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Andhra Pradesh High Court
Judges : P.SATYANARAYANA RAJU, VENKATESAM
Mirriyala China Subbaraidu - Appellant
Versus
Kallarsu Mahadeva Rao - Respondent
Decided On : 06-23-64
CONTRACT ACT - SECTION 63 - REMISSION OF DEBT - AGREEMENT TO REMIT IN FUTURO - CONSIDERATION REQUIRED - EXTINGUISHMENT OF DEBT - NO CONTRACTUAL OBLIGATION - NUDUM PACTUM.
Fact of the Case:
The plaintiff filed a suit against the defendant for recovery of the balance amount due under a promissory note executed by the defendant and another person. The defendant contended that the plaintiff had released him from his liability by virtue of a receipt (Ex. B. 1) after the payment of Rs. 1,000.00.
Finding of the Court:
The court held that Ex. B. 1 did not evidence an actual remission of the debt but only an agreement to remit, and that such an agreement required consideration to be enforceable. Since there was no consideration for the agreement, it was void and could not be enforced.
Issues: 1. Whether Ex. B. 1 evidenced an actual remission or an agreement to remit; and 2. If it is only an agreement to remit, whether Ex. B. 1 can be enforced?
Ratio Decidendi: The court relied on Section 63 of the Contract Act, which provides that a 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. The court held that under Section 63, a promisee may remit a part of the debt and give a discharge for the whole debt on receiving the reduced amount, and such discharge is valid. However, an agreement to remit in futuro clearly requires consideration, if it is to be a binding contract.
Final Decision: The court allowed the appeal and set aside the judgment of the lower appellate court. It granted a decree for the entire suit amount against the defendant.
( 1 ) ON the strength of the decision of a Division Bench of the Madras High Court in Ramaswami v. G. Rudrappa, AIR 1939 Mad 688 : 1939 Mad W N 464, the learned counsel for the appellant has contended that what Section 63 of the Contract Act permits is not an agreement to remit in future but an actual remission and that a promise to remit requires consideration in order to a binding contract.
( 2 ) REFERRING to this decision, a Division Bench of the Calcutta High Court, consisting of B. K. Mukherjea J. , (as he then was) and Pal J. , in Jitendra Chandra Roy v. S. N. Banerjee, AIR 1943 Cal 181 pointed out as follows : -"in 1939 Mad W N 464 : AIR 1939 Mad 688, 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 Section 63, Contract Act. In our opinion, this is not a sound view to take and it clearly goes against the express words of the section. "
( 3 ) AFTER considering Section 63 with the illustrations attached thereto, the learned Judges of the Calcutta High Court pointed out as follows :"in our opinion, it is open to the promisee to remit a portion of the obligation under Section 63, Contract Act even though the obligation on the part of the promisor to perform the unremitted part still continues. "
( 4 ) IN view of the decision of the learned Judges of the Calcutta High Court, the decision in AIR 1939 Mad 688 : 1939 Mad W N 464, it is contended, requires reconsideration. The second appeal may be posted before a Division Bench. * * * * * order Satyanarayana Raju , J. (1) On the strength of the decision of a Division Bench of the Madras High Court in Ramaswami v. G. Rudrappa, AIR 1939 Mad 688 : 1939 Mad W N 464, the learned counsel for the appellant has contended that what Section 63 of the Contract Act permits is not an agreement to remit in future but an actual remission and that a promise to remit requires consideration in order to a binding contract. (2) Referring to this decision, a Division Bench of the Calcutta High Court, consisting of B. K. Mukherjea J. , (as he then was) and Pal J. , in Jitendra Chandra Roy v. S. N. Banerjee, AIR 1943 Cal 181 pointed out as follows : -"in 1939 Mad W N 464 : AIR 1939 Mad 688, 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 Section 63, Contract Act. In our opinion, this is not a sound view to take and it clearly goes against the express words of the section. " (3) After considering Section 63 with the illustrations attached thereto, the learned Judges of the Calcutta High Court pointed out as follows :"in our opinion, it is open to the promisee to remit a portion of the obligation under Section 63, Contract Act even though the obligation on the part of the promisor to perform the unremitted part still continues. " (4) In view of the decision of the learned Judges of the Calcutta High Court, the decision in AIR 1939 Mad 688 : 1939 Mad W N 464, it is contended, requires reconsideration. The second appeal may be posted before a Division Bench. * * * * * Radha Raman v. Bhowani Prosad, (10) 8 Ind Cas 790, 12 Cal LJ 439; Jitendra Chandra Roy v. S. N. Banerjee, (43) AIR 1943 Cal 181, ILR (1943) 1 Cal 101; Karampalli Unnikurup v. Thekku Vittil, (03) ILR 26 Mad 195; Mathew Henry Abraham v. Lodge Good Will, (10) ILR 34 Mad 156, 20 Mad LJ 383; Subbaraya Aiyar v. Kolandavelu Mudali, (15) AIR 1915 Mad 1144 (2), 26 Ind Cas 958; Balasundara v. Ranganatha, (29) AIR 1929 Mad 794, 30 Mad LW 293; Vaidyanatha v. Kandappa, (31) AIR 1931 Mad 636, ILR 54 Mad 889; Ramaswami v. G. Rudrappa, (39) AIR 1939 Mad 688, 1939 Mad W N 464; Shanmugasundara v. Sivalinga, (52) AIR 1952 Mad 675, 1951-1 Mad LJ 292; Ma On Baw v. V. E. P. R. Chettyar Firm, (35) AIR 1935 Rang 188, 156 Ind Cas 743 ORDER Satyanarayana Raju , J. (1) On the strength of the decision of a Division Bench of the Madras Hig
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