Biswanath Prosad Gupta vs Ram Sahai Gupta

A.N. Sen, J.—This is an application under Order 23, Rule 3 of the CPC for recording the compromise of the suit.

It is the case of the Applicant, who is the Defendant in this suit, that the entire suit has been settled on the terms and conditions set out in para. 14 of the petition.

By a letter dated January 5, 1966, addressed by Sri P.P. Mitra, solicitor for the Plaintiff, draft terms of settlement had been sent to the Defendant''s solicitor. It is necessary to set out the said letter of Sri P.P. Mitra which reads as follows:

P.P. MitraSolicitor. 10, Old Post Office Street, Calcutta

Phone: 23-1890 (Office) 47-5515 (Res.) Dated, 5.1.1966 Without Prejudice

Sri L.M. Datta Chowdhury Biswanath Prosad Gupta v. Ram Sahay Gupta

Dear Sir,

I understand that the parties in this suit are agreeable to settle the suit on certain terms. I trust you have also been similarly instructed for such settlement. I am sending you herewith the draft Terms of Settlement as prepared herein for your approval without prejudice. If your client is willing to settle this suit on such terms please approve the same and return the same so approved, to enable me to arrange for filing same in Court and to get a decree passed herein in terms of such settlement.

Enclo.: One draft Terms of Settlement. Yours faithfully, P.P. Mitra

On the very same day Sri L.M. Dutt Choudhury, the solicitor for the Defendant, wrote back to Sri P.P. Mitra the following letter, unequivocally accepting the said terms and approving the same:

Sri P.P. Mitra 5th January, 1966 Biswanath Prosad Gupta v. Ram Sahay Gupta

Yours of date.

Dear Sir,

I accept the terms of settlement sent by you. I am returning the same duly approved by me.

Please get the same engrossed and signed by your client and send the same to me for being signed by my client. Thereafter the same will be immediately filed in Court and a decree shall be passed.

Enclo.: Terms of Settlement. Yours faithfully,

It may be noted that there is no dispute that the terms of settlement which had been sent along with the letter of Sri P.P. Mitra, solicitor, on behalf of the Plaintiff and had been accepted by Sri L.M. Dutt Choudhury, solicitor on behalf of the Defendant, are the indentical terms which have been set out in para. 14 of the petition. In this application the Defendant wants the said terms of settlement to be recorded.

Mr. Hazra, Learned Counsel for the Petitioner, has contended that by the said two letters a lawful agreement has been concluded between the parties compromising or adjusting the suit wholly. It is his contention that the letter dated January 5, 1966, sent by Sri P.P. Mitra, solicitor on behalf of the Plaintiff, offering the terms of settlement, constitutes a valid and lawful offer which has been unequivocally and unconditionally accepted by the Defendant by his solicitor''s letter of the same date; and this offer and acceptance concludes a lawful agreement which adjusts or settles the suit wholly. Mr. Hazra has argued that though the letter of Sri P.P. Mitra, solicitor, dated January 5, 1966, is marked ''without prejudice'' and the draft terms of settlement is sent for approval, ''without prejudice'', the same does not cease to constitute a valid offer and the acceptance of such offer concludes a lawful contract between the parties. It is his argument that when any letter is sent, marked ''without prejudice'' containing any offer, the said letter cannot be used to establish any admission by the other party, in case the offer made is not accepted by him; if however, the offer is accepted a lawful contract is concluded and the word ''without prejudice'' in the letter containing the offer, loses its entire significance. In support of this argument Mr. Hazra has referred to the decision in the case of In re : River Steamer Company (Mitchel''s claim) (1871) 6 Ch. App. 822. Mr. Hazra relies upon the following observations of Sri G. Mellish, L.J. at pp. 831 and 832:

As to the letter of the 19th of February, there is this further objection, that it is stated to be without prejudice. I am strongly of opinion, although it is not r necessary to decide it in this case, that a letter which is stated to be without prejudice cannot be relied upon to take a case out of the Statute of Limitations, for it cannot do so unless it can be relied upon as a new contract. Now, if a man says his letter is without prejudice, that is tantamount to saying, ''I make you an offer which you may accept or not, as you like, but if you do not accept it, then having made it is to have no effect at all''. It appears to me, not on the ground of bad faith, but on the construction of the document, that when a man says in his letter it is to be without prejudice, he cannot be held to have entered into any contract by it if the offer contained in it is not accepted.

Mr. Hazra has also cited the decision in the case of Walker v. Wilsher (1889) 23 Q.B.D. 335 and has strongly relied on the following observations of Lindley, L.J. at p. 337:

What is the meaning of the words ''without prejudice''? I think they mean without prejudice to the position of the writer of the letter if the terms he proposes are not accepted. If the terms proposed in the letter are accepted a complete contract is established and the letter, although written without prejudice, operates to alter the old state of things and to establish a new one. A contract is constituted in respect of which relief by way of damages or specific performance would be given.

Relying on these authorities Mr. Hazra submits that there has been a lawful agreement or compromise as a result whereof the suit has been adjusted wholly and that it is obligatory on the part of the Court to record the said compromise and to pass a decree in accordance therewith under the provisions of Order 23, Rule 3 of the Code of Civil Procedure.

Mr. Sircar, Learned Counsel for the Plaintiff, opposing this application, has raised two objections. His first objection is that in view of the letter of the solicitor dated January 5, 1966, being marked without prejudice, the same cannot be utilized and the same cannot constitute any valid offer. He, however, fairly concedes that the English cases referred to by Mr. Hazra do not support this contention and the said decisions lend support to the contentions of Mr. Hazra. The other objection of Mr. Sircar is that the Applicant has sought to make this application for recording the terms without complying with or fulfilling his part of the obligation under the said terms of settlement and as such he is not entitled to make this application and his application should not be entertained. Mr. Sircar has drawn my attention to Clause (c) of the said terms of settlement set out in para. 14 of the petition which reads as follows:

The Defendant shall further pay to the Plaintiff a sum of Rs. 500 before the filing of these terms.

Mr. Sircar argues that the Defendant has not paid this sum of Rs. 500 to the Plaintiff yet and the Defendant has not made any offer of payment of this sum to the Plaintiff before the making of this application. It is his argument that without paying and/or tendering payment of this sum to the Plaintiff the Defendant cannot make this application for recording these terms and this application should not be entertained. Mr. Sircar has drawn my attention to para. 19 of the petition and to the prayer (b) made herein and has argued that the Defendant is seeking to vary or modify the terms which have been agreed upon between the parties and in view of-the said attitude of the Defendant, this application of the Defendant should be rejected.

It may be noted here that while moving this application Mr. Hazra, Learned Counsel for the Defendant, produced on behalf of his client the sum of Rs. 500 in Court and tendered payment of the said sum in Court; but the same was not accepted by or on behalf of the Plaintiff.

In the facts of this case I am clearly of the opinion that the letter sent by Sri P.P. Mitra, solicitor for the Plaintiff, enclosing therewith the terms of settlement, constituted a valid offer. The effect of marking the letter ''without prejudice'' is, in my view, to warn the other party that he is at liberty to accept the offer, but in case he does not choose to do so, the fact of having made the offer will be of no effect at all and will not be used in any way to the J prejudice of the offeror. But the offer for all purposes remains an offer for acceptance by the other party; and if there is a valid acceptance of the offer by the other party, a concluded contract inevitably follows.

In the case of Madhavrav Ganeshpant Oze v. Gulabbhai Lallubhai ILR (1898) Bom. 177 Candy, J. observes:

What do these words ''without prejudice'' mean? Simply this: ''I make you an offer: if you do not accept it, this letter is not to be used against me''. (Per James, L.J., In re: River Steamer Company (Mitchel''s claim) Supra.

In respectful agreement with the observations of Lindley, L.J., which I have already quoted, I hold that if the proposed terms in a letter written without prejudice are accepted, a completed contract is established. In the instant case I am clearly of the opinion that a valid contract adjusting and settling the entire suit has been concluded.

The other contention of Mr. Sircar that the Defendant is not entitled to make this application and the settlement cannot be recorded inasmuch as the Defendant had not paid or tendered payment of the sum of Rs. 500 mentioned in Clause (c) of the terms of settlement, is, in my view, not tenable in the facts and circumstances of this case. It is quite clear from the provisions contained in Clause (c) that the parties had intended that the payment of Rs. 500 would have to be made before the filing of the terms in Court; and the Defendant had time till then to make the payment. In view of the conduct of the Plaintiff that stage did not reach. The Plaintiff had not signed the terms of settlement and had not taken any steps for the filing of the terms. In fact, the Plaintiff has been trying to back out of the settlement and that is why the Defendant has to make this application. The conduct of the Plaintiff has made literal compliance with the said clause impossible and the Plaintiff cannot be permitted to take advantage of his own wrong. As already noted, Mr. Hazra, while moving this application produced the sum of Rs. 500 in Court and tendered payment to Mr. Sircar''s client; but Mr. Sircar''s client was not agreeable to accept payment of the money so tendered in Court. In my view tendering payment of the sum of Rs. 500 to the Plaintiff in Court at the time of moving the application is sufficient compliance of Clause (c) of the terms of settlement on the part of the Defendant.

Mr. Sircar''s contention that the Defendant has sought to vary or modify the term (c) relating to payment of Rs. 500 by the averments made in para. 19 of the petition and by including the prayer (b) in the petition, is, to my mind, not correct. The said averments and the prayer, in my view, do not suggest any variation or modification of the terms; and the same relate to the performance or working out of the said terms. In the facts and circumstances of this case and in view of the attitude of the Plaintiff, that prayer had been made with the intention of avoiding any future harassment and not of varying or modifying the said term. The said averments and the prayer do not amount to any repudiation of the contract or of the settlement on the part of the Defendant; It may further be noted that the said prayer (b) has not been pressed by Mr. Hazra at the time of moving this application and his client had, in fact, offered and tendered payment of the sum of Rs. 500 to the Plaintiff in Court as hereinbefore stated.

No other objections have been raised and no other points have been argued.

In the facts and circumstances of this case it is proved to my satisfaction that the suit has been wholly adjusted by lawful agreement or compromise and it is the duty of the Court to record the same. I, therefore, make an order in terms of prayer (a) of the petition. However in view of the provision contained in Clause (c) of the terms of settlement, I pass this order on the condition that the Applicant shall pay to the Plaintiff the sum of Rs. 500 in course of the day. To obviate any possible difficulties in the matter of payment to the Plaintiff, I direct that the Applicant will be at liberty to pay the said sum to the Plaintiff''s solicitor and payment to the Plaintiff''s solicitor will give complete discharge to the Applicant in respect of the said payment. I make it clear that this order will not in any way prejudice the rights of the Official Receiver and the Official Receiver will stand discharged only on payment of all his costs and charges. In the facts of this case I direct that each party will pay and bear his own costs; and the costs of this application of the Official Receiver who has appeared by counsel, shall be paid in equal shares by the parties to the suit.