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Report No. 63

4.13. Section 63, Contract Act.-

One of the provisions to be considered in this context is section 63 of the Indian Contract Act, which was referred to in the Nagpur case.1 It may be debatable whether the relationship of promisor-promisee (to which alone section 63 is applicable) can be said to exist in every case under the Interest Act. However, we may consider the matter, since it was referred to in the Nagpur case. Section 63 deals with remission by the promisee. The section provides as follows:-

"63. Every promisee may dispense with or remit, wholly or in part, the performance of the promises made to him, or may accept instead of it any satisfaction which he thinks fit."2

1. Western India Life Insurance Company v. Seeta Bai, supra.

2. Illustrations not quoted.

4.14. It should be noted that this section does not provide that acceptance of a part of the debt in itself amounts to satisfaction of the whole debt. It leaves it to the promisee to remit in part the performance of the promise. There must be an acceptance in satisfaction of the whole debt. This is made clear by illustrations (b) and (c) to the section, quoted below:

(Illustrations to section 63, Contract Act)

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

(c) A owes B Rs. 5,000. C pays to B Rs. 1,000 and B accepts it in satisfaction of his claim on A. This payment is a discharge of the whole claim."

4.15. Section 41 of the Indian Contract Act deals with acceptance of performance from a third person, but that section is not of any special importance for the present purpose, at least in India. What is to be emphasised is that section 63 of the Contract Act applies only if the promisee remits performance of the promise in part or accepts, instead of the promise, any satisfaction which he thinks fit. Hence, the choice is that of the promisee.

4.16. In Digambar v. Harendra, (1910) 14 Cal WN 617 (Mookerjee and Teunon JJ.).Mookerjee and Teunon, IL held that though a tender of a smaller amount than the amount of the entire claim may be invalid as a tender, there was nothing to prevent the creditor from accepting the amount tendered in part payment, and his doing so will not preclude him from afterwards claiming the residue of his account-always provided that the debtor did not make it a condition of his tender that it be accepted in discharge of the whole. This view was re-iterated by Mookerjee and Rankin JJ. in the case of Behari Lal v. Nasimunnessa Bihi, AIR 1923 Cal 527.

The real emphasis in section 63, Indian Contract Act, is, therefore, not on the mere acceptance of a smaller sum of money when a larger sum is due, but on the acceptance of the smaller sum in discharge of the entire debt. When a creditor does once so accept the money, he is stopped from claiming more. This section, however, is relevant only when the relation is of promisor and promisee.

Interest Act, 1839 Back

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