Section 63 Contract Act: Promisee may dispense with or remit performance of promise

Section 63 of Indian Contract Act: Promisee may dispense with or remit performance of promise

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

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, or may accept instead of it any satisfaction which he thinks fit.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Promise Sec 2(b) Contract Sec 2(h)

Legal Commentary & Landmark Judgments: Section 63

A promisee possesses the statutory power to dispense with or remit, wholly or in part, the performance of the promise made to them, or to extend the time for performance, or to accept instead of it any satisfaction which they think fit. Unlike English common law, which requires fresh consideration under the rule in Pinnel's Case and Foakes v. Beer, Section 63 empowers a promisee in India to grant a legally binding waiver, remission, or extension without any fresh consideration.

Remission & Dispensation of Performance: Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or accept any satisfaction instead.
Commercial Debt Settlements: This section provides statutory backing for bank haircuts, One-Time Settlements (OTS), and negotiated debt waivers without requiring fresh consideration.

Similarly, when a buyer or employer unilaterally grants an extension of time for project completion, that extension is legally binding and prevents the promisee from treating the contractor as being in default during the extended period.

Key Landmark Precedents:

C.K. Sasankan v. Dhanalakshmi Bank Ltd (2009) 11 SCC 60: The Supreme Court held that under Section 63, a creditor who accepts a reduced lump-sum payment in full and final settlement of a debt cannot subsequently sue for the remaining balance. Consideration is not required for remission under Indian law.
Central Bank of India v. Ravindra (2002) 1 SCC 367: The Supreme Court affirmed that a compromise or concession granted by a bank under Section 63 discharges the borrower according to the precise terms of the settlement.

Legal Commentary:

Section 63 is the statutory basis for One-Time Settlement (OTS) schemes by financial institutions. Once an OTS is sanctioned and the compromised amount accepted by the creditor, the original debt is extinguished, precluding the lender from reverting to the original outstanding balance unless default occurs under the OTS terms.

Section 63: Promisee may dispense with or remit performance of promise

Section 63 of Indian Contract Act: Promisee may dispense with or remit performance of promise

Legal Commentary & Landmark Judgments: Section 63