1. Aggrieved by the Order dated 5.1.2007, passed in IA-345/2006 in SA No. 6/2006, passed by the DRT-II at Chennai, this appeal has been filed.
I have heard the learned Advocates for the appellant and the respondent.
2. As against the measures taken under Section 13(4) of the SRFAESI Act, 2002, the appellant herein preferred an Appeal in SA No. 6/2006 before the DRT-II at Chennai, and the same is pending. That in the said application/appeal, the appellant had taken out an application in IA-345/2006, to direct the respondent Bank to issue a formal letter of acceptance and accept the balance payment as per the time-frame fixed by the Tribunal and to release the documents contending that at the time when the appellant sought for an interim stay of further proceedings, the DRT was pleased to order stay on 6.2.2006, on condition that an amount of Rs. 1.5 lakh to be deposited within 10 days and the balance amount of Rs. 5.5 lakh was to be paid within 15 days.
The appellant paid Rs. 1.5 lakh to the respondent Bank on 11.2.2006, and subsequently had approached the respondent Bank for One Time Settlement (OTS) offer of Rs. 1.5 lakh by letter dated 20.3.2006, and he had also enclosed a Cheque for an amount of Rs. 25,000/- to prove his bona fides. That in the said letter, it was stated that the Cheque for Rs. 25,000/- could be encashed only if his offer for OTS as per his letter dated 20.3.2006, was acceptable to the Bank. The respondent Bank had encashed the cheque on 24.3.2006, and it has not issued a letter of acceptance of the OTS. As his letter for OTS was accepted, the appellant sought extension of time before the DRT for the payment of the balance of Rs. 5.25 lakh and also prayed that the amount to be kept in an interest bearing No-Lien account, and the DRT granted time till 22.5.2006, to make the payment and also to keep the amount in interest bearing No-Lien account, and the appellant had complied with the orders of the Tribunal. But the appellant has not received any communication from the Bank regarding the OTS even though the Bank has accepted his letter of offer dated 20.3.2006, and therefore, filed the application for suitable direction.
3. The respondent Bank opposed the said application by filing counter affidavit wherein it is stated that the encashing of Cheque of Rs. 25,000/- which was sent along with the covering letter dated 20.3.2006, would not tantamount that the Bank had accepted the OTS for a sum of Rs. 1.5 lakh. The Cheque was encashed under the impression that it was towards the condition imposed by the DRT by Order dated 6.2.2006. The one time offer made by the appellant was not acceptable to the Bank and the non-acceptance of the same has already been informed to the appellant.
4. The Tribunal had taken a view that the loan was granted in terms of the contract and grant of OTS or re-scheduling of the loan amount is really a modification of the contract, which can only be done by mutual consent of the parties vide Section 62 of the Indian Contract Act, 1872. The Court cannot alter the terms of the contract and dismissed the petition. Hence this appeal.
5. The learned Advocate for the appellant would contend that to the notice dated 7.12.2004, issued by the respondent Bank through their Advocate, the appellant had sent a reply dated 2.3.2005, wherein he came forward for One Time Settlement and offered to pay a sum of Rs. 11 lakh as OTS and also enclosed a cheque for a sum of Rs. 1.5 lakh being part of his offer for OTS. The respondent Bank by their reply dated 16.3.2005, declined to accept the OTS offered by the appellant and also returned the Cheque. That thereafter, the respondent Bank had initiated action against the appellant and the same was under challenge in SA-6/2006, before the DRT. During the pendency of the application/appeal before the DRT, the appellant had sent a letter dated 20.3.2006, to the respondent requesting once again to consider his offer for OTS. To prove his bona fide, he had enclosed a Cheque for Rs. 25,000/ and in the said letter it is stated, "You please reconsider and accept our offer for Rs. 1.5 lakh (Fifteen lakh) and present the cheque or otherwise you please return the instrument (Cheque) back to us without fail". It is the contention of the appellant that he made a conditional offer that the respondent Bank could encash the cheque, only on condition, when the Bank accepts the OTS, otherwise, the Cheque should be returned to the appellant. Though the respondent encashed the Cheque and has not sent any communication accepting the offer of OTS made by the appellant. Hence the appellant filed an application in IA-345/2006, for necessary direction. It is submitted that the very encashing of the cheque, which was sent on condition, would amount to the acceptance of the offer of the appellant and, therefore, it should be presumed that a settlement has been reached between the appellant and the respondent. Appellant also relies upon Illustration 'B' in Section 63 of the Indian Contract Act, 1872, which states, "Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time of such performance, or may accept instead of it any satisfaction which it thinks fit".
Illustration (b) reads, "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 were payable. The whole debt is discharged". In support of his submission, the appellant also relied upon the case af Lala Kapurchand Godha and Ors. v. Mir Nawab Himayatalikhan Azamjah , wherein, the defendant, the Prince of Berar, had accepted a Promissory Note in favour of the plaintiff in 1937, for a sum of Rs. 13 lakh and odd rupees due on account of purchase of jewellery from the plaintiff. After the Military occupation of Hyderabad, the Princes Debt Settlement Committee set up by the Military Governor decided that the plaintiff should be paid a sum of Rs. 20 lakh in full satisfaction of his claim of Rs. 27 lakh under the Note. The Governor also made it clear that unless full satisfaction was recorded, payment would not be made. The plaintiff after some initial protests agreed to accept the sum of Rs. 20 lakh in full satisfaction of his claim and duly discharged the Promissory Note by endorsement of full satisfaction and received the payment. Then the plaintiff brought a suit against the defendant for recovery of the balance of Rs. 7 lakh. The Trial Court decreed the suit. But however, the Appellate Court came to the contrary conclusion and held that on the evidence, oral and documentary given in the case, it was clearly established that the appellants accepted the sum of Rs. 20 lakh in full satisfaction of their claim and duly discharged the Promissory Note by endorsing full satisfaction thereon. Therefore, Section 63 of the Indian Contract Act, 1872, apply as there is an accord and satisfaction and the suit of the appellants was liable to be dismissed. It accordingly allowed the appeal and dismissed the suit with cost. On appeal, the Supreme Court confirmed the order of the Appellate Court.
The facts in that case are totally differed. As against the sum due by the defendant to the plaintiff, the third party the Government, decided that plaintiff should be paid only lesser sum of Rs. 20 lakh in full satisfaction of the claim of Rs. 20 lakh under the note. Government also made it clear that unless full satisfaction was recorded, payment would not be made. Though the plaintiff initially protested to accept lesser sum in full satisfaction of his claim, but ultimately accepted the said sum and given a due discharge to the Promissory Note by endorsement of full satisfaction and received the payment. After having given a discharge of full satisfaction, the plaintiff brought out the suit and it was failed. There the plaintiff accepted the amount knowingly, though initially protested and also entered full satisfaction and as such, it may even be said that he was estopped from making further claim. But that is not our case. Here, the respondent Bank never agreed to accept the OTS offer of the appellant. The offer made by the appellant was unilateral and it was not accepted by the respondent Bank at all. The mere statement in the letter of the appellant dated 20.3.2006, "You please reconsider and accept our offer of Rs. 1.5 lakh and present the above Cheque or otherwise you please return the above (Instrument) Cheque back to us without fail" would not amount to acceptance. Mere encashment of the said amount would not amount to the acceptance of the offer made by the appellant. Moreover, at that time, the main dispute between the appellant and the respondent was pending adjudication before the Tribunal in SA-6/2006. An earlier offer made by the appellant was rejected. The respondent also contended it was under an impression that the amount of Rs. 25,000/- offered by the appellant was due to the conditional orderpassed by the Tribunal.
In any event, there was no consensus ad idem also between the parties.
Further, any acceptance must be absolute as required under Section 7 of the Indian Contract Act, 1872, which states, "In order to convert a proposal into a promise the acceptance must- (2) be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise, but, if he fails to do so, he accepts the acceptance.
This section clearly postulates that if for any reason, the proposal prescribes the manner and the acceptance is not made in such manner, the proposer (appellant herein) within a reasonable time after the offer is communicated shall insist that the proposal shall be accepted.
In our case, the appellant has not insisted that his proposal should be accepted in the manner set forth in the letter. Mere offer or condition made in the appellant's letter, would not amount to acceptance by the respondent Bank as there is no absolute acceptance as required under Section 7 of the Contract Act.
6. The contention of the appellant also, cannot be accepted for the other reason that the respondent never agreed to accept the OTS made by the appellant. It is not the case of the appellant that the respondent is bound to accept the OTS as per any Circular issued by the Reserve Bank of India (RBI), and further in the case of Lala Kapurchand Godha and Ors. v. Mir Nawab Himayatalikhan Azamjah (surpa), the third party came forward to pay the amount to the plaintiff lesser than the amount due by the defendant and the plaintiff made initial protest, but however given full satisfaction of the claim by duly discharging the Promissory Note by making necessary endorsement of full satisfaction.
Nothing of that sort had taken place in our case and, therefore, the said case is of no application to our case.
7. The appellant also relied upon the case of Jitendra Chandra Ray Chawdhary and Anr. v. S.N. Banerjee, Barrister-at-Law AIR (30) 1943 Calcutta 181, and Firm Chhunna Mal Ram Nath v. Firm Mool Chand Ram Bhagat AIR 1928 Privy Council 99, and they all in no way support the case of the appellant to any extent as the facts in those cases are totally different from the facts in our case.
8. On the contrary, the learned Advocate for the respondent relied upon the case of Saraswat Trading Agency v. Union of India AIR 2002 Calcutta 51, wherein it was held, "30...that the mere encashment of a cheque for a smaller sum given by the debtor to the creditor, is not, standing alone, a sufficient proof of accord and satisfaction. The authority in this regard is the case of Day v. Mclea (supra). It has been relied upon D & C Builders 1965(3) All ER 837 (above) and in the Indian Courts also, including the Prince of Berar's case AIR 1963 SC 250. Were it otherwise, and were we to hold otherwise, we would be putting in the hands of all debtors a weapon of legal trickery. As a standard practice every debtor would send to the creditor a lesser sum by way of a cheque with appropriate covering documents, taking the chance that the cheque might be encashed. If encashed, the debtor can then get away without paying the balance sum. The law cannot permit them. Therefore, (sic) will be in extinction of the balance liability, will not be a full satisfaction of the debt." (Emphasis supplied). The facts and circumstances set out in this case are squarely applicable to the case on hand and, therefore, the theory put forward by the appellant that there was an accord and satisfaction of the debt, cannot at all be accepted and it is liable to be rejected and accordingly it is rejected.