Queens Bench Reports 130) in which Lord Denman decided merely on the validity of tender and observed as follows:—
“All persons who make a tender in form do so for the purpose of extinguishing the debt. If, in tendering for that purpose, they merely propose that the creditor should take the sum offered, and leave it open to him to persist in his claim for more, such a tender is free from objection; but, if party says ‘I will not pay this money unless you give a receipt for it as the whole amount due,’ that is no legal tender. It seems here to have been agreed that the Judge should decide whether the offer was conditional or not; nothing therefore turns on his having done so; but I think his decision on the point was a wrong one.”
17. In our opinion, the acceptance of the sum of Rs. 2435/0/9, in the circumstances made by the plaintiff, did not estop him from claiming more. Neither by his declaration, act or omission did the plaintiff intentionally cause or permit the defendants to believe that he was accepting the sum of money, admittedly due by the defendants, in full satisfaction of his claim. The plaintiff accepted the money on account of contracted price, in so far admitted by the defendants, without prejudice to his claim and that saves him from the bar of estoppel.
18. In the circumstances that the money was accepted no question of accord and satisfaction arose, because the plaintiff intimated to the defendants that the payment had not satisfied the debt. That is the view which was taken by Lord Esher M.R in Day v. McLea (6) (L.R 22 Q.B.D 610) as will appear from the following passage:—
“The contention, therefore, was that the plaintiffs having kept the cheque must be taken in law to have accepted it in satisfaction. Upon the other side it was contended that the keeping of the cheque could only be evidence of accord and satisfaction, and that whether or not it was taken in satisfaction was a question of fact to be determined according to the circumstances of the case. That argument raises the question whether the fact of keeping a cheque sent in satisfaction of a claim for a larger amount is in law conclusive that there has been an accord and satisfaction. It is said that that inference of law must be drawn even though the person receiving the cheque never intends to take it in satisfaction and says so at the time he receives it. All I can say is that if that is a conclusive inference it would be one contrary to the truth. I object to all such inferences of law.”
19. Similar was the view taken by the Patna High Court in (7) A.I.R 1961 Pat. 37 (Tata Locomotive and Engineering Co. Ltd. v. Sardar Kartar Singh) and we respectfully agree with the view.
20. The result is that we set aside the judgments of the two courts below and remand the matter to the trial court with direction to that court to treat the payment of Rs. 2435-0-9 as part payment towards the plaintiff's dues.
21. The trial court shall now decide what further sum is due to the plaintiff. We make it perfectly clear that we pronounce no opinion on the merits of the plaintiff's claim excepting that the defendants made a part payment towards the purchase price of the coriander seeds.
22. This Rule is made absolute to the extent indicated above but there will be no order as to costs.
Niyogi, J.:— I agree.
S.K.B