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Triloki Nath Dhar v. Dharmarth Counsel, Srinagar And Others
Factual and Procedural Background
This is a second appeal arising from a suit for rendition of accounts filed by the plaintiff appellant in the court of City Munsiff Srinagar. The trial court dismissed the suit on the ground that a claim for rendition of accounts did not lie. The Additional District Judge, Srinagar, affirmed the trial court's judgment and dismissed the appeal. The appeal was initially heard by the Chief Justice who found that the case involved a substantial question of law regarding the maintainability of a suit for accounts by an agent against the principal, and the matter was referred to the Full Bench.
The plaintiff appellant alleged that in 1956-57, tenders were invited by the defendant for two construction works: (1) Construction of office building at Basant Bagh, and (2) Construction of surrounding wall at Samadhi Rambagh. The appellant submitted tenders which were accepted, deposited earnest money, and executed agreements for the works. The appellant completed the works as per the agreements and received some payments but no final accounts were settled. The plaintiff claimed that there were substantial outstanding amounts due from the defendant but was uncertain of the exact sum as the defendant did not respond to requests for account settlement.
The defendants contested the suit contending that the appellant had received final payment for the Basant Bagh work as evidenced by a measurement book receipt and that for the Samadhi Rambagh work, the plaintiff had overdrawn an amount which was agreed to be set off against costs. They also contended that a suit for rendition of accounts was not maintainable.
The trial court found no principal-agent relationship between the parties and held that the plaintiff had maintained accounts and received full payment for one work, and had failed to appear as a witness or produce accounts. The suit for rendition of accounts was dismissed. The appellate court concurred, relying on a prior decision in AIR 1971 J. and K. 71.
Legal Issues Presented
- Whether a suit for rendition of accounts is maintainable by a contractor against the party for whom the work was executed, in the absence of a principal-agent relationship.
- Whether the relationship between the plaintiff and defendant was that of principal and agent, thereby creating a legal obligation to render accounts.
- The applicability and correctness of the precedent set in AIR 1971 J. and K. 71 regarding suits for rendition of accounts.
Arguments of the Parties
Appellant's Arguments
- The relationship between the parties was that of principal and agent, which imposed a statutory obligation on the defendant to render accounts to the plaintiff.
- The plaintiff was not in possession of the accounts, which were with the defendant, making it impossible to ascertain the outstanding amount without rendition of accounts.
- The correctness of the ruling in AIR 1971 J. and K. 71 was challenged.
- Relied on AIR 1967 SC 333 in support of the contention that a suit for rendition of accounts is maintainable under such circumstances.
Respondent's Arguments
- The plaintiff had received full and final payment for the office building work as evidenced by the measurement book receipt.
- The plaintiff had overdrawn amounts in respect of the wall construction work and had agreed in writing to set off these amounts.
- A suit for rendition of accounts was not maintainable as there was no principal-agent relationship but only a contractual relationship.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| AIR 1971 J. and K. 71 | Clarification that suits for rendition of accounts lie only in specific relationships such as principal-agent; not maintainable between contracting parties. | The court relied on this precedent to affirm that no principal-agent relationship existed and the suit for rendition of accounts was not maintainable. |
| AIR 1967 SC 333 | Recognition that a principal can sue an agent for rendition of accounts as an equitable right arising under special circumstances. | The court acknowledged this principle but held it inapplicable since the parties did not share a principal-agent relationship but a contractual one. |
| AIR 1925 Lah 100 | A suit for rendition of accounts is an unusual form of relief granted only when the relationship imposes a duty to keep accounts; otherwise, a suit for specific amount is appropriate. | Applied to show that the plaintiff’s claim was not maintainable as the defendant had no legal duty to keep accounts and the plaintiff should have claimed a specific amount. |
Court's Reasoning and Analysis
The court analyzed the nature of the relationship between the parties and found no principal-agent relationship. The plaintiff was a contractor who submitted tenders, executed agreements, and completed works under contractual terms. The court emphasized that a principal-agent relationship entails the agent acting on behalf of and representing the principal, which was absent here.
The court observed that the defendant did not stand in a fiduciary capacity to impose a legal obligation to render accounts. The scope of suits for rendition of accounts is limited to specific relationships such as partners, trustees, or principal-agent. It does not extend to contracting parties where the plaintiff is a promisee and the defendant a promisor.
The plaintiff failed to show any statutory obligation on the defendant to maintain accounts or that the accounts were unavailable to him. Evidence showed the plaintiff maintained accounts and received full payment for one work, and did not appear as a witness or produce accounts to substantiate his claim. The court found the suit was essentially a claim for a specific amount and not for rendition of accounts.
Although the appellant relied on AIR 1967 SC 333 supporting rendition of accounts between principal and agent, the court held this was inapplicable due to the absence of such a relationship. The court upheld the precedent in AIR 1971 J. and K. 71 as sound and applicable.
Holding and Implications
The appeal is dismissed with costs.
The court’s decision directly results in the dismissal of the plaintiff’s suit for rendition of accounts due to the absence of a principal-agent relationship and the existence of a contractual relationship instead. No new precedent is established; the court reaffirmed the limited scope of suits for rendition of accounts and the necessity of a fiduciary or similar relationship for such suits to lie. The plaintiff’s remedy lies in claiming a specific amount rather than seeking rendition of accounts.
Mian Jalal-Ud-Din, J.:— This is a plaintiffs second appeal and arises out of a suit for rendition of accounts brought by him in the court of City Munsiff Srinagar. The suit was dismissed by the trial Court on the ground that the claim for rendition of accounts did not lie. On appeal the Additional District Judge, Srinagar affirmed the judgment and decree of the trial Court and dismissed the appeal.
2. The appeal was originally heard by His Lordship the Hon'ble Chief Justice who was of the view that the appeal involved a substantial question of law as to the maintainability of a suit for accounts by an agent against the principal. The soundness of the Page: 77view taken by a Division Bench of this court in AIR 1971 J. and K. 71 was challenged before His Lordship. The case was therefore, referred to the Full Bench. This is how the case has come before us. Briefly speaking the facts of the case are that the plaintiff appellant brought a suit for rendition of accounts. The plaintiff averred that in the year 1956-57 tenders were invited by Mohtmim Dharmarth defendant respondent for the construction of two works namely; (1) “Construction of office building at Basant Bagh” and (2) “construction of surrounding wall Samadhi Rambagh.” Consequent upon the submission of tender by the appellant which was accepted the appellant deopsited Rs. 400/- as earnest money with the defendant respondent and executed agreements for the construction of the aforesaid works. The appellant completed both the works in accordance with the terms of the agreements and the defendant respondent paid some amount of money to him on account, but no accounts were settled. The plaintiff further averred that there were huge outstandings against the defendant on account of the said works. The plaintiff was not certain about the actual outstanding due to him. Although he called upon the defendant to settle accounts with him, there was no response from the defendant's side. Hence the suit.
3. The defendants contested the suit on various grounds inter alia that the appellant had received final payment regarding the work of Basant Bagh as evidenced by the measurement book and as such there was no amount outstanding against the defendant on account of this work. Regarding the work of wall surrounding, Samadhi Rambagh it was pleaded that the plaintiff had already over drawn an amount of Rs. 493-5-3 and that the plaintiff had furnished a written, undertaking agreeing that the amount be set off against him from the cost of material and earnest money. The suit for rendition of accounts was not maintainable.
4. After raising the necessary issues in the case the trial Judge found that there was no relationship of principal and agent between the parties. It was, however, established from the evidence on record, that the plaintiff had maintained regular accounts about both the aforesaid works and had received full and final payment for office building at Basant Bagh in token thereof the plaintiff executed receipt in his own hand on page No. 35 of the Measurement Book. The plaintiff had failed to appear in the witness box to explain the position and he had also withheld the accounts. Therefore, in view of these facts suit for rendition of accounts did not lie. On appeal the learned Addl. District Judge concurred with this view of the trial Judge and relying upon the observations made in AIR 1971 J. and K. 71 dismissed the appeal.
5. Shri J, L. Chowdhary appearing for the appellant has submitted that in the present case the relationship between the parties was that of Principal and agent. The defendant was under statutory obligation to render accounts to the plaintiff. The plaintiff had stated in the plaint that the accounts were with the defendant and therefore he was not in a position to know the exact amount due to him from the defendant on account of the works executed by him for the defendant. He has challenged the correctness of the view taken in AIR 1971 J. and K. 71 and has relied upon AIR 1967 SC 333 in support of his case.
6. On a careful consideration of the matter I am of the view that the proposition enunciated by the learned counsel that the suit for rendition of accounts in the present circumstances is maintainable does not hold good as no relationship of principal and agent is found to subsist between the parties. The plaint does not disclose the existence of any such relationship. According to the plaintiff he undertook to execute two works in respect of which he had submitted the tender. The tender was accepted by the defendant and he was called upon to execute an agreement in favour of the defendant for the construction of the said works. The relationship of the parties is governed by the terms of the agreement. The terms of the agreement do pot indicate that the plaintiff was the agent or the principal of the defendant. He was a mere contractor who had contracted to execute the two construction works as envisaged in the agreement. The idea behind the relationship of principal and agent is that the agent must act on behalf of the principal and he must represent the principal in any such dealing. That exactly is not the case before us. The defendant did not stand in any fiduciary capacity so as to impose upon him a legal obligation to render accounts to the plaintiff, the relation being only that of a contractor and contractee/promisor and promisee. In such a situation it is doubtful if a suit for rendition of accounts can lie. The scope of suit for accounts is limited to a certain number of cases for instance between one partner against another, between the beneficiary against the executor or administrator, between mortgagor against the mortgagee, between cestui que trust against a trustee and between principal against an agent. But no suit for accounts can be maintained by a promisee against a promisor or as between two contracting parties. In AIR 1925 Lah 100 it was held that a suit for rendition of accounts brought by the sons of certain contractor who had done some building work for the defendant was not maintainable. It was observed that a right to claim a statement of accounts is unusual form of relief only granted in certain specific cases and is only to be claimed when the relationship between the parties is such that this is the only relief which would enable the claimant to satisfactorily assert Page: 78his legal rights. In that case it was found that there was no duty cast upon the defendant under the law to keep an account and that the proper relief to claim for the plaintiffs was to have brought a suit for specific amount and not to have asked the defendant to produce his accounts book as evidence in support of their case. In the instant case the plaintiff has not been able to show that there was a statutory obligation on the defendant to have maintained the accounts and that the plaintiff could not maintain any such accounts.
7. I, therefore, do not subscribe to the view propounded by the learned counsel for the plaintiff appellant that the only relief available to the plaintiff in the present case was to bring a suit for rendition of accounts. There is, therefore, no merit in the contention raised before us.
8. Again, on facts as well the suit is not found maintainable because as affirmed by the plaintiffs own witness namely Jia Lal Mattu the plaintiff did maintain the accounts for both the aforesaid works. The trial Judge found that the plaintiff received full and final payment for the office building at Basant Bagh in token whereof he executed personally the receipt in his own hand on the measurement book. The plaintiff did not produce the accounts maintained by him in the court. He even did not appear as his own witness to explain his stand in the matter. The presumption is that the plaintiff knew as to what was the amount cut standing. He only pretended to know nothing about the matter and therefore clothed his suit with a prayer for rendition of accounts although the sum was ascertainable and could be ascertained from looking into the accounts maintained by him.
9. For the foregoing reasons it is found difficult to accede to the contention raised by the learned counsel for the plaintiff. Nothing has been shown as to how the view taken in AIR 1971 J.K 71 (supra) is not sound. The principle enunciated in the said authority does not militate against what has been observed in AIR 1967 SC 833. There can be no dispute with regard to the proposition that a principal can sue an agent for rendition of accounts. This is recognised by law relating to the contract. The Supreme Court has also held that the right of an agent to sue the principal for accounts is an equitable right arising under special circumstances and is not a statutory right. Where, therefore, all the accounts are in possession of principal and the agent does not possess accounts to enable him to determine his claim for commission against principal a suit for rendition of accounts is maintainable. But that is not the case before us. As already observed above the relationship of the parties is not as that of principal and agent but is purely on contractual basis, therefore the authority of the Supreme Court relied upon by the appellant is of little help to him in so far as its application to the facts of the case before us are concerned. For the foregoing reasons I see no force in this appeal which is hereby dismissed with costs.
S.M.F Ali, C.J:— I agree.
Jaswant Singh, J.:— I agree.
10. Appeal dismissed.
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