The main legal point established in the judgment is that a mutual agreement by creditors to accept a less sum than their full debts in full discharge of their debts is an enforceable contract, and the adjustment of the debt tantamount to full satisfaction of the decree.

Wallace, J.

1. The question for decision in this appeal is whether an agreement by a decree-holder in a composition by his judgment-debtor with his creditors generally to accept a percentage of his decree debt in full satisfaction of the whole debt is an adjustment which can be recorded under Order 21, Rule 2 as an adjustment of the decree. The Lower Appellate Court has held that it could not be recorded, and the appellant (the judgment-debtor) appeals.

2. The respondent, who is the transferee from the original decree-holder, at one stage of his argument, challenged the existence of any composition, but both the Lower Courts have held on the evidence that there was a composition between the judgment-debtor and his creditors, under which they agreed some of them to accept 75 per cent. of their debt and some 80 per cent. in full satisfaction, and the present decree-holder was in the latter class. He had filed an execution petition for the whole decree amount on 14th September, 1921, but dropped it after the composition agreement. It is quite clear that he was a party to that mutual agreement. That the present transferee-respondent was also aware of the composition is clear from the fact that the sum for which the decree was transferred to him was not the full amount of the decree, but practically the amount which the decree-holder under the composition had agreed to take.

3. This composition was in October, 1921, about one month after the decree. On 18th November, 1921, the judgment-debtor, the appellant, deposited into the first Court the amount due to his decree-holder under the adjustment on the footing of the decree, that is, 80 per cent. of the full amount due. It appears from the evidence that the money was first tendered to the decree-holder but he said that he had already transferred the decree to the present 1st respondent. It does not appear that the money was then tendered to the 1st respondent, but it was paid into Court by the judgment-debtor on 18th November, 1921, along with his application to record satisfaction, to which application both the original decree-holder and the transferee were made parties. This deposit was mentioned by the judgment-debtor in his affidavit in the I.A. dated 16th November, 1921, and this fact was not controverted either by the decree-holder or his transferee. I am asked to remand the case for a finding as to the tender but it is unnecessary, since to the knowledge of both these parties the money was deposited into the Court for payment to the party entitled to execute. If the adjustment therefore can be pleaded as a bar in Execution, the amount which the decree-holder had agreed to accept in full discharge of the decree was paid into Court on 18th November, 1921. No time was fixed under the composition for payment, but one month after the composition is certainly a reasonable time.

4. That a mutual agreement by creditors to accept a less sum than their full debts in full discharge of their debts is an enforceable contract in this country is not, I think, open to doubt. The illustrations to Section 63 of the Indian Contract Act seem to me to make this clear. On the other side, it is argued that that section itself implies an original contract to which there was a promisor and a promisee ; but I do not think the language used must necessarily import more than an ordinary obligation and implied promise of a debtor to pay back his creditor. Illustrations (b), (c) and (e) are, so far as appears from the language used, ordinary debts and not debts due under any contract. When the illustrations allude to a specific contract debt it is so specifically stated-see Illustration (d). Illustration (e) is practically conclusive for the purpose of this case, that such a composition with creditors is an enforceable contract, though in the case of illustrations (b) and (c) there may be no new contract created, and though until actual tender of payment, it may be still open to the creditor to refuse