The Judgment of the Court was as follows:
Mukherjea, J.:— This appeal is on behalf of the Defendants and it arises out of a suit commenced by the Plaintiff as Receiver to the estate of Gopi-ballav Sen and others to recover from the Defendants money due on a hand-note. The Plaintiff's case was that the two Defendants jointly took a loan of Rs. 3,000 only from the late Kumar Jamini Ballav Sen of Dimla, upon executing in favour of the latter, a hand-note for the said amount on the 25th of Jaistha, 1332, B.S corresponding to 8th of June, 1925. On the death of Kumar Jamini Ballav, his estate devolved upon his four sons, namely, Gopi Ballav, Jotish Chandra, Rukmini Ballav and Manmatha. Their estate is now under the management of Mr. S.N Banerji, Barrister-at-Law, who was appointed a Receiver by the Original Side of this Court in Extraordinary Suit No. 4 of 1935, and it was the Receiver who under authority of the Court instituted the present suit. The Defendants, according to the Plaintiff, had paid in all Rs. 581 in different instalments towards the principal of the said loan, but nothing was paid by them by way of interest. The total amount of interest due at the date of the suit was Rs. 3,939 annas odd. As under the law the borrowers cannot be made liable to pay interest exceeding the principal, the Plaintiff prayed for recovery of a sum of Rs. 3,000 only as interest, the total claim being held at Rs. 5,419.
2. The Defendants in their written statement did not dispute that they borrowed this money from Kumar Jamini Ballav or executed a hand-note in his favour. Their main defence was that the stipulation for payment of interest in the promissory note was not acted upon and it was subsequently rescinded by an express oral agreement arrived at between them and Kumar Jamini Ballav. It was further averred that the promisee had agreed to appropriate certain yearly allowances which were payable by him to the Defendants under the terms of a usufructuary mortgage bond dated the 12th June, 1922, towards the satisfaction of the dues on the promissory note; and as the amounts payable by the Plaintiff's estate on this account since the date of the execution of the hand-note were in excess of the amount borrowed by the Defendants, the entire debt, according to the Defendants, was satisfied. In order to appreciate the contentions of the respective parties, it will be necessary to state here certain relevant facts. It is admited on both sides that the family of Kumar Jamini Ballav and that of the Defendants were on terms of great friendship and amity since the time of their ancestors and Monish Chandra Choudhury, the father of the Defendants, was an intimate personal friend of Jamini Ballav himself. The Defendants as well as their joint co-sharer, one Bhaba Sundari Debi, came to be involved in considerable financial difficulties, and on the 29th of Jaistha, 1329 B.S, corresponding to the 12th of June, 1922, Kumar Jamini Ballav as an act of friendship and charity advanced to these three persons a sum of Rs. 37,000 for which no interest was to be paid by the borrowers. On that date the two Defendants along with Bhaba Sundari executed a usufructuary mortgage bond in favour of Jamini Ballav by which the maliki and ijara rights of the mortgagors in an eight annas share of certain revenue-paying properties were given as security for the money advanced. This document is Ext. 2 in the suit. In these mortgaged properties the two Defendants had proprietary right to the extent of 2 annas 8 gandas share and another 2 annas 8 gandas share was owned in the limited interest of a Hindu widow by Bhaba Sundari Debi, the other mortgagor. The remaining 2 annas 8 gandas share belonged to another co-sharer of the Defendants named Sashi Prova and she too had the restricted rights of a Hindu widow, which was let out in ijara to these two Defendants. The entire 8 annas share was held in putni and istemrari right by two persons, named Manindra and Surendra, and the lease reserved an annual rent of Rs. 6,106-8-0. Under the terms of the lease the lessees had to meet out of it all the revenue and cess demands in respect of the property and to pay a nett annual munafa of Rs. 2,590-1-0 to the lessors. In the usufructuary mortgage bond it was stipulated that the mortgagee would be entitled to realise from the lessees the entire munafa payable to the mortgagors under the terms of the putni and istemrari potta and after crediting cut of the same a sum of Rs. 2,000 every year towards the satisfaction of the mortgage money the balance would have to be paid to the mortgagors as maso-kara or maintenance allowance. As has been said already, Sashi Prova had only a Hindu widow's estate in 2 annas 8 gandas share of the property and the ijara granted by her to the Defendants would ordinarily cease on her death. The parties to the mortgage bond apparently had that contingency in mind and we find a clause in the deed which runs as follows:
“If for any reason the ijara granted by the said Sashi Prova Choudhurani, dated the 22nd Sravan, 1307 B.S becomes void, even then you shall remain bound to accept repayment of your dues year by year by remaining in possession according to the terms of this deed of the remaining properties of the usufructuary mortgage . . . .; and we shall remain bound to make good every year from our other incomes the amount that will fall short of Rs. 2,000 per annum due to you.”
3. Now, Sashi Prova died on the 15th of Jaistha, 1332 B.S, corresponding to the 29th of May, 1925, (vide the death register, Ext. A) and one Bimal Chandra Roy succeeded to her share in the zemindary as the next reversioner of her husband. Bimal wanted to dispose of this property as quickly as possible and it was obviously to the interest of the Defendants to acquire this share for themselves. The case of the Defendants is that at the time when the usufructuary mortgage bond was executed there was a definite understanding between Kumar Jamini Ballav on the one hand and the Defendants on the other that the latter would try their best to acquire the interest of Sashi Prova after her death and if they could not secure money elsewhere, Jamini Ballav would lend them such further sums of money without interest as might be necessary for acquisition of that share. The price of Sashi Prova's share in the property was fixed at Rs. 5,000. The Defendants had no money of their own and they borrowed a sum of Rs. 2,000 from a third party at an interest of 6 per cent, per annum. It is said hat for the balance of Rs. 3,000 they approached Surendra Lahiri, the manager of Kumar Jamini Ballav at Rangpore, and requested him to advance this sum of money without any interest in terms of the previous promise given by the Kumar. The manager said that he could not lend any money without interest as he was not aware of any such previous agreement, and there being no time to communicate with the Kumar who was ordinarily a resident of Calcutta, the Defendants took a loan of Rs. 3,000 from the manager Surendra Lahiri on executing the hand-note (Ext. 1) upon which this present suit has been brought and which contained a stipulation to pay interest at 12 per cent, per annum. The kobala in respect of Sashi Prova's share was executed by the reversioner in favour of the Defen dants on the 25th of Jaistha, 1332 B.S (vide Ext. B). The Defendants' story-is that after this purchase the Defendant No. 1 Jiten went to Calcutta and saw Kumar Jamini Ballav at his residence and the latter agreed to write to his manager that no interest should be charged on this sum of Rs. 3,000 advanced on the hand-note. Jamini Ballav, it is said, did write to the manager about it His directions were of a two-fold character. In the first place, he asked his manager not to take any interest on the amount advanced. In the second place, the manager was directed not to pay to the Defendants any further amount by way of yearly allowance which was paid to them in accordance with the terms of the usufructuary mortgage bond mentioned above. In other words, the manager was directed to credit these yearly allowances towards the satisfaction of the dues on the hand-note. Agreeably to this arrangement, the Defendants, it is said, were given credit for a sum of Rs. 570 which was the mashohara due to them up to Kartick, 1333 B.S and an endorsement of payment of that sum of money was made on the back of the hand-note in the hand-writing of Defendant No. 1 on the 8th of Pous, 1333 B.S The Defendants' case is that since then no amount has been paid to them by way of mashohara, and if these sums be appropriated towards the satisfaction of the dues on the hand-note, nothing would be due by the Defendants to the Plaintiff. It is true that certain payments of very small sums of money were made by the Defendants in subsequent periods, but these, it was said, were token payments which the Defendants had to make in compliance with the request made by the Plaintiff's manager to save limitation by such payments. The learned Judge negatived this entire story of the Defendants and gave the Plaintiff a decree. The Subordinate Judge, however, was of opinion that the Plaintiff was not entitled to claim interest exceeding Rs. 2,419 which was the outstanding principal due at the date of the suit. Hence, a decree was passed for double of that amount, namely, Rs. 4,838. It is against this decision that the Defendants have come on appeal to this Court. The Plaintiff has also filed cross-objections claiming the sum of Rs. 581 which was disallowed by the Subordinate Judge.
4. Mr. Gupta who appears in support of the appeal formulated two points in his opening. His contention, in the first place, was that the Plaintiff was not entitled to claim interest on the hand-note inasmuch as the obligation to pay interest was expressly dispensed with and remitted by Kumar Jamini Ballav, the promisee, during his life time.
5. The second point taken was that even though the plea of satisfaction taken by the Defendants could not be established, the Defendants were entitled to set-off against the debt due by them, the amounts which were payable to them by the Plaintiff's estate under the usufructuary mortgage bond of 1921. Mr. Gupta, however, later on abandoned this second point and the appeal is confined to the first point exclusively.
6. The whole point for our consideration, therefore, is whether the Plaintiff is entitled to claim interest upon the money advanced on the hand-note. We may say at the outset that we entirely agree with the learned Subordinate Judge in his finding that there was no antecedent agreement prior to the execution of the hand-note under which Kumar Jamini Ballav promised to advance to the Defendants the sum of money necessary for the purchase of Sashi Prova's share without any interest . Mr. Gupta has also not seriously pressed this point. If this agreement was really arrived at between the parties at the time of the execution of the mortgage bond, there is no reason why this was not entered in the mortgage bond itself. The only witness who speaks to this previous agreement is Jitendra, Defendant No. 1, and his statement has not been corroborated by any evidence, either oral or documentary. If Kumar Jamini Ballav had given him an assurance as alleged by him, one would have expected that he would write to the Kumar immediately after Sashi Prova's death, or, at any rate, before the hand-note was executed. There is no reason also why he and his brother should borrow Rs. 2,000 from other persons for which they had to pay interest. In his cross-examination this witness says that he did not write to Jamini Ballav about the loan as he was under the impression that Surendra Babu, the manager, knew about it, but this statement could not possibly be true as he himself stated in his deposition that Surendra Lahiri was not present when the talk took place between him and the Kumar at Calcutta. But though we hold that there was no previous agreement to advance money without interest, it seems to us that the evidence adduced by the Defendants fairly establishes their case that there was a subsequent remission of the interest due on this hand-note by Kumar Jamini Ballav. It is quite probable that Defendant No. 1 approached Kumar Jamini Ballav after the execution of the hand-note and requested him to remit the interest due on the same. Jamini Ballav had already advanced a sum of Rs. 37,000 without any interest whatsoever, and considering the terms in which the parties stood to each other there is nothing unnatural, in our opinion, in his agreeing to accommodate the Defendants a bit further in this matter. We cannot agree with Mr. Bose who appears for the Respondent that Jamini had already accommodated the Defendants to the extreme limits of his capacity and a further indulgence was neither just nor probable. We find that even after Jamini Ballav's death his sons and heirs did advance a further sum of Rs. 14,000 to the Defendants (vide Ext. 2-A) almost at a nominal rate of interest, and without any security whatsoever for the payment of the money. The letter alleged to have been written by Jamini Ballav to his manager is undoubtedly not produced. But we cannot say that Surendra Lahiri, the manager, spoke falsely when he said that he did receive a letter from Jamini, directing him not to charge any interest on this amount. The subsequent conduct of the parties bears out fully the truth of this story. All the payments since then made by the Defendants including the payment of such small sums as Rs. 5 or Re. 1 were all accepted by the Plaintiff's estate and credited towards the principal, although a very large amount of interest was due at that time. The learned Subordinate Judge lays stress on the fact that the right of appropriation belongs to the debtor. This is quite true, but the creditor is entitled to refuse to accept payment if it is not paid in a way which the creditor de sires, and this acceptance of the moneys towards the principal could not, in our opinion, be explained on any other hypothesis than that the officers of Kumar Jamini Ballav were expressly instructed not to take any interest from these Defendants.
7. Mr. Bose on behalf of the Respondents has argued that even if there was a subsequent agreement by Kumar Jamini Ballav to remit the interest due on the hand-note, that agreement is not enforceable as it is not supported by consideration and no oral evidence of that agreement can be adduced in view of the provisions of sec. 92, cl. (iv) of the Indian Evidence Act.
8. For determination of this point it is necessary for us to advert, first of all, to the provisions of sec. 63 of the Indian Contract Act. That section reads as follows:
“Every promisee may dispense with or remit wholly or in part the performance of the promise made to him or may extend the tide for such performance or may accept instead of it any satisfaction which he thinks fit.”
9. This section departs widely from the English law on this point. The promisee can discharge the promisor from his obligation to perform the contract without any consideration or fresh agreement. As was held by their Lordships of the Judicial Committee in the case of Chhunna Malram Nath, Firm v. Moolchand Ram Bhagat(1), under sec. 63 of the Indian Contract Act (1872), a promisee can effectually dispense with performance of a contract in whole or in part without either an agreement by the promisor or consideration for the dispensation. Their Lordships expressly disapproved of the view taken by Jenkins, C.J, in the case of Abaji Sitaram Modak v. Trimbak Municipality(2), that the promisee can do the acts under sec. 63 only if there be an agreement amongst the parties to that effect. “The language of the section,” thus observed their Lordships, “does not refer to any such agreement and ought not to be enlarged by any implication of English doctrines.” Mr. Bose argues that sec. 63 of he Indian Contract Act does not contemplate a state of affairs which is prior to the actual performance of the contract. But this contention does not seem to us to be tenable. Illustration (a) attached to the section itself shows clearly that when the promisee, before the time for performance of the agreement has arrived, chooses to dispense with all performance, such dispensation will be enough to discharge the promisor. This is also borne out by the decision of the Judicial Committee mentioned above where the dispensation was given long before the lime for delivery arrived.
10. It may be that when there is no actual remission but only an agreement to remit in future, such agreement would have to be supported by consideration. In the present case, however, there was an actual remission or dispensation in respect of the obligation of the debtor to pay interest upon the loan. Mr. Bose argued that in a case like this when the remission is only of a part of the obligation created by the promissory note, the remission is not complete unless the unremitted part is actually performed by the promisor and accepted by the promisee in full satisfaction of the debt. In support of this contention he has placed reliance upon Ramaswami v. Gurukar Rudrappa(3), Maung Pu v. Maungpo Thant(4), Ma on Baw v. V.E.P.R Chettyar(5) and A.M Mathuraman Chettyar v. Sellupona(6). The idea underlying some of these decisions seems to be that sec. 63 is restricted to cases where by reason of the remission the whole contract is discharged and extinguished. If only a part of the obligation is discharged by a remission and the contract still subsists, the working out of the obligation under the contract would have to be made on terms different from those in the original agreement. This would amount to a variation of the old contract or substitution of a new one in its place, and in either case it had to be supported by consideration. When however the promisee at the time that he remits payment of a debt in part, accepts the unremitted portion in full satisfaction of the debt, the contract is wholly wiped out and there would be no question of its being allowed to run on lines different from the old. In Ramaswami v. Gurukar Rudrappa the point was not discussed properly, but the proposition of law was sought to be supported with reference to illustrations b, c and d attached to sec. 63 of the Indian Contract Act. In our opinion this is not a sound view to take and it clearly goes against the express words of the section. Sec. 63, as it stands, can be divided into three parts. The promisee is entitled under, this section to act in three different ways. In the first place, he can dispense with or remit performance of a contract either wholly or in part. In the second place, he can, at his discretion, extend time for performance of the contract, and thirdly it is open to him to accept any satisfaction which he considers proper. The only illustration bearing on the first part is illustration (a) and that refers to a total, and not a partial, dispensation. Illustrations (b), (c) and (d) all refer to the third or last clause of the section under which the acceptance of any substituted satisfaction puts an end to the contract. In our opinion, when the promisee accepts a sum less than what is actually due in full satisfaction of his claim, he really acts under the third clause and it is necessary that there must be acceptance of something which discharges the entire contract. But quite apart from accepting performance of less than what is actually due, the promisee is entitled to act under the first clause of the section referred to above and remit the performance of the contract either wholly or in part and if partial remission is not complete without the acceptance of the unremitted portion, there Would be no necessity to mention it separately; it would come clearly within the third clause referred to above. In our opinion it is open to the promisee to remit a portion of the obligation under sec. 63 of the Indian Contract Act, even though the obligation on the part of the promisor to perform the unremitted part still continues. That sec. 63 of the Indian Contract Act does not contemplate an entire extinction of the contract is clear from the second clause mentioned above, which entitles the promisee to extend the time for performance of the contract and although it amounts in substance to a variation of the old terms, we are bound to say on the authority of the decision of the Judicial Committee mentioned above that no fresh contract is necessary for granting such indulgence. In the case of Maung Pu v. Maungpo Thant it was laid down that a bare agreement to take less than what is due on a monetary claim without any actual payment being made or merely to give time for such payment is void without consideration. Sec. 63 does not override the necessity of consideration for an enforceable agreement and deals only with actual remission of a performance. The decisions in the later Rangoon cases are primarily based upon the view taken in this decision. We may observe, in the first place, that this decision was prior to the pronouncement of the Judicial Committee in the case of Chhunna Malram Nath, Firm v. Moolchand Ram Bhagat. A distinction, as we have pointed out already, may be made between an actual remission and a mere agreement to remit in future. But we cannot subscribe to the view that remission of a part without acceptance of the rest would amount merely to an agreement to remit and not actual remission. All the three clauses must be read together, and we must hold on the authority of the pronouncement of the Judicial Committee that with regard to any one of the acts contemplated by the section, that is to say, either when there is a dispensation or remission of the performance of the promise either wholly or in part, or when the promisee has granted an indulgence to the promisor by way of extending the time for performance, or when any other thing has been accept ed as full satisfaction by the promisee, no agreement or fresh consideration is necessary, and it is open to the promisee by a unilateral act of grace on his part to absolve the promisor from performance of these obligations. In the present case we are of the opinion that there was not merely an agreement to remit but there was actual remission or dispensation granted in respect of the obligation of the debtor to pay interest upon the money advanced. As this matter does not rest on an agreement between the parties, but it is an one-sided act on the part of the promisee, sec. 92(4) of the Indian Evidence Act cannot, in our opinion, be invoked. That clause forbids the adducing of evidence as to the existence of an oral agreement varying or modifying the terms of a written agreement. In this case the subsequent act of remission was not an agreement within the meaning of sec. 2(e) of the Indian Contract Act.
11. The result, therefore, is that the contention put forward by Mr. Gupta must succeed, and the appeal will have to be allowed in part. The Plaintiff will get a decree for the sum of Rs. 2,419 which is the amount of principal due to him at the date of the suit. The rest of the claim will stand dismissed. As we are disallowing interest it is not necessary to advert to, or consider, the points raised in the cross-objection of the Plaintiff.
12. The result, therefore, is that the appeal is allowed in part and the cross-objection dismissed. The judgment and decree of the lower Court will be modified and the Plaintiff will be given a decree for Rs. 2,419 against the Defendants. There will be no order for costs in favour of the Defendants. The Plaintiff will get half costs only of the Court below. The Defendants are not entitled to any instalment in respect of the decretal amount inasmuch as it does not come within the purview of the Bengal Money-Lenders Act. The cross-objection is dismissed without costs.
Pal, J.:— This appeal is by the Defendants in a suit for recovery of money.
13. The Plaintiff is the Receiver appointed in a partition suit by this High Court to the estate of the heirs of the late Kumar Jamini Ballav Sen.
14. The Plaintiff's case is that on 8th June, 1925, the Defendants borrowed Rs. 3,000 from Kumar Jamini Ballav Sen on executing a promissory note in his favour on that date with interest at the rate of 12 per cent, per annum, that the total amount of interest due is Rs. 3,939-6, that out of the dues the Defendants made no payments towards interest, but paid in all Rs. 581 only towards the principal of which Rs. 670 was paid on the 8th Poush, 1333 B.S (23rd December, 1926), Rs. 5 on the 4th Poush, 1336 B.S (19th December, 1929), another sum of Rs. 5 on the 7th Agrahayan, 1339 B.S (13th December, 1932) and lastly Re. 1 on the 25th Kartick, 1342 B.S (11th November, 1935); that under the Money Lenders Act of 1933 only Rs. 3,000 out of the outstanding amount of interest is realisable from the Defendants. The claim is accordingly laid at Rs. 5,419.
15. The defence is that shortly after the date of the promissory note Kumar Jamini Ballav Sen remitted the payment of interest under it and agreed to a certain arrangement for realisation of the principal whereby the entire sum advanced was realised by the creditor's estate long ago.
16. Three years before the present transaction, the Defendants on 12th June, 1922, admittedly had another loan transact ion with Kumar Jamini Ballav Sen whereby the latter advanced the sum of Rs. 37,000 to these Defendants without any interest. To repay this loan by instalments the Defendants created a usufructuary mortgage in favour of Kumar Jamini Ballav in respect of their malikana interest in certain putni tenures. The net annual profit realisable from the putnidars amounted to Rs. 2,590 and it was arranged that after realization of this amount Kumar Jamini Ballav will appropriate Rs. 2,000 towards the repayment of the loan and pay the balance of Rs. 590 to the Defendants in four kists, viz., Baisakh, Sravan, Kartick and Magh.
17. The case of the Defendants is that the money under the promissory note an question in the present suit had to be taken from the Manager of the Kumar as the amount was urgently required by them and the Kumar was not at Rungpore at that time; that this is why they had to agree to pay interest; that shortly after that they approached the Kumar in Calcutta and the latter remitted the payment of interest under the note and communicated the same to his Manager by a letter. According to the Defendants it was further arranged that the principal amount would be realized by the Kumar by appropriating the balance of the profit payable to the Defendants under the usufructuary mortgage above referred to. Their further case is that since this arrangement they have not been paid the balance due under the usufructuary mortgage and the same must have been appropriated towards the repayment of this loan pursuant to this arrangement.
18. Six issues were raised on the pleadings of the parties of these issues 2 and 3 alone are relevant for our present purposes, and these are:—
2. Is the Plaintiff entitled to claim any interest?
3. Is the claim under hand-note in suit completely satisfied?
19. The burden of proving remission by the creditor and the arrangement for repayment by appropriation as alleged in the written statement was on the Defendants.
20. In order to prove these the Defendants called for the letter alleged to have been written by Jamini Ballav to his Manager after the date of the promissory note. No such letter could be traced in the sherista of the estate. The Defendants, nowever, examined the then Manager, Surendra Chandra Lahiri, who supported their case.
21. At the hearing it seems to have been contended on behalf of the Plaintiff (1) that evidence to prove the alleged remission was inadmissible by reason of the provisions of sec. 92 of the Indian Evidence Act, and (2) that as a matter of fact there was no such remission and no arrangement for appropriation as alleged by the Defendants.
22. The learned Subordinate Judge however allowed the Defendants to adduce evidence to prove the alleged remission and the arrangement for repayment, holding that the case was within sec. 92 and consequently “the existence of a separate, oral agreement to rescind or modify the contract may be proved by oral evidence.” He, however, found that the Defendants failed to prove the alleged remission of interest by Jamini Eallav as also the alleged arrangement for repayment.
23. According to the learned Subordinate Judge the amount of interest available for realization under the Money-Lenders Act would be the amount not exceeding the still outstanding principal. Consequently he decreed the suit in part, reducing the claim for interest to Rs. 2,419.
24. Mr. Gupta appearing in support of the appeal contends:—
(1) That the evidence on the record clearly establishes the fact that Kumar Jamini Ballav remitted the payment of interest under the promissory note and that this remission discharged the liability to pay interest under sec. 63 of the Indian Contract Act; and
(2) That the profits of the putni having been realized by the Plaintiff and the amount payable to the Defendants under the terms of the usufructuary mortgage not having been paid to them, the Defendants are entitled to a set-off of that amount against the present claim.
25. Mr. Bose appearing for the Plaintiff Respondent contends:—
(1)(a) That on the facts alleged by the Defendants there could be only an agreement to remit and not any com pleted remission, and consequently sec. 63 of the Indian Contract Act has no application to this case;
(b) That the alleged agreement to remit was void and inoperative, not having been supported by any consideration;
(2) That evidence of the alleged agreement to remit the liability to pay interest was excluded by sec. 92 of the Indian Evidence Act;
(3) That even assuming that evidence to prove such an agreement was admissible, the evidence adduced does not establish the alleged remission;
(4) That the Defendants not having claimed any set-off in the Court of first instance should not be allowed to make any such new case at the Appellate stage.
26. In their written statement, the Defendants did not claim any set-off. We however gave the Defendants an opportunity of amending their written statement by adding a claim to set-off on payment of proper court-fees if they so desired. They did not avail themselves of this opportunity and ultimately gave up this part of their case. The question of set-off, therefore, need not detain us any longer.
27. Before taking up the question of law raised in this case we propose to examine the evidence on the record as to the alleged remission, assuming that such evidence is not excluded by Sec. 92 of the Evidence Act.
28. Surendra Chandra Lahiri, who was the Manager of Kumar Jamini Ballav at the relevant date, has been examined by the Defendants on commission in the present case. He served the estate from 1323 to 1336 B.S (1916 to 1929). It is not disputed that the loan was really advanced by this witness. The witness says:….
“Jiten having asked me to lend this amount free of interest, I said that I could not do that I refused, I said that on my own responsibility I could lend money on interest — if subsequently an order to lend free of interest was forthcoming, he would get remission of the interest. As there was no time then to bring an order from the Kumar quickly I advanced the amount of that hand-note on interest after consulting all others … I subsequently got the Kumar's order that ho interest was to be charged on this hand note and that dues of Jiten and others on account of maintenance (Mashohara) under the mortgage deed were also to be not paid to them. I received the sum mentioned in Ex. 2 after I had got the order of the Kumar Bahadur. Had his order not been there I could not have accepted payment towards the principal when interest was outstanding . . . . I got this order in a letter sent by post. I made over the letter to the estate. The letter was made over to the office of the estate.”
29. This witness is an old man of 70 and certainly is a respectable man. The only thing that could be suggested against him was that his son, who was cashier of the same estate, misappropriated a large sum of money of the estate and that the witness had to join with his son in executing a mortgage bond in favour of the proprietors for the defalcated amount in 1930. We do not see how this fact tends to shake the credit of this witness or to injure his character as a truthful man. The mortgage in question is still outstanding and to this extent he is rather under the power of the Plaintiff. The facts testified to by this witness are simple enough and nothing could be suggested as to any difficulty in their perception or recollection. We are not prepared to believe that this old man deliberately perjured himself to support the Defendants' case.
30. The Defendant No. 1 Jitendra Chandra Choudhury has also examined himself in this case. He says:
“Kumar Jamini Ballav was a particular friend of my father and he was vary kind to us. Jamini Ballav's father Raja Janakilballav Sen was executor to the estate of my grandfather according to his Will.. …. I went to Calcutta and mentioned to Jaminibaliav that I . . . . . wanted the money to be free of interest. He agreed and said that he would write a letter shortly to his estate, saying that no interest should he charged on the hand-note . . . . I met Surendra Babu subsequent to this. He said that Kumar's letter has come asking him to take the amount from the Mashohara, free of any interest. The Kumar's order was acted upon.”
31. Admittedly, there was a very good relationship between the parties and it cannot be denied that Kumar Jamini Ballav was very much kindly disposed towards the Defendants. Only three years before this transaction he gave them Rs. 37,000 without any interest.
32. The case of remission, made by the Defendants is not at all unlikely in view of this relationship.
33. The case of the Defendant finds ample support in the fact that all the several repayments were endorsed as having been payments towards the principal. Kumar Jamini Ballav died in 1336 (1929). After his death his Dewan Srinath Dutt wrote a letter (Ex. C) to the Defendant No. 1 on 26th November, 1929, calling upon them to take steps to save the pro-note from being barred by limitation. On the very back of that letter, the Defendant No. 1 promptly replied by setting up this case of remission and adjustment by appropriation. This reply is Ex. D in this case. In it the Defendant clearly stated that the Dewan knew of this remission. The Dewan in his reply to this letter of the Defendant did not deny this knowledge. On the other hand, he only pointed out that the question of limitation arose because there was no endorsement of payment on the back of the pro-note since 1333 B.S Even after this correspondence the Defendants' payments were taken towards the principal.
34. From all this it is difficult to discard the evidence of the Defendants in this respect. In our opinion it has been proved in this case that as a matter of fact Kumar Jamini Ballav remit ed the payment of interest on the promissory note orally to the Defendant No. 1 and then in his letter to his Manager as promised by him to the Defendant No. 1 and as communicated to the Defendants by his Manager. We have also no doubt that this remission was always acted upon and it was pursuant to this that all the payments were credited towards the principal.
35. The defence taken in the present case involves two questions of law namely:—
1. the question of construction of sec. 63 of the Indian Contract Act,
2. the question of application of sec. 92 of the Indian Evidence Act.
36. The claim of the Plaintiff is founded on a contract whereby in consideration of the cash advanced by the Plaintiff's predecessor on 8th June, 1925, the Defendants promised to repay on demand the amount with interest at 12 per cent, per annum. The terms of this contract were reduced to the form of a promissory note. The Plaintiff has given in evidence the said promissory note in proof of the terms of the contract. These terms create an obligation on the part of the Defendants to repay the amount with interest at 12 per cent, per annum from 8th June, 1925.
37. The defence is that the promisee of the contract subsequently dispensed with and remitted in part the performance of this promise by dispensing with and remitting the obligation to pay the interest under the contract.
38. It is not disputed that this act of remission or “dispensing with” the obligation to pay interest under the contract was not supported by any consideration. It was a purely gratuitous act and was not in pursuance of any prior agreement.
39. The question is whether sec. 63 of the Indian Contract Act contemplates such remission and attaches to it the legal effect of extinguishing the obligation to pay interest.
40. As the act of remission consisted only of a certain statement made by the promisee, namely that “I dispense with and remit the obligation to pay interest,” the next question is whether evidence of this statement is excluded by sec. 92 of the Indian Evidence Act.
41. The two are obviously distinct questions and must be kept distinct.
42. In a case like the present, the questions that may fall to be considered would, inter alia, be the following:
1. (a) Whether there has been “remission” or a mere agreement to remit;
(b)(i) Whether the act of remission need be supported by any consideration in order to have the legal effect of discharging or diminishing the obligation of the promisor;
(ii) Whether the agreement to remit need be supported by any consideration in order to have the legal effect as aforesaid;
2. Whether the remission or the “agreement to remit” need be expressed in any particular form in order that it may have the intended legal effect;
3. Whether the remission or the agreement to remit in question can be given in evidence in the case.
43. The first group of questions falls to be answered with reference to the provisions of the Indian Contract Act.
44. The second question is to be answered with reference to the provisions of the Indian Contract Act, and the Indian Registration Act.
45. The third question is to be answered with reference to the provisions of the Indian Evidence Act.
46. The question 1 (a) is principally a question of fact to be answered on the evidence in the case.
47. sec. 63 of the Indian Contract Act speaks of “remission” and does not concern itself with any agreement to remit. Whatever be the legal effect of remission contemplated by the section, an agreement to remit does not produce that effect. When “an agreement to remit” is pleaded in defence, the plea is really one in enforcement of that agreement only. Such an agreement, if enforceable and if enforced, will result in remission and it is this enforced remission which will produce the ultimate legal effect, if any.
48. If follows, therefore, that when what is pleaded in defence is only an agreement to remit, the agreement must be established to be enforceable in law. If it is not supported by any consideration, sec. 23 of the Contract Act will stand in the way of its enforcement.
49. A remission, as distinguished from an agreement to remit, however, stands on a different footing. sec. 63 of the Indian Contract Act deals with the case of remission and, it must now be taken to be the settled law that in order to produce the legal effect such a remission does not require any support either in the shape of a consideration or of any prior agreement; Chunna Mal v. Mool Chand.
50. In Chunna Mal v. Mool Chand, Harrison and Campbell, JJ., of the Lahore High Court observed:
“The section is a clear departure from the English law on the subject and if we may say so, a very wise departure and specially suited to the conditions of this country. It is clear that the section is not to fee used by a Plaintiff as creating a cause of action and that it does not entitle the remitter to improve his mm position and to enlarge time or to make a remission to the detriment of the other side, but whether the remission be accepted in so many words or not, it creates a plea which a Defendant can always urge to meet an action. It does not contradict or vary the provisions of see. 39 by dispensing with action by the other side before the institution of a suit. The remittance can never, by itself, entitle a party to sue, but does afford a protective plea, and enables a Defendant to meet a suit instituted by the remitter. Many authorities have been quoted to us, but these all deal with the converse proposition when a man tries to take advantage of a remittance or extension of time given by himself to improve his position and to prove that this unilateral act has borne fruit to his advantage. This of course can never be allowed font the section does empower a Defendant to take advantage of a concession made by the Plaintiff and to plead that he could not be expected to do what he had been definitely told he need not do, and that he is absolved. He need not prove consideration for the absolution and this is, in our opinion, made as clear as day by the wording of the illustrations.”
51. This view found the approval of the Judicial Committee. Their Lordships of the Judicial Committee observed:—
“The Appellants contended that see. 63 sip-plied only where there was an agreement to dispense or a contract, supported by consideration to do so, and that in any case it could only operate, when the party dispensing had performed his part of the contract and only something remained to be performed on the other side unless dispensed with: Abaji Sitaram, Modak v. Trimbak Municipality. They further said that, if they had been wrong in refusing in advance to accept bales, this repudiation had not been accepted by the Respondents, and therefore the contract remained alive and Ought to have been performed. It is evident that the alleged dispensation Hinder sec. 63 is by itself a complete answer, unless the absence of contract or consideration is fatal for the Appellants again and again dispensed with the performance by the Respondents of their promise to deliver the goods contracted for, and they can not recover damages for the breach of a promise touching the performance of a thing they wholly dispense with.
“In Abaji Sitaram Modak v. Trimbak Municipality Chief Justice Jenkins deals with sec. 63, and; holds that the promisee mentioned in sec. 63 can only do the acts ho is by that section empowered to do, if there can be an agreement (as defined by 2(e)) amongst the parties to that effect. At page 72 of the report of this case the learned Judge is reported to have expressed himself thus:
‘Therefore we hold that, assuming that there was a legal resolution, and that it was commiunicated as alleged, still, inasmuch as a dispensation or remission under see. 63 requires an agreement or contract, the resolution was of no legal effect since the provisions of sec. 30, Bombay Act 2, 1884, have not been observed.’
“With this their Lordships are unable to agree. The language of the section does not refer to any such agreement and ought not to be enlarged by any implication of English doctrines. On this they agree with the learned Judges of the High Court.”
52. Mr. Bose appearing for the Respondent contends:—
(1) That sec. 63 of the Indian Contract Act is limited in its operation only to the cases where the performance has already fallen due and contemplates remission only of overdue performances;
(2) That the section contemplates only those cases where the remission causes cessation of the subsisting contractual relation altogether;
(a) that the words “wholly” or “in part” refer to cases of remission in full when the whole performance is still due and in part when only that part of the performance is still left to be performed, so that after remission nothing of the contract remains for the future;
(3) That when, as in this case, the alleged remission relates to future liability, it is only an agreement to remit and is of no legal consequence unless supported by consideration.
53. sec. 63 of the Indian Contract Act runs thus:—
“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 instead of it any satisfaction which he thinks fit.”
54. The section uses the words “the performance of the promise” without any qualification. On the face of the section these words do not limit its operation only to the cases where the performance has already fallen due.
55. The words “dispense with “mean “relax,” “give exemption from” “render needless,” “do without,” “annul binding force of.”
56. The word “remit” means “pardon,” “refrain from exacting.”
57. The use of the words “dispense with or remit” makes the section comprehensive enough to cover all the cases irrespective of the question whether “the performance of the promise” has or has not already fallen due.
58. There is nothing again in the section which lends any support to the second contention of Mr. Bose. The words “wholly or in part” qualify the words “dispense with or remit” and clearly contemplate remission in part. Re-mission in part may have the effect of varying or subtracting from the terms of the original contract and may thus create some difficulty regarding the question of its proof. But that is a different question altogether and should be kept distinct from the question under consideration now.
59. As regards the third contention of Mr. Bose I don't see why a future liability cannot be remitted in praesenti and why remission of a future liability would necessarily require an agreement to remit. As has been pointed out above, the section contemplates only acts of remission and has nothing to do with “an agreement to remit.” The defence in the present case did not plead “any agreement to remit” but pleaded completed remission.
60. The first part of the section really provides for a form of extinguishment of an obligation by release of the promise or by gratuitous abandonment of it. By a contract the promisor places himself under an obligation to perform the promise. He will also have a right to perform it and may have other rights dependent on such performance. The promisee in a contract will have corresponding rights and obligations. The section authorises the promisee to give up his right to the performance either wholly or in part without, of course, affecting the rights of the promisor. The act of remission contemplated by the first part of the section is calculated to affect only the right of the promisee and the corresponding obligation of the promisor and consequently, there is nothing wrong in its being merely a gratuitous unilateral act of the promisee.
61. The answer to the question whether the remission or the agreement to remit need be expressed in any particular, form in order that it may have the intended legal effect, depends upon the facts of any particular case. In the present case the remission in question was merely the remission of the performance of the promise to pay interest. It was the remission of existing and future debts and the law did not require it to be put in any particular form.
62. The form in which this remission was expressed may have an important bearing on the other question, namely, whether it can be proved by any evidence in this case. But that again is a different question distinct from the one under our consideration here.
63. The case of the Defendants is that the factum of “dispensing with or remitting” the obligation to pay interest was stated orally to D.W 1 by Jamini Ballav, the promisee, and was put into writing by him in a letter written by him to hjs Manager Suren-dra Nath Lahiri. The Defendants rely on
1. the oral statement of the promisee made to the Defendant No. 1, saying that no interest should be charged on the hand-note,
2. the promise of Jamini Ballav (the promisee) that he would write a letter to his estate saying that no interest should be charged on the hand-note,
3. the fact that such a letter was written by him to his manager stating that no interest should be charged on the hand-note and that this order was given effect to.
64. So far as the second of the above three items is concerned, it was at best merely an agreement to remit and, standing by itself, would have been of no avail to the Defendants, as admittedly this agreement was not supported by any consideration. Consequently we need not stop to consider whether any evidence of such an oral agreement would be inadmissible under gee. 92 of the Evidence Act.
65. As regards the other two items the question is whether any evidence is admissible to prove this remission expressed, as it was, by the statement of the promisee.
66. Sec. 92 of the Evidence Act prohibits evidence of any oral (1) agreement or (2) statement “for the purpose of contradicting, varying, adding to, or subtracting from,” the terms of a contract when such terms have been reduced to the form of a document and have been proved by the document itself. Here there is no question of oral agreement. The act of remission or of dispensing with is not an agreement. It is a completed act purporting to make the immediate remission of the obligation.
67. But the act itself consisted of a mere statement of the promisee, viz., that “I dispense with or remit the interest payable under this contract.”
68. So far as the third item is concerned, it is a statement in writing and consequently is outside the prohibition of sec. 92 of the Indian Evidence Act. If we accept the evidence relating to this statement, then it becomes immaterial whether or not the Defendants can give evidence of the earlier oral statement made to the Defendant No. 1.
69. The letter in question, if in existence, must have been in the possession or power of the Plaintiff. The Defendants called for the same, but it was not produced by the Plaintiff. In these circumstances the Defendants were entitled to adduce secondary evidence of the contents of this letter under sec. 65 of the Evidence Act, and they proved it satisfactorily by examining the Manager himself to whom the letter was written. The Manager in his evidence said: “I subsequently got the Kumar's order that no interest was to be charged on this hand-note . . . .” ….
“I got this order in a letter sent by post.”
70. In our opinion the evidence in the case sufficiently establishes the fact that the promisee conveyed his order of remission by a letter written to the Manager and this order was given effect to.
71. In view of the above finding the other question, namely, whether the oral statement of the promisee remitting the interest can be proved by any evidence in this case, does not require any serious consideration.
72. Sec. 92 of the Indian Evidence Act lays down that when the terms of a written contract have been proved by the document itself, “no evidence of any oral …. statement shall be admitted …. for the purpose of contradicting, varying, adding to, or subtracting from, its terms.”
73. If the performance of the promise is remitted wholly, the remission operates in total extinguishment of the rights of the promisee under the contract and there is, therefore, no question of its contradicting, varying, adding to or subtracting from the terms of the original contract. Sec. 92 of the Evidence Act cannot stand in the way of proving any statement expressing such remission. The question is whether when, as in the present case, the remission is partial and thus does not operate in extinguishment of the rights under the contract, an evidence of such partial remission can be said to be for any of the purposes referred to in Sec. 92 of the Evidence Act.
74. It may be contended that remission, when proved, does not contradict, vary, add to or subtract from the terms of the original contract. The terms remain intact and operate fully. The remission only discharges the liability resulting from the operation of the terms.
75. The effect of remission comes in only after the terms of the original contract operate fully. There has, however, been a good deal of divergence of judicial opinion on this point, and as it is not necessary to decide the point for the present case I refrain from expressing any further opinion on it.
76. We have already examined the evidence in the case and have arrived at the conclusion that as a matter of fact Kumar Jamini Ballav remitted the payment of interest on the hand-note. The Plaintiff, in our opinion, is therefore not entitled to claim any interest on this note.
77. I therefore agree that this appeal should be allowed and the cross-objection dismissed and I concur in the order proposed by my learned brother.
P.C