Sunday, 12 November 2017

What is basic concept of novation sub silentio?

Under Clause 5 of the agreement, cannot be construed either as novation of the original contract Under Section 62 of the Indian Contract Act (hereinafter referred to as 'the Act'), or acquiescence to any new arrangement by substitution of a new contract. It was an act done under compulsion, and not voluntarily. A novation of contract, can take place only by mutual consent in a tripartite arrangement. In absence of any fresh tripartite agreement executed between the parties, it is futile to contend novation. 
The plea of the Respondents for novation of the contract referring to Section 8 and 62 of the Act, sub silentio finds support from the observations in McDermott International Inc. (supra) as follows:

151. Clause 5 of the contract categorically states that MII was to procure the material which was to be reimbursed by BSCL. The extra amount incurred by MII for procuring materials having extra thickness, therefore, was not payable. To the aforementioned extent, there has been a novation of contract. MII had never asserted, despite forwarding of the contention of ONGC, that it would not comply therewith. It, thus, accepted in sub silentio.

21. The novation of a contract could take place sub silentio was also noticed in BSNL v. BPL Mobile Cellular Ltd. MANU/SC/7717/2008 : (2008) 13 SCC 597 as follows:

45..... They might have also been held bound if they accepted the new rates or the periods either expressly or sub silentio.....

Civil Appeal No. 1168 of 2007

Decided On: 19.06.2017

 Kanchan Udyog Limited Vs.  United Spirits Limited

Hon'ble Judges/Coram:
Ranjan Gogoi and Navin Sinha, JJ.

Citation :(2017) 8 SCC 237.
Read full judgment here: Click here
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