Bhowani Proshad Shahu v. Juggernath Shahu

The Judgment of the Court was as follows:—

The events which led to the litigation out of which the present appeal arises are of a somewhat complex character, but, so far as it is necessary to state them for the disposal of the questions argued before this Court, they may be thus briefly outlined.

The father of the Plaintiff-Appellant formed along with the first two Defendants, a joint Hindu family governed by the Mitakshara law. The family was engaged in mercantile business, out of the profits of which, moveable and immoveable properties were acquired by the care and labour of the members of the family. The father of the Plaintiff died in January 1902 and in June following, the parties separated in mess. It is alleged in the plaint that at the time of the separation, the uncles of the Plaintiff gave him a share of all the immoveable properties of the family, in respect of which they subsequently executed, on the 9th December 1902, a deed of release in his favour. At the same time, the Plaintiff appears to have executed a deed of release in favour of the Defendants in respect of the share of the properties which they received on the looting of the same partition. It further appears that on the 13th May previously the parties had drawn up and executed memoranda in respect of the partition of the moveables possessed by the family. The Plaintiff, however, alleged in the plaint that at the time when the partition was effected, no adjustment of accounts was made in respect of the profits of the ancestral trade and of the immoveable properties which had come into the hands of the first Defendant as the head of the family. He accordingly instituted this suit and prayed for a decree for account; he further stated that, if upon evidence it was found that any portion of the joint family properties had been ignored at the time of the partition, a decree might be made in his favour in respect of a third share thereof. The claim of the Plaintiff was resisted on various grounds amongst which it is sufficient to mention that the Defendants denied their liability to render any accounts. Their case in substance was that accounts had been taken at the time of the partition with a view to determine the assets available for division and that the settlement was conclusive between the parties. The Subordinate Judge who heard the case in the first instance raised a preliminary issue as to the right of the Plaintiff to claim any account at all and on this he held that, although there had been an ascertainment of the assets at the time of the partition, yet there had not been such an adjustment of accounts as the first Defendant as head of the family was bound to render to the other members. He consequently concluded that accounts had not been properly rendered and that the claim of the Plaintiff was sustainable. At a subsequent stage of the hearing of the suit before the Subordinate Judge, a Commissioner was appointed to take accounts. After an elaborate investigation, he submitted his report to which various objections were taken by both the parties. The Subordinate Judge discussed those objections and made a partial decree in favour of the Plaintiff. Neither party was satisfied with this judgment and two appeals were preferred to the District Judge. On behalf of the Defendant, the objection was reiterated that the Plaintiff was not entitled to claim any account at all, and exceptions were also taken to the various items allowed by the Court below on the assumption that the claim of the Plaintiff was maintainable. The learned District Judge held that the suit of the Plaintiff was not maintainable inasmuch as the division of the property agreed to by the parties was a final settlement and apportionment of all the joint family properties. He examined however, in detail, the specific objections of the Defendants to various items of the account taken by the Commissioner and came to the conclusion that these objections were well founded, so that the Plaintiff was not entitled to any relief on the merits also.

The Plaintiff has now appealed to this Court, and on his behalf the decision of the District Judge has been challenged by the learned Advocate-General, substantially on four grounds; namely, first, that the partition was not of a character which precluded the claim of the Plaintiff for accounts, and that in any event it was open to the Plaintiff to claim relief in respect of the joint property which had been excluded from the partition either by mistake or by fraud; secondly, that the Plaintiff was entitled to relief in respect of two jotes which belonged to the joint family at the time of the partition but had not been taken into account when the partition was effected; thirdly, that the Plaintiff was entitled to relief in respect of the debt payable by Shama Sundari, the principal amount alone of which debt had been taken into account in the partition, while the large amount of interest which had accumulated at that time was excluded; and, fourthly, that the Plaintiff was entitled to relief in respect of the debts due to the Berhampore shop at the time of the partition, which had become barred and irrecoverable by reason of the negligence of the first Defendant as head of the family. We shall consider these points in the order in which we have just stated them.

As regards the first point, urged by the learned Advocate-General, it will be observed that he divided it into two branches. So far as the first branch of the contention is concerned, we are of opinion that it is not sustainable either upon principle or upon the authorities. It is common ground in the case before us that there was a partition as alleged by the Plaintiff, and upon the facts found by the Courts below it cannot be successfully disputed that at the time of the partition the assets were determined and divided. The Plaintiff, however, now puts forward a claim, which found favour with the Subordinate Judge, that the Defendant as head of the family is bound to render an account of the dealings of the family during a period of six years immediately antecedent to the institution of the suit. In our opinion, no foundation has been laid for a claim of this description. It is now well settled that when accounts have to be taken with view to a partition of joint family properties, the account which has to be taken of the entire family property in the hands of the different members is mainly an enquiry into the existing assets; the head of the family cannot, in general, be called upon to defend the propriety of the past transactions of the family. In support of the proposition that no co-parcener has, under circumstances like those of the present case, any right to claim an account of past transactions of the family, it is sufficient to refer to the cases of Jug Mohan Das v. Mangal Das and Narayan v. Nathaji. In the first of these cases, Mr. Justice Scott referred with approval to the statement of law made by Mr. Justice Melville in the case of Konerrav v. Gurrav(3), namely, that the ordinary rule no doubt is that the members of an undivided Hindu family when making a partition are entitled, not to accounts of past transactions, but to a division of the family property actually existing at the date of partition. We need not consider cases of fraud and misappropriation, or of gross reckless waste on the part of the manager, because no such element had been established in the case before us. The view we take is supported by the decision of a Full Bench of this Court in the case of Abhay Charan v. Peari, and also by the observations of the Supreme Court of Calcutta in Surjeemonee Dossi v. Dinobundhoo. The substance of the matter is that the manager of the joint family administers it for the purposes of the family, and, so long as he does this, he is not under the same obligation to economise or to save as would be the case with a paid agent or trustee. That this distinction is well founded is obvious from the decision of the Judicial Committee in Rajah Setrucherla v. Rajah Setrucherla. The contention of the Appellant, therefore, that the Plaintiff is entitled to claim an account in respect of the dealings of the family for six years antecedent to the institution of the suit cannot be supported. The second branch of the contention of the learned Advocate-General upon the first point is based upon an entirely different ground. He assumed that the assets were determined at the time of the partition and that accounts were taken with a view to ascertain what funds were actually available for distribution. But he contended that, although it might not be open to the Appellant to re-open the whole of the account, it was open to him to claim relief in respect of items of property which were excluded from partition by mistake or fraud. It was argued on the other hand by the learned vakil for the Respondents that no case of fraud was specifically alleged in the plaint, that the facts found by the District Judge distinctly negatived any possible case of fraud, and that no mistakes in the accounts were mentioned in the plaint with any degree of precision. Reference was also made to the case of Helan Dassi v. Durga Das, in support of the proposition that a partition made in settlement of disputed claims ought to be treated as a valid and binding arrangement which the parties to it cannot deny, ignore or resile from. In reply, the learned Advocate-General suggested that, even if a case of fraud was not established, the Appellant was entitled to succeed on the ground of mistake, and he referred to the decision of this Court in the case of Jogendra Nath v. Baldev Das(8), to show that, if an item of joint property has been by mistake excluded from partition, it continues to be joint property in respect of which any of the co-owners is entitled to claim relief in an appropriate proceeding. After a careful consideration of the arguments advanced on both sides, we are of opinion that the contention of the Appellant ought to prevail. It is well settled that, although the Court is always reluctant to re-open an account which has been settled with deliberation and with tolerable fairness, relief will be granted where fraud or mistake is established. In Varnon v. Vadry(9), Lord Hardwicke ruled that, when an account has been stated if fraud or imposition is established the whole shall be opened; but, if there are mistakes and omissions, the party objecting shall be allowed no more than to surcharge and falsify. In other words, as Lord Hardwicke stated in Pitt v. Chalmondeley(10), the onus probandi is always on the party having the liberty to surcharge and falsify, “for the Court takes it as a stated account and establishes it; but if any of the parties can show omission for which credit ought to be given, that is a surcharge, or, if anything is inserted that is a wrong charge, he is at liberty to show it, and that is falsification, but that must be by proof on his side.” To the same effect are the observations of Sir George Jessel, M.R, in Williamson v. Barbour(11): “if the Court is of opinion that errors of sufficient number and sufficient magnitude are shown, it is not necessary that the errors shown should amount to fraud; if they are sufficient in number and importance whether they are errors caused by mistake or errors caused by fraud the Court has a right to open the accounts.” It follows obviously that when fraud, omission or mistake is not shown to taint the whole settlement, the account will be rectified as to the mistaken items only; the mistake must be corrected and the rights of the parties re-adjusted as to such items. To put the matter in another way, when accounts have been settled, they are primâ facie, to be taken as a settlement of all valid items of debit and credit existing between the parties at the time of settlement; but the parties will not be concluded by such presumption as to matters which were not contemplated by them or which were not in fact included in the settlement though they existed at the time; the presumption is distroyed when the details of the settlement show that the matter in controversy was not included. The principle of law applicable to cases of this description was very concisely stated by Mr. Justice Washington in delivering the judgment of the Supreme Court of the United States in Perkino v. Hart(12): “a settled account is only primaâ facie evidence of its correctness; it may be impeached by proof of unfairness or mistake in law or in fact; and if it be confined to particular items of account, it concludes nothing in relation to other items not stated in it.” The rule thus stated is, however, not of universal application and requires qualifications; for it should be remembered that the right to correct an account is confined to cases in which no element of estoppel has intervened or where there is no obligatory agreement between the parties as upon a settlement and mutual compromises; to this latter class belongs the case of Helan Dassi v. Durga Das, upon which reliance was placed on behalf of the Respondents. The principle upon which this right to re-open or correct an account is allowed to be exercised has sometimes been assimilated to the principle upon which the right to recover money which has been paid can be exercised; and in determining whether an account which has been settled can be impeached, the case is put upon the same footing as if the money had been paid. Such payment would be conclusive subject to the right to recover it back on failure of consideration, and so, on the settlement of an account, if the case is one in which a payment, if made, could have been recovered back, the facts which show the failure of consideration may be proved [Wilson v. Wilson(13) and Laycock v. Pickles(14)]. On principle as well as on the authorities, therefore, we must hold that the account which has been settled in this case may be rectified, if mistake is established, and it does not matter whether the error in the accounting occurred by accident or design; nor is it necessary that the error or mistake should be mutual. If an item has been omitted in the account by mistake, it may be recovered. Pavic v. Nayvel(15), Eddic v. Eddie(16).

It was argued, however, by the learned vakil for the Respondents that, as errors in the account were not specifically stated in the plaint, it is not open to the Plaintiff to claim any relief on that ground. Now, it is perfectly true that ordinarily when the Plaintiff impeaches accounts which have been settled, on the ground of errors, such errors ought to be specifically stated, or, as put by Lord Chelmsford in the case of Parkinson v. Hanbury(17), followed by this Court in Mohesh Chandra v. Radha Kishore, where a party seeks to open a settled account there must be some direct, distinct and specific averment of errors to entitle the party to open the accounts. The plaint in this case before us is, no doubt, open to criticism on the ground that such specific averment of errors was not made and relief was asked only upon the general ground, that items of joint family property had been excluded from partition. It must be observed, however, that no objection was taken by the Defendants to the frame of the suit, and after the preliminary question of the liability of the first Defendant to render an account had been decided in favour of the Plaintiff, the parties did go into an elaborate examination of the accounts, apparently without any objection as to the course adopted, we are not prepared at this stage to allow an objection of this character to prevail when it is not even faintly suggested that the Defendants have been in any way prejudiced by the omission of the Plaintiff to specify the errors in the plaint. We must consequently hold, so far as the second branch of the first contention of the Appellant is conserved, that the Plaintiff is entitled to relief, if he establishes that any items of joint property have been excluded from partition.

The second ground taken on behalf of the Appellant is that the Plaintiff is entitled to a third share of two jotes which belonged to the joint family at the time of the partition but were apparently ignored when the assests were determined. The Subordinate Judge made a decree in favour of the Plaintiff in respect of these tenancies. It was not denied before him that the holdings had been excluded from the amicable partition, and it was found that one of them had been transferred to a stranger after the partition and that the other was still in the possession of the first Defendant. The District Judge reversed this decision on the ground that the Plaintiff had failed to prove that the existence of the holdings had been concealed from him at the time of the partition and he also doubted whether the suit could be treated as one for recovery of immoveable property. In our opinion the grounds of the decision of the District Judge upon this point cannot be supported. If the holdings were joint family property, as they were practically admitted to be before the Subordinate Judge, and if they were excluded from partition no question arises as to fraud or concealment. If they were joint property and if they were not partitioned they still continue to be joint property and the Plaintiff is entitled either to a share of them or to a decree for money representing their value.

The Subordinate Judge assessed their value at Rs. 791 and gave to Plaintiff a decree for one-third of this sum. No question, therefore, arises as to whether the present suit should be treated as one for recovery of possession of immoveable property. The Plaintiff is satisfied with the decree given by the Subordinate Judge upon this point and, in our opinion, that decree ought to be restored to this extent. The third ground urged on behalf of the Appellant relates to the debt due from Shama Sundari. It appears from the papers which have been placed before us that, when the account were taken, the amount due from Shama Sundari was estimated to be Rs. 1,336 and odd; but it was expressly stated that this was only the principal amount of the bond. It is obvious, therefore, that whatever sum was due at the time on account of interest was excluded from the partition. There are no materials however on the record from which we can determine the precise amount of interest then due. The bond was apparently not produced, and no satisfactory explanation has been given for its non-production. At the same time we observe that the reason given by the District Judge for holding that the Plaintiff has no right to the interest which had accrued in respect of the bond debt is unsustainable. The learned Judge refers to sec. 8 of the Transfer of Property Act to show that the interest was an incident of the debt and when the debt upon partition fell to the share of the first Defendant, the interest also must be taken to have been similarly allotted. This view is obviously erroneous. sec. 8 of the Transfer of Property Act clearly specifies that when the property transferred is a debt, arrears of interest accrued before the transfer is presumed not to have been transferred, but the interest accruing after the transfer is implied to have been transferred. We are of opinion, under these circumstances that the rights and liabilities of the parties in respect of this particular matter should be further investigated. The District Judge will determine what interest had accrued due at the date of the partition and what was the total amount recoverable from Shama Sundari at that time. If such amount is established to be in excess of Rs. 1,336 and odd which alone was taken into account at the time of partition, the Plaintiff will be entitled to a decree in respect of his share of the balance. The parties will be at liberty to give additional evidence for the full elucidation of this point and to produce either the original bond, if it is still in existence, or to give secondary evidence of its contents.

The fourth ground urged on behalf of the Appellant relates to a share of the debts due to the Berhampore shop at the time of the partition. It is not quite clear upon what precise ground the Plaintiff seeks to found his claim in respect of this matter. It is not alleged, much less established, that these debts have been actually collected and the sums realised misappropriated by the first Defendant. Nor is it established that the debt's have become barred and unrealisable by reason of any default on his part. Upon the facts found, no charge of fraud or negligence can be maintained as against any of the Defendants. On the other hand, it is reasonably clear that these debts were examined by the parties at the time of the partition, and no suggestion appears to have been made either then or now that the first Defendant was in any way to be blamed because the debts had become unrealisable. We must consequently hold that the claim of the Plaintiff in respect of these debts can not be sustained. The result, therefore, is, that this appeal must be allowed in part; the decree of dismissal made by the District Judge will be discharged and in lieu thereof, the Plaintiff will have a decree for one-third of Rs. 719 in respect of his share of the two holdings. The decree will further direct that the case be remanded to the District Judge for investigation of the claim of the Plaintiff in respect of the debt due by Shama Sundari, with reference to the observations contained in this judgment. As the victory has been a divided one, we direct that the parties should bear their own costs of this litigation up to the present stage.

The costs of the hearing before the District Judge after remand will be in his discretion.

Decree modified.