Yamuna Developers Pvt. Ltd. contracted with JTL for supplying various kinds of tiles to its Green Valley Project with actual cost of Rs. 50,00,000. JTL fulfilled its own part but YDPL had paid only Rs. 20,00,000. After one year, JTL agreed to accept Rs. 20,00,000 in satisfaction of its claim of Rs. 30,00,000. Later on, JTL filed a suit for the enforcement of contractual obligation. Decide the case on the basis of relevant legal provisions and case law.
The main issue which is involved in the present case is whether YDPL is liable to pay Rs. 30,00,000? Every contract which is made by parties is based upon mutual trust and confidence and every party to contract gives his consent on a belief that every party to contract will perform his contractual obligation.
But if any party fails to perform his contractual obligation, then another aggrieved party has right to claim compensation or recover the amount spent by that party from wrongdoer. If any party who is an aggrieved agrees to take some amount less than the actual amount, then in such a case, after the settlement, that party cannot claim the remaining amount which he agreed to remit.
Section 63 of the Indian Contract Act, 1872, deals with the provisions of remission of part of promise. According to this section, if any party to the contract agrees to accept the lesser amount in satisfaction of the whole claim, then after the settlement, he cannot claim the remaining amount.
In the leading case of Amarnath vs. Bharat Heavy Electricals, the Hon’ble court held that the promise has been authorised by section 63 to remit or dispense with the performance of contract without any consideration.
He may fully forgo his claim or may agree to a smaller amount in the full satisfaction of the whole amount. In the present case, JTL agreed to accept Rs. 20,00,000 instead of Rs. 30,00,000.
According to abovesaid legal provisions and case law, he cannot claim rest of the amount because he himself forgone the remaining amount. Hence YDPL is liable to pay only Rs. 20,00,000.