NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

SEMESTER – I
LAW OF CONTRACTS
PROJECT
ON
Union Of India vs M/S. Navilakha And Sons”

SUBMITTED BY: SUBMITTED TO:

ISHIKA SRIVASTAVA PROFESSOR NEHA SHARMA

January 2021
DECLARATION

I, ISHIKA SRIVASTAVA

D/S/o RACHNA AND MANU SRIVASTAVA

Roll Number 45

Enrollment Number 129

do hereby declare that the Project titled Union Of India vs M/S. Navilakha And Sons” is
an outcome of my own independent research endeavor and has been carried out under the
guidance of PROFESSOR NEHA SHARMA name of course teacher. Literature relied
on by me for the purpose of this project has been fully and completely acknowledged in
the footnotes and bibliography. The Project is not plagiarized and all reasonable steps
have been taken to avoid plagiarism. Similarity Index as per the Turnitin Report is____
%. In case, my project is found to be plagiarized, the course teacher shall have the full
liberty to ask me to revise the Project. If I fail to comply with the instructions of the
teacher, my project may be referred to the Committee Against Use of Unfair Means and I
will comply with the decision of the said Committee.
DECLARATION...................................................................................................................................... 2

JUDGMENT BY ADDITIONAL SMALL CAUSES COURT, PUNE.................................................... 1

MATERIAL.............................................................................................................................................. 2

ISSUES RAISED...................................................................................................................................... 2

CONTENTIONS ADVANCED................................................................................................................ 3

Petitioner(s)/Appellant(s) (Union Of India)....................................................................3

STATUTES .............................................................................................................................................. 4

Code of Civil Procedure, 1908 (CPC) - Section 80;........................................................4

BOOKS, ARTICLES AND OTHER LITERATURE ............................................................................. 5

PRECEDENTS RELIED UPON ............................................................................................................. 5

Kapur Chand Godha vs. Mir Nawab Himayatalikhan Azamjah MANU/SC/0030/1962;

-........................................................................................................................................5
Union of India (UOI) and Anr. vs. Gangaram Bhagwandas MANU/MP/0038/1977-....5
Union of India v. Babulal Uttamchand Bhandari, 1968 Mh.L.J 35 : 69 BLR 843..........5

JUDGMENT............................................................................................................................................. 5

(Judgment in personam) –...............................................................................................6

Ratio Decidendi (Judgment in rem).................................................................................6

(9)  CONCLUSION ................................................................................................................................. 6

Name of the Case: “Union Of India vs M/S. Navilakha And Sons”
Citation: 1997 SCC ONLINE BOM 95

Background and details

Respondents sent some items through the petitioner's Central Railway
On the part of the petitioners, there was negligence and thus the respondents suffered
injury. The opponents under section 78(b) of the Indian Railways Act 1890 gave notices,
making claims. The Petitioners submitted cheques for varying amounts and told the
opponents that the cheques are sent in full and final settlement of the claims and the
cheques should be sent back if the sum was not acceptable.
Since the checks were for smaller amounts than the claims made, the opponents accepted
the checks in protest and communicated the following- “If you have any objection for our
acceptance under protest as part payment, you may inform us within ten days from the
receipt of this letter. If you do not reply this letter within 10 days, we will encash said
cheque under protest and accepts as part payment, please note.”
There was no reply from the Petitioners.
The opponents thereafter sent notices claiming the balance amount which wasn’t paid by
the Petitioners and hence a string of suits followed.

Judgment by Additional Small Causes Court, Pune

The suits 5th Additional Small Causes Court, Pune. Various defences raised on behalf of
the Petitioners came to be rejected and the claims made by the opponents came to be
accepted.
The same is being challenged in these revisions at The Bombay High Court.

Bench and Advocates

Size of the bench: Single judge bench
Names of the judge: P.S Patankar 
Name of the judge who delivered judgement: Justice T.S. Thakur
Names of Advocates:
• Advocates of the Petitioners: (Union Of India)
A.N Samant (In all the Applications)
• Advocates of the Respondants: (Navilakha And Sons)
B.R Patil and C.A Kaveria
Interveners: Not Applicable.
Amicus: Not Applicable.

Material Facts
Respondents sent some items through the petitioner's Central Railway but due to
negligence on the petitioner’s part, they suffered damages.

The Petitioners submitted cheques for varying amounts in full and final settlement of the
claims and said that the cheques should be sent back if the sum was not acceptable.

Opponents accepted the checks in protest and communicated that if there was any
objection to their acceptance under protest as part payment, they may inform them
within ten days from the receipt of the said letter. In case of no reply within 10 days, the
cheques will be encashed under protest and accepted as part payment.

There was no reply from the Petitioners.

Issues raised
Whether there was accord and satisfaction and if the present case attract the provisions of
section 63 of the Contract Act, 1872 – Mixed question of law and fact
When the claimants accepted the smaller amount without informing the Railways that
they would claim the balance, whether they were entitled to sue for the balance? - Mixed
question of law and fact
CONTENTIONS ADVANCED

Petitioner(s)/Appellant(s) (Union Of India)

1. There was accord and satisfaction when they encashed the cheques
2. The provisions of section 63 of the Contract Act are attracted in view of the
letter written by Petitioners while sending cheques and the opponents have not
returned the cheques but encashed them. 
3. 968 Mh.L.J 35 : 69 BLR 843, Union of India v. Babulal Uttamchand Bhandari
has no application in the present case and therefore it was an error for the court to
rely upon it
4. The petitioners sent cheques along with a letter stating that the cheques are sent
in complete and final settlement of the claim and that the cheques should be
returned if they are not appropriate, then the opponents should have returned the
cheques.
5. As per 1968 Mh.L.J 35 : 69 BLR 843, On behalf of the Railways, it was
claimed that, because the sum was paid in full and the lawsuit was eventually
settled, the plaintiffs were not entitled to sue for the remainder. In the present
case, this can also be extended and it can not be said that the Court was
absolutely wrong to rely on it below.
6. In the case of Lala Kapurchand Godha v. Mir Nawab Himayatalikhan Azamjah,
AIR 1963 SC 250; Where, after some initial protest, the Plaintiffs expressed
willingness to accept the amount sent in full satisfaction of his claim and
discharge the promissory note by endorsing full satisfaction and obtaining the
payment. The Plaintiffs then filed a suit seeking the sum of the balance. In those
cases, it was held that section 63 of the Contract Act absolutely protected the
situation. Having accepted payments in complete satisfaction of the claim, the
plaintiff will then be discharged by the defendants of the entire claim.
7. In Union of India v. Gangaram Bhawandas, AIR 1977 MP 215. The cheque was
accepted, but there was no receipt sent. On the contrary, the defendant sued the
suit for the balance sum following receipt of the aforementioned cheque. They
presented evidence to demonstrate that the plaintiffs' goal was not to accept the
 cheque to the complete and final satisfaction of the claim. It was held that it was
not proven by the railway that there was a case of agreement and satisfaction.
8.

STATUTES
Section 25 of the Provincial Small Causes Court Act : involves common questions of law
Code of Civil Procedure, 1908 (CPC) - Section 80; 
[(1)] 2 [Save as otherwise provided in sub-section (2), no suit 3 [shall be
instituted] against the Government (including the Government of the State of
Jammu and Kashmir)] or against a public officer in respect of any act purporting
to be done by such public officer in his official capacity, until the expiration of two
months next after notice in writing has been 4 [delivered to, or left at the office of
6 [7 [(b)] in the case of a suit against the Central Government where it relates to
railway, the General Manager of that railway;]

Indian Contract Act, 1872 - Section 63; 

Every promisee may dispense with or remit, wholly or in part, the performance of
the promise made to him, or may extend the time for such performance, 1 or may
accept instead of it any satisfaction which he thinks fit.

INDIAN CONTRACT ACT, 1872  Section  63 - Promise may dispense with or
remit performance of promise

Provincial Small Cause Courts Act, 1887 - Section 25-

The District Judge, for the purpose of satisfying himself that a decree or order
made in any case decided by a Court of Small Causes was according to law,
may of his own motion, or on the application of an aggrieved party made within
thirty days from the date of such decree or order, call for the case and pass such
order with respect thereto as he thinks fit."]

PROVINCIAL SMALL CAUSE COURTS ACT, 1887  Section  25 - Revision

of decrees and orders of Courts of Small Causes

Books, articles and other literature

None
Precedents relied upon

Kapur Chand Godha vs. Mir Nawab Himayatalikhan Azamjah

MANU/SC/0030/1962; -

It was the case where the Plaintiffs after some initial protest expressed readiness
to accept the sum sent in full satisfaction of his claim and discharge the
promissory note by making endorsement of full satisfaction and received the
payment. Thereafter the Plaintiffs filed the suit claiming the balance amount. In
these circumstances it was held that the case was completely covered by section
63 of the Contract Act.

Union of India (UOI) and Anr. vs. Gangaram Bhagwandas

MANU/MP/0038/1977-

he claimants did not accept the cheque remitted by the Railway stating that it
was in full and final settlement of their claim for damages. The cheque was
encashed but no receipt was sent. On the contrary after receiving the said
cheque, the claimant prosecuted the suit for the balance amount. They led
evidence to show that intention of the claimants was not to accept the cheque in
full and final satisfaction of the claim. It was held that the railway failed to prove
that there was case of accord and satisfaction.

Union of India v. Babulal Uttamchand Bhandari, 1968 Mh.L.J 35 : 69 BLR

843
 “the Petitioners have sent cheques along with letter which specifically mentioned that the
cheques are sent in full and final settlement of the claim and the cheques should be sent
back, if not acceptable, then the opponents ought to have sent back the cheques. But,
when they encashed the cheques there was accord and satisfaction and section 63 was
attracted”

Judgment
“The opponents specifically wrote to the Petitioners that if they are having any objection
to accept the cheques under protest as part payment then they may be informed within 10
days, and if no reply is received then the cheques would be encashed under protest.There
was no reply. The acceptance under protest was communicated immediately. It cannot be
said that there was satisfaction and those Opponents have foregone the balance.
Petitioners cannot be said to be discharged from liability for balance. Encashment of
cheque in this case does not amount to promise to release the Petitioners from the
obligation to pay the balance. Acceptance under protest and communication thereof
shows that there was no intention on the part of those opponents to accept the cheques in
full satisfaction of their claims. Mere encashing the cheques in the facts and
circumstances cannot amount to agreement to accept lesser amount. Accord and
satisfaction imply an agreement to take the money in satisfaction of the claim in respect
of which it is sent.”

(Judgment in personam) –
Petitioners cannot be said to be discharged from liability for balance.

Ratio Decidendi (Judgment in rem).

Encashment of cheque in this case does not amount to promise to release
the Petitioners from the obligation to pay the balance.
(9)  Conclusion
I am in full agreement with the judgment. There was a clear reply of accepting the
cheques in protest. It was the railways fault to not follow up and reply. Hence, they cant
be asked to be released from the claim here.