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  • Art. 89 of the Limitation Act. If Art. 89
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  • Art. 89 of the Limitation Act. If Art. 89
  • Art. 120 of the Limitation Act,
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Smart Summary

Judgment Summary — Madhavan Nair, J. (Connected Appeals arising out of O.S. No. 29 of 1931)

Factual and Procedural Background

The appeals arise from O.S. No. 29 of 1931 (Court of the Subordinate Judge, Devakottah), a suit for accounts between the owner of the S.A. firm (plaintiff) and members of an undivided Hindu family representing the M.P. firm (defendants). The principal disputes related to collections under a Rs. 60,000 promissory note executed by the R.M.V.R.V. firm in favour of the M.P. firm in 1907. Two promissory notes were executed in 1907 (Rs. 25,000 and Rs. 60,000) because the S.A. firm was in disorder following disputes about its owner’s will; securities were deposited to enable M.P. to collect and appropriate amounts towards the joint debt of the firms.

Procedurally: the M.P. firm obtained a decree on the Rs. 25,000 note in O.S. No. 6 of 1911 and an arrangement followed in which Rs. 17,500 was paid into Court. The plaintiff later filed O.S. No. 14 of 1921 seeking declarations and accounting; appeals (A.S. Nos. 135 and 223 of 1924) produced a High Court finding that the S.A. firm's share was 5/17ths in both notes and that Rs. 26,000 had been collected under the Rs. 60,000 note with the plaintiff having been paid his 5/17ths share of that amount.

The present suit (arising from the O.S. No. 29 of 1931 proceedings) confined itself to alleged collections by M.P. under the balance of the Rs. 60,000 note beyond the admitted Rs. 26,000. The Subordinate Judge found for the plaintiff on several issues, concluded that the defendants wilfully suppressed accounts, and passed a final decree (without a preliminary decree for accounts) directing payment of the plaintiff's 5/17ths share of the balance due; the decree required further enquiry to fix interest and ascertain precise sums. The appeals challenge the interim and final decrees and the procedure followed.

Legal Issues Presented

  1. Whether M.P. was a trustee or agent in respect of collections regarding the Rs. 60,000 promissory note, whether they had a duty to collect, and whether they were liable to account.
  2. Whether M.P. collected any amount in respect of the Rs. 60,000 promissory note beyond the Rs. 26,000 already found collected, and whether M.P. is liable to account for such additional collections.
  3. Whether any amounts were collected by S.A. in respect of the two notes and whether the plaintiff is bound to account (issue labelled No. 5 in the record).
  4. Whether the suit is barred by limitation (issue labelled No. 8 in the record).

Arguments of the Parties

Appellants' (Defendants') Arguments

  • The lower Court was wrong to pass a final decree without first passing the usual preliminary decree directing account-taking; the normal two-stage procedure should have been followed.
  • The suit is time-barred — the appellants argued Article 89 of the Limitation Act (three-year period for principal v. agent for movables not accounted for) applied, and if agency was terminated by the plaintiff's earlier suit (O.S. No. 14 of 1921), limitation began to run from that termination.
  • The rate of interest awarded by the lower Court was incorrect: they contended the current rate should apply rather than the Rangoon nadapu rate, and that compound interest should not have been allowed (the lower Court had calculated compound interest with half-yearly rests).

Respondent / Advocate-General's Arguments (as presented in the opinion)

  • Characterised the relationship between M.P. and the plaintiff as fiduciary (akin to trustee) rather than a straightforward agent-principal relationship; argued that Article 120 (residuary) of the Limitation Act applied to equitable claims against a trustee liable to account.
  • Contended that liability to account existed in any event (whether co-owner, agent, or fiduciary), and that the agency was not terminated by the earlier suit so as to start the running of a three-year limitation under Article 89.
  • Did not seriously contest that the Rangoon nadapu rate should apply, but did not press the case for compound interest.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Annamalai Chettiar v. Muthukaruppa Chettiar (Privy Council) That an equitable claim against a trustee liable to account is governed by the residuary Article (Art. 120) of the Limitation Act; Art. 62 did not apply; where defendants cannot specify a date when they denied the plaintiff's right to an account, the right to sue has not accrued and the suit is not barred. The Court treated the Annamalai Chettiar decision as analogous and applied its reasoning to hold Art. 120 applicable here, concluding that the plea of limitation failed because appellants could not point to a date on which the right to sue accrued.
Velliyappa Chetti v. Vellayappa Chetti That in suits for accounts a preliminary decree directing the taking of accounts should ordinarily be passed before a final decree; a final decree without preliminary decree is permissible only where facts are so simple (by admission or proof) that taking accounts would be needless. The Court relied on this authority to evaluate whether the Subordinate Judge was justified in dispensing with a preliminary decree. Concluding the facts were not simple and because disputed accounts and securities required enquiry, the Court held the lower Court should have passed a preliminary decree and appointed a Commissioner to take accounts, and therefore set aside and remanded the decree.

Court's Reasoning and Analysis

The Court's analysis proceeded through distinct strands: limitation, characterisation of the parties' relationship, interest, suppression/non-production of accounts, and appropriate procedural remedy.

Limitation: The Court examined whether Article 89 (three years, principal v. agent for movables received and not accounted for) or Article 120 (residuary — when right to sue accrues) governed. It noted the appellants argued Article 89 applied because, they said, agency was terminated by O.S. No. 14 of 1921. The Court found that the earlier suit did not contain acts unequivocally terminating any agency in respect of the Rs. 60,000 note: the earlier suit related to the Rs. 25,000 note and did not assert a repudiation or termination regarding the Rs. 60,000 note. Applying the Privy Council decision in Annamalai Chettiar (analogous facts), the Court held the relationship was fiduciary and that Art. 120 should apply; because the defendants could not specify a date on which they denied the plaintiff's right to an account, the right to sue had not accrued and limitation did not bar the suit.

Character of Relationship (Agent vs Fiduciary/Trustee): The Court reasoned that although the M.P. firm had no express trust, the factual arrangement — promissory notes taken in M.P.'s name, securities delivered so M.P. could collect and appropriate realisations — created a fiduciary obligation to account. The Court concluded the relationship was akin to a trustee liable to account (i.e., equitable/fiduciary), not a simple agent-principal relationship for the entire scope of the transaction.

Interest: The Court found the promissory note referenced the Rangoon nadapu rate. The parties agreed that the Rangoon nadapu rate should be applied; the lower Court had computed compound interest with half-yearly rests. The Court held that compound interest was not warranted on the facts and that the plaintiff was entitled to interest at the Rangoon nadapu rate until the date of decree and at 6% thereafter until payment. However, when directing the final decree procedure on remand, the Court ordered the final decree to calculate simple interest at the Rangoon nadapu rate until the date of the decree.

Suppression/non-production of accounts and admissible evidence: The Subordinate Judge had concluded that the defendants wilfully suppressed accounts and proceeded to a final decree without a preliminary decree. The appellate Court scrutinised the factual record: some accounts for 17 Jan 1908 to 4 July 1909 had been produced (certified copies), and original account books for 17 Oct 1909 to 8 June 1910 were produced late (after trial) but were not admitted. The first defendant's affidavit said many records were untraceable amid multiple proceedings, and the first defendant's oral evidence had not been robustly tested on cross-examination. The Court considered that, given these special circumstances and the late production of some books, it was unsafe to sustain a finding of wilful suppression by the defendants without fuller enquiry. The Court also noted that the plaintiff had not produced his accounts or himself as witness to explain their non-production; the plaintiff said those accounts were not handed over or had been lost or filed in other proceedings. Because both sides had gaps, the Court concluded that the issues concerning production, possible suppression, and the quantum of collections required a fuller inquiry by a Commissioner.

Securities and collection under them: Seventeen securities had been deposited originally; only a subset (value Rs. 15,800) were produced in Court. The lower Court had disbelieved the defendants' contention that nothing beyond Rs. 26,000 had been collected, mainly because accounts were not produced. The appellate Court found the reasons used by the lower Court to reject the authenticity of produced securities unsatisfactory and held that the question of amounts collected under each security (and reasons for non-collection: wilful default, inability, unavoidable cause) required investigation by a Commissioner.

Procedure and remedy: Applying the settled rule that suits for accounts ordinarily require a preliminary decree and the appointment of a Commissioner unless the facts are simple, and finding the facts were not simple, the Court concluded that the Subordinate Judge should have passed a preliminary decree and appointed a Commissioner to take and report on accounts. Accordingly, the Court set aside the final decree and remanded the case for that procedure, while preserving parties’ rights to adduce further evidence before the Commissioner (with limits regarding collections prior to 1909).

Holding and Implications

Core Ruling: THE LOWER COURT'S FINAL DECREE IS SET ASIDE AND THE CASE IS REMANDED FOR A PRELIMINARY DECREE AND ACCOUNTING.

Direct consequences imposed by the Court:

  • The decree of the Subordinate Judge (final decree awarding the plaintiff his 5/17ths share of the balance over the Rs. 26,000) is set aside and the case remanded.
  • The Subordinate Judge is directed to pass a preliminary decree and appoint a Commissioner to examine and adjust accounts, to enquire into collections under the securities (including whether any securities remain with the plaintiff), and to report on the amount due from the defendants to the plaintiff.
  • Both parties are permitted to produce further evidence before the Commissioner on all points except that collections prior to 1909 (which, on the evidence, have been treated as already accounted for) are generally closed to re-litigaton; defendants may prove collections by the plaintiff after 1909 and other issues permitted by the Court.
  • After receiving the Commissioner's report and hearing objections, the learned Judge will pass a final decree for the amount ultimately found due, calculating simple interest at the Rangoon nadapu rate until the date of the decree (and as earlier indicated in the opinion, interest at the Rangoon nadapu rate was allowed until decree and 6% thereafter until payment).
  • Costs: appellants will recover costs from respondents in A.S. No. 57 of 1933 (advocates' fees limited to Rs. 500). No costs order was made in A.S. No. 235 of 1933. Court-fee on the memorandum of appeals to be refunded.

Broader implications: The Court applied existing authorities (notably the Privy Council decision in Annamalai Chettiar) to reaffirm that equitable claims for accounts against fiduciaries/trustees are governed by the residuary limitation rule (Art. 120) where the defendants cannot fix a date when they repudiated the right to account; and it reiterated the ordinary procedural requirement that preliminary decrees and commissioners are used in suits for accounts unless the facts are straightforward. The decision remands for fact-finding and does not itself purport to lay down new law beyond its application of settled principles.


End of summary. This summary is prepared strictly from the contents of the provided opinion and does not add information beyond what the opinion contains.

    P.P Palaniappa Chettiar And Others v. Rao Bahadur S.A Ramanathan Chettiar And Others S

    JUDGMENT

    Madhavan Nair, J.—These are two connected appeals and both arise out of O.S No. 29 of 1931 on the file of the Court of the Subordinate Judge of Devakottah. The suit was one for accounts. A.S No. 235 of 1933, the main appeal, is by the defendants against the decree and order in I.A No. 364 of 1933 in the suit, under which they were made liable to pay the plaintiff a sum of Rs. 50,146-7-9. A.S No. 57 of 1933 is against the interim decree passed in the suit.

    The facts are these. S.A, M.P and R.M.V.R.V were three firms in Rangoon which had dealings with each other. The plaintiff in the suit is the owner of the S.A firm. The defendants, members of an undivided Hindu family, represent the M.P firm. The original owner of the S.A firm, Subramaniam Chettiar, died on the 11th November, 1904, leaving a will authorising his widow to adopt. The widow adopted the plaintiff in 1906. The genuineness of the will was disputed; but in 1916, after protracted litigation, the Privy Council upheld it. In 1907 the two firms, S.A and M.P were carrying on business together through their agents. About that time the financial condition of R.M.V.R.V became very shaky. On the 30th December, 1907, it was found that R.M.V.R.V owed the two firms jointly a sum of Rs. 85,000. On that date Kadiresa, the agent of R.M.V.R.V executed two promissory notes, one for Rs. 25,000 and another for Rs. 60,000 (Ex. II), both in favour of the M.P firm. With respect to the latter note seventeen securities worth about Rs. 60,000 were given to the M.P firm so that it may collect whatever was realisable out of those securities and appropriate the amount towards the debt due to the two firms. It appears from the evidence that the promissory notes were taken in the name of the M.P firm as the S.A firm was in a chaos owing to the disputes about the will.

    In O.S No. 6 of 1911 on the file of the Ramnad Court, the M.P firm sued R.M.V.R.V on the promissory note for Rs. 25,000 and got a decree for Rs. 28,575 on the 20th November, 1911; (see Ex. I). In adjustment of this decree, by arrangement between the parties a sum of Rs. 17,500 was paid in Court by R.M.V.R.V The present plaintiff then filed O.S No. 14 of 1921 on the file of the Sub Court of Sivaganga for a declaration that the decretal amount belonged to the plaintiff exclusively, or if the Court found that he was entitled only to a portion of the amount to limit the declaration to such limited interest, and for other appropriate reliefs. To this suit both the M.P firm and the R.M.V.R.V firm were parties. In the appeals preferred against the decree in O.S No. 14 of 1921, which held that the plaintiff was entitled exclusively to the entire sum due under the promissory note (A.S Nos. 135 and 223 of 1924), it was held by the High Court after calling for a finding from the lower Court that “the plaintiff is entitled to 2½ out of 8½ shares or 5/17th share in both the promissory notes (namely, the promissory notes for Rs. 25,000 and Rs. 60,000) and therefore to 5/17ths share of the Rs. 17,500” paid in pursuance of the arrangement in O.S No. 6 of 1911. It is not now disputed that the shares of the S.A firm and the M.P firm in the two promissory notes are in the proportion of 5/17 to 12/17 of the amount, the plaintiff firm being entitled to 2½ out of 8½ shares. In the course of the suit, the question also arose as to the amount collected under the Rs. 60,000 promissory note. It was found that a sum of Rs. 26,000 only had been collected under this note and that the plaintiff has been paid his 5/17 share of the said amount. On this question the learned Judges observed,

    “As to the other promissory note for Rs. 60,000 it is the case of the M.P firm that only Rs. 26,000 has been collected. It is now found that the plaintiff has been paid his 5/17th share of the said amount. It is unfortunate that after all this protracted litigation no final decision can be reached in this case whether any sum beyond the admitted sum of Rs. 26,000 has been collected by the M.P firm.”

    The suit out of which this appeal arises related to the collections made under the promissory note for Rs. 60,000. In the suit the plaintiff (S.A firm) asks for a decree directing the defendants (the M.P firm) to account for all the collections made by them in respect of this promissory note (Ex. II) and for an order directing them to pay him his share of the collections in the proportion of 5/17 to 12/17. In the plaint he ignored the finding that Rs. 26,000 has already been collected and that he has been paid 5/17th portion of that amount. This fact has since been recognised and the case has in consequence been confined only to the collections made by the defendants with respect to the balance under the suit promissory note.

    The respective contentions of the parties in so far as they are relevant for this appeal are those covered by issues 1, 2, 5 and 8, which are as follows:

    1. Whether M.P is a trustee or agent to the plaintiff in respect of the collections regarding Rs. 60,000 pronote and whether there was any duty on their part to collect? If so, is M.P not liable to account?

    2. Whether M.P collected any amount in respect of Rs. 60,000 pronote over and above Rs. 26,000 and whether M.P is not liable to account for the same?

    5. Whether any, and if so, what amounts were collected by S.A in respect of the two notes and whether the plaintiff is not bound to account for the same?

    8. Whether the suit is in time?

    On the above issues the following findings were recorded by the learned Subordinate Judge:

    Issue 1:

    “Though the M.P firm was not an express trustee for the plaintiff with reference to collections regarding the Rs. 60,000 promissory note (Ex. II) they were bound to use reasonable diligence as agent standing in a fiduciary relationship towards the S.A firm to collect both on their own account and on account of the S.A firm and that they are liable to account.”

    Issue 2:

    “The M.P firm must be deemed to have collected the balance over and above Rs. 26,000 found to have been collected by it and is liable to pay the plaintiff his share of the collection, i.e, 5/17.”

    In discussing this issue the Court came to the conclusion that the defendants wilfully suppressed their accounts and did not produce them.

    Issue 5:

    “The defendants have failed to establish that the plaintiff has collected any amounts in respect of the promissory note in question.”

    Issue 8: “The suit is in time.”

    As the defendants were found to have suppressed the accounts the learned Judge without passing a preliminary decree, straightaway passed a final decree against the defendants for the balance over and above the Rs. 26,000 which had already been collected by the defendants. The decretal portion of the judgment appearing in paragraph 30 is as follows:

    “Therefore the defendants must pay the plaintiff the 5/17th of the sum that would be due as on the date of plaint for the Rs. 60,000 pronote, subject to the finding that it is supported by consideration only to the extent of Rs. 52,500, i.e, Rs. 60,000 less Rs. 7,500 as already stated, deducting therefrom the sum of Rs. 26,000 realised as and when they were realised as per finding in O.S No. 14 of 1921.”

    The finding that the consideration for the promissory note is only Rs. 52,000 is not now questioned. The defendants represented the sum due to the plaintiff under this decree to be Rs. 22,075-4-7. An ‘interim decree’ against the defendants for this sum was passed by the Court and it was ordered in that decree that “for the ascertainment of the exact sum payable by the defendants over and above the above-mentioned Rs. 22,075-4-7, there will be a further enquiry.”

    This further enquiry was necessitated by the fact that in the judgment the rate of interest under the promissory note had not been fixed. Ex. II mentioned no particular rate of interest beyond stating that it carries the Rangoon nadapu rate. The parties were not agreed as to the Rangoon nadapu rate of interest; nor were they agreed as to whether the Rangoon nadapu rate meant simple or compound interest. By his order dated the 30th March, 1933, the learned Subordinate Judge determined these points and held that the interest should be calculated at the Rangoon nadapu rate calculating compound interest with half-yearly rests. On this basis a final decree was passed for the difference between Rs. 22,075-4-7 and the sum to be determined on the above basis. As already stated, App. No. 235 is against the decree as finally amended by this order and the connected appeal is against the original interim decree. In the latter appeal the 2nd defendant ranks as the 2nd respondent. In both the appeals the 4th defendant-appellant having died his legal representative has been made a party.

    The most important contention urged in the main appeal is that the suit being one for accounts the lower Court was wrong in straightaway passing a final decree against the defendants without passing the usual preliminary decree in the first instance and then passing the final decree; and that the reasons given by the lower Court for not adopting the normal procedure are unsustainable. It is also contended that the suit is barred by time, that the rate of interest that should have been awarded was the current rate and not the Rangoon nadapu rate, and that compound interest should on account have been allowed. We will deal with these latter contentions first and then discuss the question whether a preliminary decree for taking accounts should have been passed in the case before passing the final decree.

    The lower Court held, applying Art. 120 of the Limitation Act, that the suit was not time barred on the ground that the appellants are not in a position to specify any date on which they denied the plaintiff's claim to an account. The decision of the Privy Council in Annamalai Chettiar v. Muthukaruppa Chettiar(1) in a very analogous case was relied on in support of this conclusion. Mr. Rajah Iyer for the appellants contends that the Article applicable to the case is Art. 89 and not the residuary Art. 120. Art. 89 prescribes a period of three years for a suit “by a principal against his agent for movable property received by the latter and not accounted for,” the period being calculated from the time “when the account is, during the continuance of the agency, demanded and refused or, where no such demand is made, when the agency terminates.” It is clear that if the Article applies, limitation will have to be calculated from the time when the agency may be said to have terminated as it is not the case of the appellants that account during the continuance of the agency was demanded and refused. Mr. Rajah Iyer contends that the defendants' firm is the agent of the plaintiff with respect to the collection of the amount due under the suit promissory note, that its agency was terminated by the plaintiff by the institution of the suit O.S No. 14 of 1921, and that therefore the present suit is barred as it has been instituted more than three years after that suit. On the other hand the learned Advocate-General contends that the position occupied by the M.P firm towards the plaintiff is not exactly that of an agent towards his principal but that it is a fiduciary one, especially so having regard to the fact that at the time when the promissory notes were executed, the plaintiff was a minor. The liability of the M.P firm to account is not and can never be disputed, whether its position be that of a co-owner with the plaintiff of the suit promissory notes or that of an agent of the plaintiff or whether it be a fiduciary one. Having regard to our opinion, which will be indicated presently, as to whether it can be said that the agency was terminated by the institution of the suit O.S No. 14 of 1921, it is not necessary in considering the applicability of Art. 89 to decide the exact nature of the relationship of the defendants' firm with the plaintiff. In O.S No. 14 of 1921 the present plaintiff, who was the plaintiff therein, claimed that the amount under the promissory note for Rs. 25,000 was exclusively his, that the M.P firm (defendants) in obtaining the decree in O.S No. 6 of 1911 on the note and executing it was acting as his representatives, that he has put an end to that representation and that he should be declared entitled to directly proceed with the execution of the decree. It is true that the relationship of the parties with respect to the promissory note then in question was put an end to by the suit, but nothing is mentioned in the plaint about putting an end to their relationship regarding the present promissory note. It was not in suit between parties and what is remarkable is that the case of the S.A Firm with respect to it was that it exclusively belonged to the M.P firm (the defendants). How then could there be any repudiation with respect to that note it is difficult to understand. Only one agency, and that was with respect to the collection of the amount under the promissory note for Rs. 25,000 was asserted in the plaint and put an end to in the suit O.S No. 14 of 1921: and nothing more. No other act is relied on by the appellants as amounting to termination of the agency. Assuming that the relationship between the plaintiff and the defendants was one of principal and agent, we are satisfied that relationship was not terminated by any assertion contained in the plaint in O.S No. 14 of 1921 and hence the suit is not barred under Art. 89 of the Limitation Act.

    If Art. 89 does not apply, Mr. Rajah Iyer concedes that the proper Article to be applied to the facts of this case is Art. 120, under which time begins to run “when the right to sue accrues.” Evidence shows that these notes came to be executed in favour of the M.P firm as the S.A Firm was in a chaotic condition at the time, and the plaintiff was also a minor. The nature of the arrangement arrived at between the parties is thus described in the judgment of the Subordinate Judge in O.S No. 14 of 1921: “Then the agents of the three firms met together and entered into an arrangement by which the agent of R.M.V.R.V—Kadiresa—executed two promissory notes, one for Rs. 60,000 and another for Rs. 25,000 both in favour of the M.P firm and gave securities worth about Rs. 60,000 to M.P so that the M.P firm may collect whatever was realisable out of these securities and appropriate these amounts towards the amounts due to them.” Shortly stated, the gist of the arrangement was that the defendants' firm was entrusted with the promissory notes by R.M.V.R.V which involved on the part of that firm an obligation to make the collections under the notes and pay the plaintiff his share of whatever they have received though there was no specific trust created for that purpose: or in other words, the M.P firm took the promissory notes subject to the equitable right of the plaintiff to claim an account. In the circumstances we think the relationship of the defendants to the plaintiff could be described only as a fiduciary one involving liability to account and not as that of agent and principal though the relationship clothed the plaintiff with the right to call for an account. The relationship is more akin to that of a trustee liable to account though no specific trust was created for the purpose. It was in this light that the Privy Council viewed a similar question in the analogous case in Annamalai Chettiar v. Muthukaruppa Chettiar already referred to. In that case three firms, S.K.T, R.M.A.T and T.A.R.M contributed moneys for a mortgage of Rs. 10,000 dated 22nd September, 1902. R.M.A.T provided a fourth of the money. S.K.T and T.A.R.M transferred their interest in the mortgage loan to N.R.M.A firm, who were the defendants in that suit. The R.M.A.T firm transferred in 1900 their interest to the plaintiffs in the suit, A.M.K The defendants, N.R.M.A, obtained a final decree for sale on the mortgage in 1919 and the property was sold in 1920 and purchased by them. In 1923 the plaintiff sued claiming a fourth share in the property and for an account. Their Lordships of the Privy Council disallowed the plaintiff's claim for a share in the property but held that the plaintiff was entitled in equity to an account. They held that Art. 62 of the Limitation Act did not apply to an equitable claim against a trustee liable to account and that the proper Article applicable is Art. 120 and that as the defendants could not specify any date when they denied the right of the plaintiff to claim an account the right to sue had not accrued and the suit was not barred. The question whether Art. 89 of the Limitation Act would apply to the case was neither raised nor decided as on the facts it must have appeared that the argument was obviously untenable. On the reasoning adopted by their Lordships we think Art. 120 should be held to apply to the present case also and that the plea of limitation therefore fails.

    The next point for consideration is what rate of interest the plaintiff is entitled to, and how should the interest be calculated. As already stated, Ex. II mentions no particular rate of interest beyond stating that it carries the Rangoon nadapu rate. It is now agreed that the Rangoon nadapu rate of interest should be allowed and not simple interest as contended for by the appellants. The lower Court awarded this rate calculating compound interest with half-yearly rests. The learned Advocate-General does not seriously contend that this is a case where compound interest should be allowed. We hold that the plaintiff is entitled to claim interest at the Rangoon nadapu rate on the amount found due to him till the date of decree and at 6 per cent afterwards till the date of payment.

    We now come to the most important point, namely, whether the lower Court was right in passing a final decree for the sum due on the promissory note over Rs. 26,000 already collected, without ordering the taking of accounts. The law is well settled that in suits for an account a preliminary decree directing accounts to be taken should be passed before passing a final decree, though in cases where the facts are so simple, either by admission or proof, as to afford a ready decision so that the taking of accounts will be unnecessarily lengthening the proceedings without any benefit to the parties, a final decree may be passed without any preliminary decree. Velliyappa Chetti v. Vellayappa Chetti]. The reason given by the learned Judge for departing from the normal course is that he was satisfied that the defendants were wilfully suppressing their accounts. In paragraph 30 of the judgment he says, “By the wilful suppression of the accounts the defendants have made it impossible for the Court to call on them to account. Without the accounts no preliminary decree for taking accounts could possibly be passed in a case like the present. The Court has to draw an inference adverse to the defence consequent on the non-production of the accounts and a decree has to follow on the presumption that all the balance over and above what has been collected for Rs. 60,000 pronote has been collected by the defendants' firm.” The question we have to consider is, has there been a wilful suppression of accounts by the defendants? While maintaining strenuously that the finding of the learned Judge on this point is amply supported by the evidence, the learned Advocate-General frankly, and in our opinion rightly, stated that having regard to certain special circumstances of the case it might have been better if the learned Judge had directed an account to be taken.

    The facts show that the winding up of the defendants' firm began in 1908 and the firm continued till 1913 for making collections, without doing any business. In O.S No. 14 of 1921 the accounts from 17th January, 1908 up to 4th July, 1909 had been produced. In the present suit certified copies of those accounts were filed as the originals were not available. With respect to the rest of the accounts the 1st defendant stated in his affidavit that they were not able to say where the accounts were, as many proceedings were going on in many Courts at Rangoon and this place and they did not know in what Courts and in what suits the records were filed, whether the return thereof had been obtained and in what place and with which Vakil the documents whose return had been obtained remained, that he made a search for them and that they were not traceable. (See his affidavit dated 4th January, 1932). After the trial was over and the arguments were heard, while the case was pending judgment, the defendants filed original account books from 17th October, 1909 to 8th June, 1910, asking the learned Judge to accept them in evidence. The Court refused the request and after delivering the judgment passed an order giving reasons for the refusal. The reasons given therein for holding that the defendants have wilfully withheld the accounts cannot affect the question as the learned Judge had already come to that conclusion in the judgment which was prior to that order. We are concerned only with those reasons. The accounts of 1910 to 1913 were not produced at all. How the circumstances revealed in the accounts from 17th October, 1909, to 8th June 1910, which were actually produced though late would have affected the decision of the case is difficult to say as these were not, as already stated, accepted by the Court. In support of his case the 1st defendant gave evidence as D.W 1. A perusal of his evidence shows that he has not been seriously cross-examined with respect to his failure to produce his accounts and the reasons assigned by him for the same. It may be that he has wilfully withheld the accounts—on that question we express no opinion—but the full circumstances have not been brought out in cross-examination. Without a fuller enquiry into such circumstances and taking into consideration the undisputed fact that accounts from the 17th October 1909 to 8th June 1910 were produced before the Court though late, it is unsafe to hold that the defendants have wilfully suppressed the accounts.

    The plaintiff also has not produced his accounts, nor has he gone into the witness-box to explain their non-production. The learned Judge says “that the plaintiff cannot be accused of wilfully suppressing accounts in his possession, especially when there is at present no evidence to indicate that such accounts are anywhere within his reach. Nothing could be achieved by him by doing so, for, if the defendants' accounts are produced, they might prove the defence version”. It is true that the burden of proving what collections had been made under the promissory notes is on the defendants in the case: but when they charge the plaintiff with having made some collections, if it is proved that it is likely that the plaintiff must have some accounts with him we think in all fairness the plaintiff should produce his accounts to help the Court in arriving at the correct conclusion, or give reasonable explanation for their non-production. The plaintiff's first witness, an agent of the firm, speaks to all the firm's accounts being taken by the second witness to Karaikudi. P.W 2 who was an agent of the firm for about 2½ years from 1908, says that after the winding up of the firm he took all the S.A accounts to Karaikudi and handed them to the executor of the plaintiff's estate, who is now dead. The estate was handed over to the plaintiff in 1916. With the handing over of the estate ordinarily the accounts would also have been handed over to him. In Ex. I, the judgment in O.S No. 6 of 1911, it is observed that the plaintiff's Vakil represented that he had not been able to get the accounts and after the arguments he took time for getting them. In the affidavit of discovery now filed by the plaintiff he denies that he is in possession of accounts, setting out how the accounts are not traceable. He says, “When the executor handed over the estate to me the accounts relating to Rangoon S.A firm which is relevant to the subject-matter of the present suit were not given over to me by him. Probably they had been filed in some proceedings in foreign parts and were not subsequently got back by the executor or his agent or otherwise lost during the time of the management of the S.A firm by the executor Chinnayya Chettiar.” If the accounts of the S.A firm had been handed over to Chinnayya Chettiar we think he would have given them to the plaintiff when he handed over the estate to him. The plaintiff was not given any evidence in support of the vague statement made by him in his affidavit. That the plaintiff's accounts are not altogether valueless for the case appears to be evident from the testimony of P.W 2 who says, “From the S.A accounts it can be seen what securities were got from Chockalinga during my agency and what was done during that period.” As we are leaving the question whether the defendants have wilfully suppressed their accounts undecided, we are not now deciding the question whether the plaintiff has also wilfully withheld his accounts. As will be explained later, these questions should have been left by the learned Judge for decision by a commissioner appointed by him to take accounts after the passing of the preliminary decree.

    We will now refer to another question which also has a bearing on the procedure adopted by the learned Judge. It will be remembered that seventeen securities of the value of nearly Rs. 60,000 were deposited by R.M.V.R.V with the defendants. With reference to these, two lists have been given, one by the plaintiff dated 25th January 1933 and another by the defendants dated 27th January 1933. There is no dispute about the nature of the securities and their value as the securities referred to in both the lists are the same. Of these only five securities (Exs. II-a, II-b, II-c, II-d, II-e, II-f and II-l to II-p) the value of which is Rs. 15,800, have been produced into Court. The defendants' case is that no amounts have been collected under these securities. With regard to the other securities not produced their case is that securities of the value of Rs. 18,370 are with the plaintiff and of the rest only portions of the amounts have been collected and these have already been accounted for. The learned Judge holds that he is not satisfied that the documents produced were the securities got for Ex. II and says, “Even if they are, in the absence of accounts I cannot possibly uphold the defendants' contention that nothing over and above Rs. 26,000 was collected and could have been collected”. We do not think that his reasons for holding that the documents produced are not the securities got for Ex. II are satisfactory. Those very securities are mentioned in the plaintiff's list of documents also. If they are genuine, in our opinion, the mere non-production of the accounts cannot be a ground for refusing to hold an enquiry as to why no amount was collected under them. With respect to these, as well as the others not produced, provided there was no dispute as to the real nature of those securities, enquiry should have been held as to what amounts were collected or why collection became impossible if no amounts had been collected at all. Prima facie if the Rs. 15,800 under the securities produced in Court had not been actually collected, then at least with respect to that amount it would be unjust to hold the defendants liable in the absence of special grounds. On this part of the case we are of opinion that on the mere ground of the non-production of accounts the learned Judge was wrong in not considering at all the question how much money had been collected by the defendants under the securities and whether they can be legitimately held liable for their non-collection. This question will now be reserved for decision by the Commissioner.

    Connected with the above point is the question whether any of the securities still remain with the plaintiff. The defendants say that some of them are still with him, while he says that he has none. The learned Judge has rejected the defendants' contention, and the Advocate-General has taken us through the evidence on record to show that the securities were never with the plaintiff and that the defendants would not have allowed them to remain with the S.A firm. As the learned Judge has “in the absence of accounts” refused to uphold the defendants' contention that nothing over and above Rs. 26,000 was collected under the securities, and since we have postponed the consideration of the question whether the failure to produce the accounts by the parties was wilful or not, we do not express any definite opinion on the point whether any of the securities are still with the plaintiff. This question also should have been left by the learned Judge for decision by the Commissioner. In this connection we may mention that the case of the defendants that the plaintiff has made collections subsequent to 1909 must on the evidence produced be disbelieved. No doubt the evidence of Chockalinga, who was the agent of the plaintiff's firm from 1906 to 1908, given in O.S No. 14 of 1921 to a certain extent supports the defendants' version, but we think he speaks to collections made prior to the year 1909 which must all have been included in the Rs. 26,000 found to have been collected and accounted for in O.S No. 14 of 1921. It is difficult to accept the evidence of Chockalinga at its face value.

    For the reasons given above we are not satisfied that the case has had a satisfactory trial in the Court below. In our opinion the facts of the case are not so simple for the Court to dispense with the passing of a preliminary decree. In the circumstances we think the learned Judge should first have passed a preliminary decree, and then should have appointed a Commissioner directing him to examine and adjust the accounts, and that the final decree should have been passed only after the receipt of his report and hearing the objections of the parties. We would therefore set aside the decree of the lower Court and remand the case and direct the learned Judge to pass a preliminary decree directing a Commissioner to be appointed by him to take an account of the moneys due from the defendants to the plaintiff. Both the plaintiff and the defendants will be at liberty to give further evidence if they think it necessary in support of their respective cases for the non-production of the accounts. Evidence may also be given on the important question whether the defendant has collected any money under the securities and if so how much, and whether the non-collection if any was due to “wilful default”, inability or any unavoidable cause. On the evidence on record we have expressed the opinion that the collections made by the plaintiff under the securities should be referred to the collections made prior to 1909. As the case will be re-heard it will be open to the defendants to prove that collections were made by the plaintiff subsequent to the year 1909, and also to show as already stated that there are securities still remaining with the plaintiff. Both parties will be at liberty to produce before the commissioner fresh evidence on all the points except with regard to the collections prior to the year 1909. After considering this and the other evidence on record the Commissioner will submit a report to the learned Judge deciding the points mentioned above and stating his final conclusion as to the amount due from the defendants to the plaintiff. After receiving the report the learned Judge will fix a time for objections and after due consideration of the report and the objections he will pass a final decree for the amount ultimately found due from the defendants to the plaintiff calculating simple interest at the Rangoon nadapu rate till the date of the decree.

    The appellants will get their costs from the respondents in A.S No. 57 of 1933, the Advocates' fees being limited to Rs. 500. We make no order as to costs in A.S No. 235 of 1933.

    The Court-fee on the memorandum of appeals will be refunded.

    Sir Lionel Leach C.J—I agree.

    N.R.RCase remanded.

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