John v. Varghese — 1951 DIGILAW 34 (KER)

Judgment :- 1. This is an appeal against an order passed by the learned temporary Second Judge, Mavelikara, holding that the judgment-debtor has incurred forfeiture of his right to pay the decree-debt by instalments as per the provisions of the Travancore Debt Relief Act and directing execution for the entire balance due under the decree. When the 12th instalment fell due on 30.1.1122 two previous instalments were already in default. Even according to the judgment-debtor-appellant, in case it is found that the decree-holder had not accepted a certain payment towards one of the over-due instalments, to wit the 10th instalment, the latter had the right to execute the decree for the entire balance without reference to the provisions of the Debt Relief Act. In other words, the appellant's case is that by a subsequent payment and acceptance of an overdue instalment the decree-holder had waived his right to enforce the penal provisions of S. 9(3)(b) of the Debt Relief Act. The decree-holder would, however, have it that the acceptance was not on account of any specific instalment in arrear, but was only in reduction of the whole debt, i.e., a mere payment on account. Alternatively it was contended on his behalf that a mere acceptance of an overdue instalment will not in itself amount to waiver or otherwise disentitle him to claim the entire balance due under the decree. To appreciate these contentions we must know the true facts of the case. 2. As already mentioned the 12th instalment for payment fell due on 30.1.1122. Two previous instalments were already in default. On 29.1.1122 the appellant sent a cheque for Rs. 136-12-0 to the decree-holder together with a covering letter intimating him that the cheque was in lieu of the amount for the 10th instalment and that the banker's commission was also included in it. The decree-holder was asked to acknowledge receipt of the same and certify the payment in court. In the ordinary course the cheque would have reached the decree-holder the next day, but he got it actually only on 3.2.1122. The cheque was got cashed on 4.2.1122, but no acknowledgment would seem to have been given to the judgment debtor nor was any certification made to the court. In the ordinary course the cheque would have reached the decree-holder the next day, but he got it actually only on 3.2.1122. The cheque was got cashed on 4.2.1122, but no acknowledgment would seem to have been given to the judgment debtor nor was any certification made to the court. There is no dispute however that the proceeds of the cheque were not sufficient to cover the amount due on the 10th instalment as also the commission on the cheque. On 4.6.1122 the decree-holder filed the execution petition giving rise to the present appeal alleging that the judgment-debtor has forfeited his right to the benefit of the Debt Relief Act by reason of default having been made for three consecutive instalments, namely, 10th, 11th and 12th instalments. The execution petition further stated that the amount received as per the cheque sent on 29.1.1122 has been credited towards the decree-debt. On notice being given about this execution application the present appellant field written objections contending inter alia that the payment as per the cheque dated 29.1.1122 was made specifically towards the 10th instalment which was overdue and that the decree-holder's conduct in cashing the cheque (assuming it was received late) showed that it was accepted towards that specific instalment and that he cannot now be heard to say that it was a receipt towards account generally. The appellant's case is that the decree-holder had no right to take the money except on the terms on which it was paid and his conduct in cashing the cheque was clear evidence of his having accepted the terms of the covering letter. According to the appellant there was therefore a clear case of waiver of the right to enforce payment of the balance decree-debt without reference to the provisions of the Debt Relief Act. The lower court gave its decision against the appellant without considering this question of waiver and it is for us now to decide whether the appellant's plea can be sustained on the materials existing on the records of the case. 3. The question whether a subsequent payment and acceptance of an overdue instalment would amount to waiver has been the subject of a large number of decisions in the Indian High Courts in connection with instalment bonds and instalment decrees with the usual default clause. 3. The question whether a subsequent payment and acceptance of an overdue instalment would amount to waiver has been the subject of a large number of decisions in the Indian High Courts in connection with instalment bonds and instalment decrees with the usual default clause. The law on the point is, if we may say so, correctly set out in Volume II of Rustomji's Law of Limitation page 807 (5th Edition, 1938) as follows: "The law now appears to be that such payment and acceptance (a subsequent payment and acceptance of an overdue instalment) is sufficient evidence of waiver, but the payment must be on account of the specific instalment in arrear, and not a mere part payment in reduction of the whole debt (i.e. a mere payment on account generally will not suffice). When it is sought to establish waiver by payment of an overdue instalment it is not necessary that the creditor should expressly say that he waives the forfeiture. It is sufficient if from the amount paid and accepted, and the circumstances attending the payment and the conduct of the parties, an intention to set up the bond (notwithstanding the default) as one payable by instalments is unequivocally indicated." 4. At one stage of the argument it was faintly suggested that the law relating to waiver applicable to instalment bonds or instalment decrees will not apply to a statutory right of forfeiture created by the provisions of the Debt Relief Act. We are not inclined to think that there is any substance in this suggestion. The right of forfeiture provided by the Debt Relief Act is one made solely for the protection and benefit of the decree-holders. It does not infringe on any public right or public policy or affect the right of any third party and there was nothing to prevent the decree-holder waiving any advantage conferred on him thereunder. The right conferred by the statute is a personal right and that such rights, even though conferred by a statute can be voluntarily renounced and parted with unless the statute conferring the right excludes it was clearly laid down by so eminent an authority as the House of Lords so long ago as the decision in Great Eastern Railway Company v. Goldsmid ((1884) 9 Appeal Cases 927 at 936-37). 5. 5. It is a question to be inferred from the facts and circumstances of a particular case as to whether a decree-holder has by accepting an overdue instalment waived his right to enforce the penal provisions enacted for his benefit by the Debt Relief Act. Here the amount due for the 10th instalment was sent so as to reach the decree-holder on the date of the 12th instalment. It is clear that the remittance was made with a view to avoid three consecutive defaults. The evidence which we see no reason to doubt is to the effect that the decree-holder received the cheque only on the third of Kanni 1122. For more reasons than one he could have refused to accept it. He was not bound to accept payment made by a cheque, nor was he bound to accept the payment (even if made in money) when it reached him only on the third. He, however, without any objection or protest, cashed the cheque and kept quiet for four months or so. The appellant's letter sent along with the cheque, as already mentioned, clearly stated that the remittance was made for the 10th instalment. In our opinion the conduct of the decree-holder clearly indicates that he accepted the cheque in lieu of the amount due for the 10th instalment and that his attempt to claim the entire balance due under the decree without reference to the provisions of the Debt Relief Act is the result of an afterthought. Decided cases, Indian and English, show that the decree-holder cannot under the circumstances take advantage of the so-called default. The contention raised by Mr. T.K. Joseph, the learned counsel for the respondent, that to enable the appellant to avail himself of the equitable doctrine of waiver there must be either fresh consideration, a fresh agreement or something amounting to an estoppel is, in our opinion, not warranted on principle or on authorities. There is large preponderance of judicial opinion to the effect that the benefit of instalment payments would remain open to the debtor even in cases where he has not changed his position to his detriment on account of the conduct of the creditor in accepting payment of an overdue instalment. An early English Case may first be referred to in this context. An early English Case may first be referred to in this context. In Norton v. Wood (1829) I.R. and M. 178 = 32 Revised Reports 181 the obligee under a bond had bound himself not to call the principal for a specified period, if interest were regularly paid. On two occasions interest was paid after the due date. In delivering the judgment Lord Lyndhurst said: "The question, whether payment of interest tendered after it is due, and accepted by the creditor, is or is not a regular payment, is one which at law would be left to the jury. As to the construction to be put upon the memorandum, I agree with the opinion of the Vice-Chancellor; and then; the only remaining question will be, whether this amounts to a regular payment of the interest. Upon that point I feel myself bound to express a different opinion from that entertained by his Honour. I think, if money is tendered after the period when it became due, and the person to whom it has been paid does not see fit to refuse it, it is a waiver of the objection; it must be taken as a regular payment, if the person receives it the day after without making any objection. The order of the Vice-Chancellor must be discharged; but if any interest has since become due, it is competent to the defendant to move to dissolve the injunction." (p. 183) There when the obligee commenced an action on the bond the bill which gave rise to the decision was filed to have the benefit of the undertaking and to stay the proceedings at law. This English decision has been followed in a good many decisions of the Indian High Courts. This English decision has been followed in a good many decisions of the Indian High Courts. To avoid multiplicity of reference to decided cases in India and at the same time to acquaint ourselves with the trend of judicial opinion in the Indian High Courts a passage from the decision of the Allahabad High Court in Badri Narain v. Kunj Bihari Lal (1913) I.L.R. 35 Allahabad 179 may with advantage be quoted here; at page 184 of the report the learned judges in that case said: "There is a consensus of opinion among the High Courts that the subsequent payment and acceptance of overdue instalments must be taken into consideration for the purpose of applying the rules of limitation to an instalment decree, although the articles applicable contain no such provision as that to be found in Art. 75. The Calcutta High Court seem to treat it as a case of waiver and as an exception to the rule that limitation runs from the date of default - Mon Mohun Roy v. Durga Churn Gooee (1888) I.L.R. 15 Calcutta 502 - and the same view seems to have been accepted by this Court and by the Madras High Court. The Bombay High Court treat it as a kind of estoppel - Kashiram v. Pandu (1903) I.LR. 27 Bombay 1. Whatever may be the true reason for the rule, it seems to be well settled that after defaults have occurred, which according to the decree set time running against the decree-holder, the payment and acceptance of the overdue instalments may have the effect of preventing him from saying that the payments were not made regularly and in satisfaction of the decree, and remitting the parties to the rights which they would have had if no default had occurred." Among the later decisions of the Calcutta High Court which take the same view as that court took in the case referred to in the above extract mention may be made of the decisions in Sital Chandra Nahar v. Hyder Molla (1896) I.L.R. 24 Cal. 281, Surendra Nath v. Raja Rishikesh Law (1923) 27 Cal. Weekly Notes 893 and Jalim Chand Patwari v. Yusuf Ali Chowdhuri (1927) I.L.R. 54 Calcutta 143. The Madras view is to be found in Papamma Row v. Toleti Venkaiya, 5 Madras High Court Reports 198 and Nagappa v. Ismail (1889) I.L.R. 12 Madras 192. 281, Surendra Nath v. Raja Rishikesh Law (1923) 27 Cal. Weekly Notes 893 and Jalim Chand Patwari v. Yusuf Ali Chowdhuri (1927) I.L.R. 54 Calcutta 143. The Madras view is to be found in Papamma Row v. Toleti Venkaiya, 5 Madras High Court Reports 198 and Nagappa v. Ismail (1889) I.L.R. 12 Madras 192. The Bombay decision referred to in the extract made above from the Allahabad case will presently be referred to. 6. The view of the Lahore High Court is seen set out in a decision by Jai Lal, J. reported as Gopal Mal v. Gopal Singh (A.I.R.) 1928 Lahore 378. The head-note to that case which correctly sets out the sense of the decision is in these terms: "It is open to the decree-holder to expressly state when accepting the instalment that he does so without prejudice to his rights which have already accrued owing to the default or to show by his conduct at the time of accepting the instalment that he does not waive his rights under the default clause. But in the absence of proof to the contrary tender by the debtor and acceptance by the creditor of an overdue instalment must be deemed to amount to a waiver and condonation of the default". We are not unaware that criticism has been made in certain quarters that the law has been too broadly stated by the learned Judge. In Gokhul Mahton v. Sheoprasad (A.I.R.) 1939 Patna 433 at pp. 440 - 441 of the report Manohar Lall, J. one of the judges constituting the Full Bench observed: "The weighty observations of Lord Denman and Fry, J. quoted in the Order of Reference correctly indicate how this question should be determined. It is there laid down that mere failure to sue or inaction by the creditor is not a waiver of the default, something also must be established to show that the promisee has waived his rights. It is there laid down that mere failure to sue or inaction by the creditor is not a waiver of the default, something also must be established to show that the promisee has waived his rights. For instance his acceptance of an overdue instalment or his communicating to the promisor for a consideration that he will not insist upon his rights which have already accrued to him on the default which has taken place, or, it may be that the promisor himself approached the promisee or writes to him to stay his hands and not to proceed to demand the full amount and if the promisee agrees to such request, these will ordinarily amount to a waiver, In such cases, it is clear that some overt act has been established from which the court of fact can draw the conclusion that the obligee has waived the default. In some cases it will be easy to decide this question by looking at the frame of the suit and to find from the plaint the manner in which the allegations have been made. When the plaintiff alleges, for instance that all the previous instalments have been paid he proceeds on the footing that there has been no default and no waiver, and if his allegations are, in the course of the trial, found to be false, in my opinion, it is not open to the promisee to turn round and ask the Court to infer any waiver. Some High Courts have held that a mere acceptance of an overdue instalment cannot be treated as wavier of the default in the view that the promisee is merely taking what was due to him. But the Calcutta High Court has consistently held that an acceptance of an overdue instalment amounts in law to a wavier of the default. As this High Court has adopted the view that where there is a cursus curia of the Calcutta High Court they will ordinarily adopt the same as a rule of law binding upon this Court. I am inclined to agree with the view that where the promisee has accepted an overdue instalment it must be held that he has waived his rights which accrued to him on that default and that the starting point of limitation would be from the next default, if not waived". I am inclined to agree with the view that where the promisee has accepted an overdue instalment it must be held that he has waived his rights which accrued to him on that default and that the starting point of limitation would be from the next default, if not waived". The view contained in the above extract has been cited with approval and followed by Padhye, J. in Regunathdas Madangopal Bhangade Shop v. Warlu Bapu Maral (A.I.R.) 1948 Nagpur 225. The learned judge quotes a portion of the above extract in his judgment and concludes his discussion by formulating the points which appeared to him to be well-established. Among points (a) to (e), points (a) and (c) are alone of assistance to us and we quote them here: (a) That the exigibility clause in an instalment is for the benefit of the creditor and he has a right to waive that benefit even in the absence of a fresh agreement, a fresh consideration or a fresh bilateral arrangement. (b) ................................................................................................................................................ (c) The payment by the debtor and the acceptance by the creditor specifically made towards the satisfaction of a particular defaulted instalment would amount to a waiver of that default and of the benefit arising out of that default. (d) (e) 7. In view of this long current of decisions elsewhere we feel justified in holding that on the facts and circumstances of this case the decree-holder had waived his right to avail himself of the benefit of the so-called default for three consecutive instalments. The payment made by cheque dated 29.1.1122 was accepted by him as and for the 10th instalment. 8. We must not however omit to notice a few cases cited at the bar in support of the contention that a mere waiver will not enable the debtor to prevent the creditor from enforcing the penal consequences of the default provided by contract, decree or statute. The contention is that waiver must be such as would amount to estoppel. Earlier in this judgment we have said that the contention is unwarranted and that it cannot be supported on principle or on authorities. The learned counsel for the respondent placed reliance on certain observations of Sir Lawrence Jenkins, C.J. in the Full Bench case in (1903) I.L.R. 27 Bombay 1 to support him. Earlier in this judgment we have said that the contention is unwarranted and that it cannot be supported on principle or on authorities. The learned counsel for the respondent placed reliance on certain observations of Sir Lawrence Jenkins, C.J. in the Full Bench case in (1903) I.L.R. 27 Bombay 1 to support him. No doubt certain observations on p.11 of the report have been interpreted by certain decisions of the Nagpur Court, as supporting the above contention. See Ballabadas v. Dalipsingh (12 I.C. 741), Tukaramappa v. Laxmanappa (1935) 159 Indian Cases 96 and Maruthi Laxman Joshi v. Namdeo Sheoramai Warhekar (A.I.R.) 1949 Nagpur 385. But the learned judges in these cases would seem to have lost sight of the fact that the observations were made in connection with the first of the two points which the learned Chief Justice was discussing in that case. That point was whether the statute of limitation operated notwithstanding subsequent payments of overdue instalments. In discussing the second point whether payments of overdue instalments cannot by themselves prove a waiver what the learned Chief Justice had to say is to be found on pp. 12-13 and it is as follows: " I now proceed to deal with the second of the two difficulties which confronted the referring Bench, viz., the opinion expressed in Balaji v. Sakharam (1892) 17 Bombay 555 at p. 559 that payment and acceptance of overdue instalments cannot by themselves prove waiver. This (if intended to be a general proposition of law) is opposed to the view expressed in several Calcutta Cases Ram Culpo v. Ram Chander (1887) 14 Calcutta 352; Mon Mohun v. Durga Churn (1894) 21 Calcutta 542 at p. 547; Hurri Pershad v. Nasib Singh (1888) 15 Calcutta 503 and in its operation conflicts with the decision of Lord Lyndhurst, which I have already cited. In my opinion the point is one to be determined on the circumstances of each case, and unless the proposition in Balaji v. Sakharam was intended to be limited to the facts of that case, I think it cannot be sustained, and that we should decline to follow it. The result is that, in my opinion, we should answer the reference by holding that, having regard to the payment and acceptance of instalments in this case, the application is within time. The result is that, in my opinion, we should answer the reference by holding that, having regard to the payment and acceptance of instalments in this case, the application is within time. I think we are entitled so to decide, notwithstanding that this is a second appeal, for it is a mixed question of law and fact that is involved. I am glad that it is open to us to come to this conclusion as to the effect of waiver on instalment decrees; for, though in this case the result is that a judgment-debtor is held to his obligation, to hold otherwise, instead of being beneficial to judgment-debtors generally, would preclude decree-holders under instalment decrees, however favourably inclined, from acting with reasonableness, and would possibly in the result throw debtors (to use the language of Lord Selborne in Cotterell v. Stratton (1873) L.R. 8 Ch. 295 at p. 302 "into the hands of those who indemnify themselves against extraordinary risks by extraordinary exactions". This view was concurred in by all the other four learned judges who took part in the decision of the case. The Allahabad decision (1913) I.L.R. 35 Allahabad 178 quoted earlier and the Lahore decision in (AIR) 1928 Lah. 378 already referred to have not understood or interpreted the decision in (1903) ILR 27 Bom.1 in the sense in which the above mentioned Nagpur cases interpreted it. In A.I.R. 1928 Lahore 378 the comment made regarding (1903) ILR 27 Bom.1 is this: "The learned Counsel for the respondent relied upon a Full Bench judgment of the Bombay High Court in Kashi Ram v. Pandu, in which a different view was alleged to have been taken but I have been unable to discover where the difference lies. In that case Jenkins, C.J. held that acceptance of an overdue instalment may have the effect of estopping the creditor from enforcing the default clause but that there may be circumstances which may negative the operation of an estopel, and Astone, J. expressed himself strongly in favour of the proposition that under the circumstances mentioned the creditor must be deemed to have waived his rights under the default clause". (380). 9. How the learned judges of the Allahabad High Court understood the view of Sir Lawrence Jenkins, C.J. is explained in the extract quoted earlier. (380). 9. How the learned judges of the Allahabad High Court understood the view of Sir Lawrence Jenkins, C.J. is explained in the extract quoted earlier. Our reading of the Bombay Full Bench case is that it fully accepted the view of the Allahabad, Calcutta and Madras decisions that subsequent payment and acceptance of an overdue instalment is sufficient evidence of waiver. In fact the reference to the Full Bench was itself to see whether the Bombay High Court should not on this question fall into line with the decisions of the other High Courts and the Full Bench accepted the view of the other High Courts and overruled the prior decisions of the Bombay High Court. We, therefore, venture to observe that in the three cases mentioned the Nagpur Court misinterpreted the Bombay decision. Further, the observations in AIR 1949 Nag. 385, the case most relied on by the learned counsel for the respondent, are purely obiter. A prior order in execution operated as res judicata against the judgment-debtor's surety who brought the appeal before the High Court and he had himself during the course of the proceeding in the court of execution abandoned the point as to waiver. These grounds had really concluded the case against the appellant and it is in spite of that the learned judge went on to discuss the question of waiver. Besides the decree-holder had made his election before the debtor paid the amount into court. No reference is made in that decision to the case in AIR 1948 Nag. 225 referred to by us earlier. 10. One more case remains to be referred to and that is the decision in Kasin Khan v. Abdul Wahab Sikdar (1910-11) 15 Calcutta Weekly Notes 10. This case was cited by the appellant's counsel, but by some strange irony it contains observations favourable to the respondent. The learned judges in that case suggest two tests to see whether there is waiver or not in a particular case. We are afraid these tests go beyond what the decisions the learned judges themselves rely on warrant. We have referred in this judgment to the more important cases cited in that decision. Though the facts of the case before the learned judges answered the two tests, the tests proposed need not in our opinion necessarily be satisfied to make out a case of wavier. We have referred in this judgment to the more important cases cited in that decision. Though the facts of the case before the learned judges answered the two tests, the tests proposed need not in our opinion necessarily be satisfied to make out a case of wavier. No fresh consideration or any action on the part of the debtor on the belief the creditor accepted the payment in satisfaction of the obligation is needed in cases similar to the present to enable the debtor to avoid the penal consequences of a provision on account of default. 11. In the result the appeal is allowed with costs in both the courts and the execution petition giving rise to it will stand dismissed. If by reason of any subsequent default the decree-holder has become entitled to claim the whole balance due under the decree without reference to the provisions of the Debt Relief Act he will of course be free to pursue his remedy. Appeal Allowed.