Hiralal and Others v. Badkulal and Others

Judgment

195li Ganpat Rai Hira Lal and Another Aggarwal Chamber of Oonimerce Ltd. [1953) the appeals are not competent is, in' om opinion, erroneous. The result is that Appeal No. 152 of .1951 is dismissed with costs throughout, while Appeals Nos. 167 and 167 A of 19.51 are allowed with costs throughout. Appeal No. 12.5 dismissed. Appeals Nos. 167 and 167 A .allowed. Ghandrasekhara Agents for the a.pp~llants in Appeals Nos. 167 AiyarJ. and 167A: Mohan Behan Lal. March 12. Agent for the appellant in Appeal No. 152 : Kitndan Lal Mehta. Agent for respondents in Appeals Nos. 167 and 167 A: Naunit Lal. Agent for respondent in Appeal No. 152: Mohan Behari Lal. HIRALAL AND OTHERS BADKULAL AND OTHERS. [MEHR CHAND MAHAJAN and BHAGWATI JJ.] Acknowledgment-Whether gives fresh cause of action-Practice -Party in possession of documentary evidence-Duty to produce.

Where the defendants who had dealings with the plaintiffs for several years signed the following entry in the plaintiffs' account book underneath the earlier entries: "After adjusting the aceounts Rs. 34,000 found correct payable". Held, that this amounted to an unqualified acknowledgment of liability to pay and implied a promise to pay and could be made the basis of the suit and gave rise to a fresh cause of action. Maniram v. Seth Rup Chand (33 I.A. 165), Fateh Chn.nd v. Ganga Singh II.L.R. 10 Lab. 745) and Kahan Chand Dularam v. Daya1al Amritlal (I.L.R. 10 Lah. 748) relied on. Gh11lam M11rtuza v. Fasih1mnissa (I.L.R. 57 All. 434) overruled. It is not a sound practice for those desiring to rely upon a certain state of facts to withhold from the court written evidence which is in their possession which could throw light upon the. issues in controversy and tc rely upon the mere doctrine of onus of proof. Murugesam Pillai v. Manickavasaka Pandara (44 I.A. 99) referred to.

8.C.R. CIVIL Ar°FELLATE JURISDICTION: Civil Appeal No. 168 of 1952. Appeal from a Judgment and Decree dated 23rd July, 1951, of the Court of the Judicial Commissioner, Vindhya Pradesh, in Civil First Appeal No. 26 of 1951 arising out of the Judgment and Decree dated 14th .:\farch, 1951, of the CouPt of the District Judge, Umaria, in Case No. 32 of 1951. N. S. Bindra (S. L. Chhibber, with him) for the appellants. S. P. Sinha (K. B. Asthana, with him) for the respondents. 1953. March 12. The Judgment of the Court was delivered by MAHAJAN J.-The suit out of which this appeal arises was instituted by the plaintiff-respondents in the court of the district judge of Umaria, for recovery of Rs. 34,000 principal, and Rs. 2,626 interest, due on foot of mu~ual dealings.

The suit was dismissed by the district judge but was decreed on appeal by the Judicial Commissioner of Vindhya Pradesh. certificate for leave to appeal to this Court was granted as the case fulfilled all the conditions and requirements in force relating to appeals to the Supreme Court. The defendants did not admit the claim and it was pleaded that no accounts were explained to fihem when the signatures of Bhaiyalal and Hiralal were obtained in the plaintiffs' ledger on 3rd September, 1949, acknowledging the snit amount as due from them. It was further pleaded that no suit could be based merely on an acknowledgment of the debt. In paragraph 4 of the written statement it was alleged that the plaintiff No. 2 Dipchand having threatened to bring a suit against defendants 1 and 2 whose financial position was bad and having represented that plaintiff No. 1 Badkulal would be angry and abuse plaintiff No. 2, and having assured on oath by placing his hand on a deity in a temple that no suit shall be lliralal and Others Badhulal and Others.

Hiralal and 0th""'. Badknlal and Othe1·s. SUPREME COURT REPOR'rS [1953] brought, and that amouni of interest wouid be reduced, asked defendants 1 and 2 to sign the khata, who signed the same without going through the accounts,' on the faith of these statements made by Dipchand and that foe defendants were not bound by these signatures. In paragraph 9 of the written statement it was alleged th'at in• fact Hs. 15,000 or 16,000 as principal sum were due to plaintiffs from defendants but the suit had been filed for a much larger sum than due. Issue 1 framed by the district judge,was in these terms : "Did the defendants Hiralal and Bhaiyalal sign on Bhadon Sudi 11 Samvat 2006 in the capacity of manager and head of the family, on the khata of the plaintiffs after understanding the debit and credit accounts and accepting Rs. 34,000 as the correct balance due to the plaintiffs."

It would have been more correct had a separate issue been framed on the two points compositely mentioned in this issue, Be that as it may, the form in which the issue was framed is uot material for the decision of the appeal. Issue 7 was in t'hese terms : "Did the plaintiff Dipchand obtain the signature of defendants 1 and 2, in their bahi under the threat · of instituting a suit and giving the assurance of the suit being not filed and leaving the interest which is incorrect and very much exaggerated, by saying that Badkulal shall he very angry with him ... ". The frame of the issue shows that the learned judge at this stage made no effort to ascertain or apprehend the nature of the plea taken in the written statement. He seems to have acted more as an ~.utomaton than as a judge in the discharge of his responsible duties.

Before framing an issue like this it was his duty to examine the parties and to find out the precise nature of the plea involved within these facts; in other words, whether the a.efendants wished to plead in defence fraud, coercion, undue influence or a mistake of fact entitling them to reopen the accounts. Mr. Bindra for the appellants was unable to tell us S.C.R. what real plea was involved in the facts stated under th is issue. The manner in which the learned judge dealt with this issue lends support to our view that he did uot at all apprehend what he had to decide. It was held that the defendants did not sign the entry after understanding, settling, and adjusting oi the accounts, hut that plaintiff Dipchand obtained their signatures without explaining the accounts to them. The fact that the entry was signed by both the defendants who represented their family was not denied.

Hiralal, defendant, in the witness box admitted that the defendants deal in gold, silver and kirana and maintain regular books of account. It was also admitted that two or three muneems are in their employ for maintflining regular boo.ks of the business dealings. Hiralal was questioned " How much money was due from the defendants-firm to the plaintiflsfirm?". The answer was evasive, viz., "He could not say how much was due". When questioned about his accounts, he replied that he had not filed them as he was ill. He further deposed that he had looked into his accounts and Rs. 10,000 to Rs. 15,000 as principal and interest were due but he could not say what was the correct amount. vVhen asked whether on the date of signing the acknowledgment he looked into the books to see what amount was due from him, his answer was in the ·negative. He further said that even after receiving notice he did not look into his own accounts to check as to what the correct balance was ..

A leading question was put to him whether on Bhadon Sudi 11 Samvat 2006 there was an entry of Rs. 34,000 in the defendants' kbata as being the balance due from them to the plaintiffs. The answer was again evasive. He said "I couid not say whether there was any such entry in bis books." In these circumstances there was no justification for throwing out the plaintiffs' suit on the ground that the accounts were not explained to the defendants by the plaintiffs. The defendants had written the accounts in their own books from which the true,bala.nce co11ld Hiralal and Others Badkulal and Others. Mahajan J. Hiralal and Others Badkulal and Others. Mahajan J. [1953] be ascertained. An inference from the "statement of Hiralal can easily be raised that the balance entry of Rs. 34,000 r1lso existed in his own books. Mr. Bindra tried to get out of this situation by urging that it was no part of the defendants' duty to produce the books unless they were called upon to do so and the onus rested on. the plaintiffs to prove their case.

This argument has to be negatived in view of the observations of their Lordships of ~he Privy Conncil in Murugesam Pillai v. Manickavasaka Pandara('), which · appositely apply here. 'fhis is what their Lordships observed: "A practice has grown up in Indian procedtue of those in possession of important documents or information lying by, trusting to the abstract doctrine of the onus of proof,.and failing, accordingly, to furnish to the courts the best material for its decision. With regard to third parties this may be right enonghthey hf1.ve no responsibility for the conduct of the suit; but with regard to the parties to the suit it is, in their Lordships' opinion, an inversion of sound practice for those desiring to rely upon a certain state of facts to withhold from the court the written evidence in their possession which would throw light upon the proposition." This rule was again reiterated in Rameshwar Singh v. Rajit Lal Pathak(').

On the evidence of the parties it is clear that both parties are businessmen and each party has been maintaining accounts of their mutual dealings, and they met on 3rd September and in the plaintiffs' book the defendants signed an entry on page 58 of bhe ledger which runs thus:- "Rs. 34,000 balance due to be received up to Bhadon Sudi 11 Samvat 2006 made by check and understanding of accounts with Hiralalji's books." This acknowledgment was made below a number of entries made in this khata on the credit and debi& side and the mutual dealings had continued since (!) (1917) 44 I.A; 99, 8.0.R. SUPREME COUR'r REPOR'rs several years.· The acknowl~dgment is signed by Hiralal and Bhaiyalal, with the following endorsement: "After adjusting the' accounts Rs. 34,000 fonnd correct payab-Ie." In these circumstances we are not able to understand the view of the district judge that it was not proved that the accounts were explained to the defendants by Dipchand.

It was unnecessary to do so because the defendants themselves were keeping accounts and they would not have signed the balance for Rs. 34,000 with the endorsement above cited, without reference to their own books or in the manner suggested in the written statement. Plaintiff Dipchand in the witness box supported the plaintiffs' case as laid in the plaint. He deposed that "This accounting was done by my muneem Puranfai and Ram Prasad, muneem of Hiralal. ........... Muneems explained and Hiralal signed after understanding it." In cross-examination he said that muneems were checking the accounts and when both the mnneems said that so much was the bala,nce, Hiralal then signed and that Hiralal and Bhaiyalal them~elves did not check any account. The learned district judge and Mr. Bindra criticized the evidence of this witness and it was urged that he had made false and highly . improbable statements with regard to the manner and circumstances in which the entry was signed.

The discrepancies in the statement relate to matters of no consequence. In our opinion, his evidence along with the entry was sufficient to hold the plaintiffs' case proved when the best evidence ·of their own books to disprove the plaintiffs' case had been withheld by the defendants. No satisfactory explanation had been given for the non-production of the defendants' books, and the evidence given by Hiralal does not do much credit to him. Mr. Bindra contended that it should have been held that Bhaiyalal did not sign at the same time when the entry was written but he signed later on. On this point Hiralal deposed that when he signed Bhaiyalal 99 Hiralal and Others Badkulal and Others. Mahajan J, Hiralal and Others Badkulal and Others. Mahajan J. [1953] was not present, that he signed afterwttrds, that Kulai muneem came with the bahi s:!.ying that Badkulal and Dipchand had quarrelled among themselves that there should also be the signature of Bhaiyalal, that Bhaiyalal questioned him as to why the witness had signed, that he replied that Dipchand had told him l!.fter pointing his hand towards God that he would take no action so long as he lived, so he did not check, nor any one explained him the accounts, that on this he asked Bhaiy1tlal to sign and on his asking he signed.

It was for Bhaiyalal to explain his signature by going into the witness box but he did not give evidence in the case and there is no explanation why he did not do so. Mr. Bindra's contention therefore that it should be held that Bhaiyalal was not present when the acknowledgment was signed cannot be sustained. 1he defendants tried to support their case by the statements of Kulai Prasad, muneem, and the other two muneems Ram Prasad aud Puraulal. So far as Kulai Prasad is concerned, he was in the plaintiffs' service and was dismissed by Badkulal, plaintiff, on 31st March, 1950. Much reliance cannot be placed on the statement of a dismissed and disgruntled employee. He stated that Hiralal was not made to understand auy accounts and Dipchand assured him on oath that he would raise no trouble during his life and asked Hiralal to sign and that Bhaiyalal signed on a different date. This evidence is of a partisan character and no reliance can be placed on it.

Ram Prasaa stated that he did not check the accounts of the plaintiffs from Bhadon Samvat 2006 and that Hiralal did not sign in bis presence. In cross-examination he admitted that there were mutual dealings between the parties and that Hiralal might have signed after accounting was done. He pretended ignorance of what happened on Bbadon Samvat 2006. As regards Puranlal, be stated that after looking inlio the accounts and after mutual talk, Exhibit P-1 8.C.R. was written on Dip Chand's asking, that accounts might have been told by Dipchand on the basis of the statement which he had with him, that no ac-- counts were explained. He further stated that Hiralal said to Dipchand "Please see me", on which Dipchand replied after raising his hand towards the temple "I shall not do anything unfair in my lifetime." In cross-examination he admitted that the words" signed Bhurey Naik Raghunandan Prasad Bakala.rn Hira Lal", and the words " after adjusting the accounts Rs. 34,000 found correctly payable signed Hinllal " were written by Hiralal himself.

It was further elicited in cross-examination that the witness had forged a receipt and for forging that receipt he was sentenced to one year's imprisonment in a criminal case started by Badkulal, plaintiff. 'l'his evidence therefore is not of much consequence in this case. In these circumstances we are satisfied that the district judge not only approached the decision of the case from an erroneous point of view but he also incorrectly appreciated the material on the record. The learned Judicial Commissioner was therefore perfectly justified in reversing his decision and in holding that on 3rd September, 1949, there was an adjustment of accounts actually done by the muneems and accepted by the principals and the story of coercion and misrepresentation was false. · Mr. Bindra next urged that the plaintiff's suit should have been dismissed because it could not be maintained merely on the basis of au acknowledgment of liability, that such an acknowledgment could only save limitation but could not furnish a cause of i>ction on which a suit could be maintained.

The Judicial Commissioner took the view that an unqualified acknowledgment like the one in the suit, and the statement of the account under which the entry had been made, were sufficient to furnish a cause of action to the plaintiffs for maintaining the present suit. We are satisfied that no exception can be taken to this conclusion. It was held by the Privy Council in Hiralal and Other's Bodkulol and Others. ltfa,hajan J. Hiralal and Others Badkulal and Others. Mahajan J. [19/i3j Maniram v. Seth Rupchand('), that an unconditional acknowledgment implies a promise to pay because .that is the natural inference if nothing is said to the contrary. It is what every honest man would mean to do. In Fateh Chand v. Ganga Singh(') the same view was taken. It was held. that a suit on the basis of a balance was competent In Kahanchand Dularam v. Dayaram Amritlal(3) the same view was expressed and it was observed that the three expressions "balance due", " account adjusted " and "balance struck" must mean that the parties had been through the account.

The defendant there accepted the statement of account contained in the plaintiff's account book, and made it his own by signing it and it thus amounted to an "accounts stated between them" in the language of article 64 of the Limitation Act. 'l'he same happened in the present case. The acknowledgment which forms the basis of the suit was made in the ledger of the plaintiffs in which earlier mutual accounts had been entered and truly speaking, the snit was not based merely on this acknowledgment but was based on the mutual dealings and the accounts stated between them and was thus clearly maintainable. Mr. Bindra drew our attention to a decision of the Allahabad High Court in Ghulam Murtuza v. Fasihunnissa('), wherein it was held that even if an acknowledgment implies a promise to pay it cannot be made the basis of suit and treated as giving rise to a fresh ca use of action. We have examined the decision and we· are satisfied that it does not lay down good law.

For the reasons stated above this appeal has no merits and we accordingly dismiss it with costs. Appeal dismissed. Agent for the appellants: Govind Saran Singh. Agent for the respondents : A. D. Mathur. (r) (I906) 33 I.A. I65. (2) (I929) I.L.R, Io Lah, 748. (3) (I929) l.L.R. Io Lah. 745. (4) (I935) I.L.R. 57 All. 434,