Section 62 – Amendments and Section 63 – Waivers

My Lord, What is the difference between an Amendment and a Waiver, in context of The Indian Contract Act, 1872?

Amendment

It is settled law that an amendment to a contract being in the nature of a modification of the terms of the contract must be read in and become a part of the original contract in order to amount to an alteration under Section 62 of The Indian Contract Act. This is clear from Juggilal Kamlapat, AIR 1955 Cal 65:

The effect of the alterations or modifications is that there is a new arrangement; in the language of Viscount Haldane, ‘a new contract containing as an entirety the old terms together with and as modified by the new terms incorporated’. The modifications are read into and become part and parcel of the original contract. The original terms also continue to be part of the contract and are not rescinded and/or superseded except in so far as they are inconsistent with the modifications. Those of the original terms which cannot make sense when read with the alterations must be rejected.”

Waiver

In Jagad Bandhu Chatterjee, (1969) 3 SCC 445 the SC held:

In India the general principle with regard to waiver of contractual obligation is to be found in Section 63 of The Indian Contract Act. Under that section it is open to a promisee to dispense with or remit, wholly or in part, the performance of the promise made to him or he can accept instead of it any satisfaction which he thinks fit. Under the Indian law neither consideration nor an agreement would be necessary to constitute waiverThis Court has already laid down in Waman Shriniwas, 1959 Supp 2 SCR 217 that waiver is the abandonment of a right which normally everybody is at liberty to waive. ‘A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right’.”

In P. Dasa Muni Reddy, (1974) 2 SCC 725 the SC held:

Waiver is an intentional relinquishment of a known right or advantage, benefit, claim or privilege which except for such waiver the party would have enjoyed. Waiver is consensual in nature. It implies a meeting of the minds. It is a matter of mutual intention. The voluntary choice is the essence of waiver. There should exist an opportunity for choice between the relinquishment and an enforcement of the right in question. There can be no waiver of a non-existent right. Similarly, one cannot waive that which is not one’s as a right at the time of waiver.”

It is clear that when waiver is spoken of in the realm of contract, Section 63 of the Indian Contract Act governs. But it is important to note that waiver is an intentional relinquishment of a known right, and that, therefore, unless there is a clear intention to relinquish a right that is fully known to a party, a party cannot be said to waive it. But the matter does not end here. It is also clear that if any element of public interest is involved and a waiver takes place by one of the parties to an agreement, such waiver will not be given effect to if it is contrary to such public interest. This is clear from a reading of the following authorities: Lachoo Mal, (1971) 1 SCC 619; Indira Bai, (1990) 4 SCC 668; Krishna Bahadur, (2004) 8 SCC 229. It is thus clear that if there is any element of public interest involved, the Court steps in to thwart any waiver which may be contrary to such public interest.

– Hon’ble Justice R.F. NarimanAll India Power Engineer Federation & Ors. v. Sasan Power Ltd., [Civil Appeal Nos. 5881-5882 of 2016].

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