The judgment established the application of novation under Section 62 of the Indian Contract Act in determining the entitlement to the balance amount in a rescinded agreement.

1. Ext.A1 agreement dated 12.02.2008 was entered into between the parties for the sale of the plaint schedule property for a total consideration of Rs. 6 lakhs. An advance amount of Rs. 1 lakh was paid by the appellant/plaintiff to the respondent on the date of agreement. The sale deed had to be executed within a period of six months from 12.02.2008. Even during the subsistence of Ext.A1 agreement, the parties decided to rescind the contract and thereby, they rescinded the contract. It seems that an endorsement has been made at the bottom of Ext.A1 in Malayalam, the translation of it in English is as follows:-

"Since the sale deed cannot be executed prior to the period of agreement, the proposed sale has been abandoned and an amount of Rs. 60,000/- out of the advance amount, is hereby returned."

2. The signature of the proposed vendor is affixed beneath the said endorsement. At the bottom of it, another endorsement is there as follows:-

"Received Rs. 60,000/- (Rupees sixty thousand only)."

The signature of the proposed buyer is endorsed beneath it.

3. According to the plaintiff, he is entitled to get the balance amount of Rs. 40,000/- from the defendant and even though repeated requests and demands were made, the said amount was not returned. The defendant contended that the return of an amount of Rs. 60,000/- as per the endorsement was in full and final settlement of the claims of the parties and, therefore, the plaintiff is not entitled to get any further amount. It is also contended that the defendant had to pay a brokerage of Rs. 10,000/- and had to incur other expenses also and, therefore, the plaintiff is not entitled to claim any further amounts.

4. Since the amount was not paid, the plaintiff filed O.S. No. 214/2009 before the Munsiff's Court, Alappuzha. The trial court decreed the suit and allowed the plaintiff to recover an amount of Rs. 45,600/- with future interest at the rate of 6% per annum on the principal amount of Rs. 40,000/- from the defendant and all his assets. Aggrieved by the judgment and decree, the defendant filed A.S. No. 4/2012 before the District Court, Alappuzha. The learned District Judge, by applying the principles of novation or alteration under Section 62 of the Indian Contract Act, held that the plaintiff is not entitled to demand the alleged balance amount of Rs. 40,000/- and thereby, allowed the appeal by setting aside the judgment and decree passed by the trial court.

5. Heard both sides.

6. The learned counsel for the appellant has argued that on the principles of equity, the defendant was duty bound to repay the balance amount of Rs. 40,000/- to the plaintiff. According to the learned counsel for the appellant, the defendant had agreed to repay the balance amount of Rs. 40,000/- within two months.

7. Per contra, learned counsel for the respondent has argued that as per Sections 62 and 63 of the Indian Contract Act, the defendant is not bound to make any further amounts in the matter and the plaintiff is estopped from demanding any further amounts.

8. Learned counsel for the respondent has relied on Illustration (b) to Section 63 of the Indian Contract Act, which reads as follows:-

"A owes B 5,000 rupees. A pays to B, and B accepts, in satisfaction of the whole debt, 2,000 rupees paid at the time and place at which the 5,000 rupees were payable. The whole debt is discharged."

9. If there is any endorsement in Ext.A1 in tune with Illustration (b) to Section 63 of the Indian Contract Act, it can be said that the plaintiff is clearly estopped from forwarding a demand for any further amount. At the same time, the endorsement made by the defendant at the bottom of Ext.A1 does not show that the said amount of Rs. 60,000/- was paid in satisfaction of the whole claim or by way of full and final settlement of the claims of the parties. Had there been such an endorsement, the defendant could have evaded payment of the balance amount. In the endorsement made by the plaintiff at the bottom of Ext.A1 als