A mutual mistake of fact essential to an agreement renders the agreement void under Section 20 of the Indian Contract Act.

JUDGEMENT :- The short question that arises for consideration is whether the plaintiffs are entitled to recover a sum of Rs. 11,261-25 after having executed a receipt in full settlement for a sum of Rs. 3753-75 for non-delivery of certain goods shipped through the defendant. The plaintiffs are the appellants. The first plaintiff is Bharat Electronics Ltd. Bangalore. It purchased 20 cartons of Electron tubes from an American Company. The goods were sent under a Bill of Lading from New York by s.s. 'Flying Cloud' belonging to the defendants. The

ship arrived at Madras on 22-9-1969. When the goods were unloaded 9 cartons were found to be in a damaged condition. A survey was conducted on 1-10-1969, which disclosed that 4 cartons were completely empty. Bharat Electronics Ltd. sent a claim bill dated 19-11-1969 for a sum of Rs. 20496 representing the value of the goods lost by non-delivery. As there was no response, a notice was sent through the recovery agent for the said sum. By a letter dated 3-3-1970 the defendants informed Bharat Electronics Ltd. that under clause 17 of the Bill of Lading they were liable to pay only Rs. 3753-75. A revised bill was made out accordingly, and a sum of Rs. 3753-75 was received. Subsequently, Bharat Electronics Ltd. found that there was a mistake, as the revised bill proceeded on the basis that there was only one carton in which all the four tubes were to be found, while actually there were four cartons in which the four tubes were sent. Bharat Electronics Ltd., therefore, demanded a sum of rupees 11261-25.

2. The defendants contended that the sum of Rs. 3753-75 had been paid in full and final settlement and that, therefore, there was no liability to pay the further sum of Rs. 11261-25. The second plaintiff is the insurer who, on payment to Bharat Electronics Ltd. has been subrogated to the rights of Bharat Electronics Ltd. and, therefore, both of them filed the present suit.

3. The defence was that there was a delay of nine days in the survey and that during this period there was scope for damage or pilferage while the tubes were in the custody of the Port Trust. The Port Trust itself had annotated the goods and only two cartons were found empty; whereas in the survey held subsequently 4 cartons were said to be empty. It was, therefore, contended that there was some pilferage or loss while the goods were in the custody of the Port Trust and that the defendants were not liable. According to the defendants, the amount having been received in full settlement, there was no justification for claiming the further amount under suit and that there was no misrepresentation on its part as alleged in the plaint. The following issues were framed :-

1. Whether the defendants are liable for the 9 cartons as alleged by the plaintiffs ?

2. Whether the defendants are liable to pay Rs. 11261-25 as claimed by the plaintiffs ?

3. Whether the plaintiffs passed the bill for Rs. 3753-75 due to the misrepresentation of the defendant and whether it is not binding on them ?

4. Whether the plaintiffs are estopped from making the suit claim after having passed the bill for Rs. 3753-75 in full settlement ?

5. To what relief ?

Additional Issues :-

6. Whether the mistake is unilateral or mutual ?

7. Whether the agreement is void and not binding on the plaintiffs ?

The trial Court held that the defendants are not liable to pay the sum of Rs. 11261-25, that the amount already paid, viz. Rs. 3753-75 was not paid by misrepresentation, and that the plaintiffs were estopped from making the suit claim after having accepted the sum of Rs. 3753-75 in full settlement. The suit was, therefore, dismissed. The present appeal has been filed by the unsuccessful plaintiffs.

4. The short question that arises for consideration is whether there was unilateral or bilateral mistake in accepting the sum of Rs. 3753-75. The plaintiffs could claim the balance in case it was found that the mistake was as mentioned.

5. On 26-6-1969, under the Bill of Lading