Chirag Enterpriseis v. Star Traders

JUDGMENT

K. Harilal, J.

This appeal is directed against the judgment and decree passed in O.S No. 90/1999 on the file of the 2nd Additional Sub Judge, Kozhikode. The appellant was the plaintiff and the respondents were defendants in the above suit.

2. The facts giving rise to this Appeal can be briefly summarised as follows (parties are referred to as in the trial court judgment):-

3. The plaintiff is a business concern engaged in the wholesale business of boiled rice etc. The first defendant is a Partnership firm and the second defendant is the Managing Partner of the firm. They are customers of the plaintiff in rice business and the defendants owed Rs. 1,95,730.55 towards credit purchase of rice as per proper books of accounts maintained by the plaintiff in the name of the first defendant as on 07.06.1996 Despite, demands at times, the defendants did not pay the amount. Hence the suit was filed for realisation of an amount of Rs. 1,95,730.55 with interest from the defendants.

4. In written statement, the defendants denied the allegation that the defendants owed a sum of Rs. 1,95,730.55 to the plaintiff and contended that no amount is due or payable by the defendants to the plaintiff. So no demand was ever made to them for payment. The allegation in the plaint is vague, indefinite and the plaintiff did not have a cause of action to institute the suit. The documents produced along with the plaint are not admissible in evidence and the suit has been filed without bona fides. Hence prayed for dismissal of the suit.

5. Ext.A1 to A8 were marked and PWs 1 and 2 were examined by the plaintiff. Neither any oral nor documentary evidence was adduced by the defendants. The trial court raised four issues and considered the evidence adduced by the plaintiff. However, the court below took a view that since the original ledgers were produced late, those documents cannot be received in evidence as per Order 7 Rule 18, unless leave is granted by the court. The duplicate of the receipt books also could not be taken in evidence for the same reason. The court below found that there is no sufficient evidence to hold that the defendants were connected with Ext.A1 and A2 documents and the suit is barred by limitation. Aggrieved by the impugned judgment and decree, this appeal has been preferred on various grounds.

6. We heard Sri. Dinesh. R. Shenoy, learned counsel appearing for the appellant and Sri. S. Ananthakrishnan, learned counsel appearing for the defendants.

7. The counsel for the appellant submitted that the court below ought to have found that there was no specific denial against the plaint averment that there were business transactions between the plaintiff and the defendants and the only plea is that no amount is due to the plaintiff. The learned counsel argued that the trial court ought to have drawn an adverse inference against the total denial of the defendants and from the fact that the defendant did not give any evidence either oral or documentary. He did not reply to Ext.A4 lawyer notice. The court below erred in not looking into the original ledger books and the original receipt books which were produced before the court in trial on the sole reason that those documents ought to have been produced along with the plaint. The trial court erroneously found that the suit is barred by limitation, the counsel submitted.

8. Per contra, the counsel for the defendants submitted that there is no sufficient evidence to hold that the defendants were connected with Exts.A1 or A2 documents. Ext.A1 is dated 14.02.1996 and the suit was filed on 19.03.1999 Though the plaintiff has alleged part payment on 07.06.1996 in order to get over the limitation, that payment was neither admitted by the defendants nor successfully proved by the plaintiff. The part payment was not quantified in the pleadings. Therefore, the claim of the plaintiff is hopelessly barred by limitation.

9. The learned counsel for the defendants pointed out that the court below rightly rejected ledger books produced late without leave of the court and discarded entries in Ext.A3 series in the absence of independent corroborative evidence in view of Section 34 of the Evidence Act.

10. We have given our anxious consideration to the rival submissions made at the Bar. The first point to be considered is whether the plaintiff is entitled to get the amount claimed from the defendants? Coming to documentary evidence, what is the evidence available on record to prove the claim against the defendants? The main documents relied on by the plaintiff are Exts.A1 and A2. Ext. A1 is the Credit Bill dated 14.02.1996 and Ext.A2 is another Credit Bill dated 20.04.1996 How does the plaintiff connect Exts.A1 and A2 Credit Bills with his claim against the defendants? PW1 is the Manager of the plaintiff firm. It is elicited in his cross examination that the business as per Exts.A1 and A2 were done through a broker called Mooppan. When asked a definite question whether the order should be placed for purchasing goods, he responded that he knows the broker only and he does not know the parties. According to PW1, Mooppan is no more. PW1 further deposed that the business is fixed through Mooppan and no endorsements were taken from the defendants in receipt of the delivery of goods. Exts.A1 and A2 do not show whether the purchase was for cash payment or for credit. He admits that Exts.A1 and A2 bills would not show that the defendants have received the goods corresponding to the entries which could be found in the cash ledger and stock register which were kept in the custody of the plaintiff. It is pertinent to note that those corresponding relevant records were not brought up in evidence by the plaintiff to corroborate Exts.A1 and A2 bills. PW1 admitted that Ext.A3 series are written in Gujarathi language and the contents would be known to those persons who know that language only. He is not sure that the print out seen in Ext.A3 series are reliable translations. Thus evidence tendered by PW1 does not give any material to connect Exts.A1 to A3 with the claim against the defendants. Thus the evidentiary value of the oral evidence tendered by PW1 whittles away and pales into insignificance and worthlessness.

11. Coming to PW2, he is an Accountant of the plaintiff firm. He is the person who has written the accounts in Gujarathi language. Ext.A6 to A8 ledger books were brought up in evidence through him. According to him, the defendant companies account is written in Page No. 551, which is marked as Ext.A7 and the debit balance therein is Rs. 1,95,730.55. He further deposed that there is a receipt of Rs. 20,000/- as on 07.06.1996 from the defendants. In Page No. 409 of another cash book also, the debit balance as on 01.04.1998 is Rs. 1,95,730.55. But in cross examination it was elicited that he has no direct dealings with the parties referred to in the ledger. So, his evidence also cannot be taken into account as true versions of the transactions seen in the books.

12. Coming to Ext.A3 series, it appears that these are ledger extracts produced along with the suit. The original ledger books marked as Exts.A6 to A8, whose extracts are A3 series, were produced only at the time of trial. The counsel for the defendants pointed out that as per Order VII Rules 14, 17 and 18, these ledger books should have been produced at the time of filing the suit and no sanctity could be given to its extracts which were produced along with the suit. Since leave was not granted, these ledger books should not have been admitted in evidence. We find enough force in the arguments advanced by the counsel for the respondent. The suit was filed on 19.03.1996 Order VII Rules 17 and 18 which stood before 2002 Amendment of CPC reads as follows:

“17. Production of shop-book.- (1) Save in so far as is otherwise provided by the Banker's Books Evidence Act, 1891 (18 of 1891), where the document on which the plaintiff sues is an entry in a shop-book or other account in his possession or power, the plaintiff shall produce the book or account at the time of filing the plaint, together with a copy of the entry on which he relies.

(2). xxx xxx xxx

18. Inadmissibility of documents not produced when plaint filed.- (1) A document which ought to be produced in Court by the plaintiff when the plaint is presented, or to be entered in the list to be added or annexed to the plaint, and which is not produced or entered accordingly, shall not, without the leave of the Curt, be received in evidence on his behalf at the hearing of the suit.

(2) xxx xxx xxx”

13. In Ishwar Dass Jain v. Sohanlal (AIR 2000 SC 426) the Supreme Court held that:

“The extracts from accounts are not “account books” falling within Section 34 of the Evidence Act and are inadmissible. Sanctity is attached in the law of evidence to books of account if the books are indeed “account books i.e in original and if they are kept in the regular course of business”. Such sanctity, cannot attach to private extracts of alleged account books where the original accounts are not filed into Court. this is because, from the extracts, it cannot be discovered whether the accounts are kept in the regular course of business or if there are any interpolations or whether the interpolations are in a different ink or whether the accounts are in the form of a book with continuous page numbering. Hence, if the original books have not been produced. It is not possible to know whether the entries relating to payment of rent are entries made in the regular course of business. It is only in the Bankers' Books Evidence Act, 1891 that certified copies are allowed or the case must come under Section 65(f) or (g) of the Evidence Act.”

14. Indisputably Exts.A6 to A8 are original ledger books which were produced at the time of trial. The document which ought to have been produced along with the suit and which was not produced accordingly shall not be received in evidence without the leave of the court. Though Exts.A7 and A8 were marked subject to proof, no sufficient ground was made for not producing these documents at the time of filing the suit and no doubt, these ledger books were being kept by the plaintiff in his custody. No sufficient ground was pleaded to vindicate late production of these original ledger books. Therefore, the court below rightly rejected Exts.A6 to A8 as inadmissible in evidence”.

15. Another important document sought to be proved in evidence is the duplicate receipt book which shows the receipt of Rs. 20,000/- on 07.06.1996 Going by Para 4 of the plaint, it is averred that the cause of action has arisen in the suit on 07.06.1994, when the last payment was made by the defendants. But that document from which the cause of action has allegedly arisen and the period of limitation has begun to run was also not produced at the time of filing the suit. Here also, no sufficient ground was made out for not producing the duplicate of the receipt book along with the suit. Therefore, rightly those documents were also not allowed to be marked.

16. Let us consider the evidentiary value of Exts.A6 to A8 also. These are ledger books which show the entries of the alleged transactions with the defendants. The learned counsel for the respondent submitted that entries in Exts.A6 to A8 cannot be taken as substantive evidence, unless those are corroborated by other independent evidence which was not forthcoming, in view of the mandate under Section 34 of the Evidence Act. He placed reliance on various decisions in Chandradhar Goswami v. Gauhati Bank Ltd. (AIR 1967 (SC) 1058), Shambhu Bhat v. Karnataka Vyavasaya Varthaka Sangha Ltd. (1987 (1) KLT 768), Narayanan v. Indian Handloom Traders (1999 (1) KLT 700), Manilal v. Johnson (2011 (1) KLT 321), Central Bureau of Investigation v. V.C Shukla (1998 (2) KLT SN 47 (SC).

17. Section 34 of the Indian Evidence Act reads as follows:-

“34. [Entries in books of account including those maintained in an electronic form] when relevant-[Entries in books of accounts including those maintained in an electronic form], regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability.”

18. A close analysis of the above said decisions would show that the Case Law as it stands today set out in the above decisions is as follows: The entries in books of account are not by themselves sufficient to charge any person with the liability. There must be independent evidence of the transaction to which the entries relate and in the absence of such evidence, no relief can be given to the parties who rely upon such entries to support their claim against another. As per the evidentiary value of entries relevant under Section 34 of the Evidence Act such entries though relevant are only corroborative evidence and it is to be proved by further independent evidence that the entries represent honest and real transactions and money was paid or due in accordance with those entries.

19. What Section 34 demands is a book of account regularly maintained in the course of business. A duly bound ledger book, incapable of being tampered with, of a fool-proof character is produced, all by itself without production of the corresponding day book or cash book or stock register, that ledger though relevant would not itself be sufficient evidence to charge any person with liability. More clearly, the statement of account by itself does not make substantive evidence, since it is an admission by the maker himself in his own favour. Independent evidence to corroborate such entries depends upon the facts and circumstances of the case. Even if entries in the books of account are correct and authentic, such books of account cannot fix the liability upon the person, in the absence of independent corroborative evidence. To sum up, Exts.A1 and A2 are not by themselves sufficient to charge the defendants with the liability in the absence of independent corroborative evidence in view of Section 34 of the Indian Evidence Act. Ext.A3 is neither admissible nor relevant as it cannot be considered as books of account contemplated under Section 34. Exts.A6 to A8 are inadmissible in evidence in view of Order VII Rules 17 and 18 due to the non-production along with the suit and lack of sufficient grounds for the delay in producing it before the court.

20. Though last, the more important point to be decided is whether the suit is barred by limitation? We may consider the averments in the plaint. The only averment giving rise to a right to sue against the defendant pleaded in paragraph 3 reads as follows:

“The defendants owed a sum of Rs. 1,905,730.55 towards credit purchase of rice as proper accounts maintained by the plaintiff in the name of the first defendant during the course of business as on 7/6/1996. In spite of demands, the defendants have not paid the amount. Hence the suit.”

21. Paragraph 4 which refers to cause of action reads as follows:

“The cause of action has arisen in this suit on 7/6/1996, when the last payment made by the defendants and thereafter in Nagaram Amsom and Desom of Kozhikode Taluk, xxx xxxx xxx.”

22. But now the learned counsel for the plaintiff submitted that the amount claimed by the plaintiff is the balance due under the total sum of Exts.A1 and A2, after adjusting the part payment of Rs. 20,000/- made on 7/6/1996 and that part payment amounts to an acknowledgments under Section 18 of the Limitation Act. Therefore, a fresh period of limitation starts on 7/6/1996 and the suit was filed on 19/3/1999, within three years from 7/6/1996. Even proceedings on the basis that the pleadings in paragraphs 3 and 4, suffice within the meaning of Order VII Rule 4, the question to be considered is, can an inscription of an amount of Rs. 20,000/- in figures only made in a credit bill without any details and signature of the payer be taken as an acknowledgment under Section 18 of the Limitation Act? Going by Section 18 of the Limitation Act, it could be seen that to attract operation of this Section, two conditions are essential. Firstly, the payment must be made within the prescribed period of limitation. Secondly, it must be acknowledged by some form of writing either in the hand writing of the payer himself or signed by him. Thus it is the part payment which really extends the period of limitation. The mere inscription without referring to the person in whose handwriting, the inscription was made and without the signature of the payer cannot be taken as acknowledgment of the total consolidated amount claimed in the plaint. More importantly, this part payment of Rs. 20,000/- said to have been made on 7/6/1996 stands neither proved by the plaintiff nor accepted by the defendants.

24. To sum up, in the absence of proof of the part payment amounting to acknowledgment as on 7/6/1996, the claim for the consolidated amount of Rs. 1,95,730.55 fails under the bar of limitation.

25. Then the question that arises is where the claim for a consolidated amount accrued from different and distinct transactions becomes barred by limitation, can such distinct claims from which the consolidated amount arose be considered independently and separately in the matter of limitation? On a conjoined reading of Order VII Rules 2, 6, 7 and 8, it can be inferred that when the claim for a consolidated amount which arises from several and distinct claims become barred by limitation and no relief is sought separately for such distinct claims, each claim accrued on different dates can be considered separately and independently in the matter of limitation, if each and every such distinct claims are specifically pleaded with precise amounts and the cause of action is founded upon such separate and distinct ground also.

26. Coming to the instant case, in view of the above proposition, we have examined the averments in the plaint. In the plaint, there are no such pleadings which give rise to a right to sue on the basis of either Ext.A1 or A2. Nothing is stated about the amount due under Exts.A1 or A2. The entire claim is based on a total amount fell due on 7/6/1996 after part payment allegedly amounting to acknowledgment. Moreover, cause of action has arisen on 7/6/1996 only, the day on which Rs. 1,95,730.55 fell due to the plaintiff. Therefore, in the absence of distinct claims or cause of action founded upon separate and distinct grounds in conformity with Order VII Rules 2 and 8 of the C.P.C, we are not inclined to consider each transaction independently and separately in the matter of limitation. Even if it is taken separately, the first claim of Rs. 1,27,133.65 due to the plaintiff which fell due on 14/2/1996 is obviously barred by limitation.

27. Learned counsel for the appellant submitted that the trial court ought to have drawn an adverse inference from the fact that the defendants did not examine either by themselves or somebody else on their behalf to rebut the evidence of the plaintiff. We are unable to countenance that argument in view of the pleadings and evidence on record. It is a case wherein the defendant denied the transactions totally and according to them no amount is due to the plaintiff from them. On the other hand, plaintiff miserably failed to state his case and produce evidence against the defendants. The settled law is that it is incumbent upon the plaintiff to establish his case averred in the plaint and produce evidence at first. Unless and until the plaintiff discharge his initial burden, the question of rebuttal evidence does not arise. The plaintiff, who desires the Court to give Judgment as to his right to get the amount dependent on the facts which he asserted in the plaint must establish his case at first. But here, the plaintiff miserably failed to discharge his initial burden of proof. Non examination of the defendant or his witnesses is immaterial, where no onus cast on the defendants. The above view is supported by the decision reported in Union of India v. Ibrahimuddin [2012 (3) KLT SN 73] wherein the Supreme Court held that:

“Issue of drawing adverse inference is required to be decided by the court taking into consideration the pleadings of the parties and by deciding whether any document/evidence, withheld, has any relevance at all or omission of its production would directly establish the case of the other side. The court cannot lose sight of the fact that burden of proof is on the party which makes a factual averment.”

xx xx xxx

“Failure of party to prove its defence does not amount to admission, nor it can reverse of discharge the burden of proof of the plaintiff.”

The above decision was laid down following the decisions in Srinivasa Das v. Surjanarayan [AIR 1967 SC 256], Ramrati Kuer v. Dwarika Prasad [AIR 1967 SC. 1134] and Manager, R.B.I Bangalore v. S. Mani [AIR 2005 SC 2179]. Therefore, no adverse inference can be drawn against the defendants either for their non examination or for non-production of documentary evidence. Invariably it is optional and depends upon pleadings mooted by the parties.

28. The counsel for the plaintiff further submitted that the defendants had not replied to Ext.A4 lawyer notice so as to deny the claim against them and the conduct of the defendants amount to admission. It is true that the defendants have not replied to the lawyer notice sent by the plaintiff. But as rightly found by the court below that aspect alone will not be sufficient to establish the plaintiff's case. At the utmost, that aspect can be taken as only a circumstance in favour of the plaintiff, if the plaintiff succeeds in discharging the initial burden of proof. In a case where the plaintiff miserably failed to discharge the initial burden, these aspects become insignificant. On an analysis of the entire evidence on records, at all points, we find that the plaintiff miserably failed to prove the claim against the defendants. Hence, we are inclined to dismiss this appeal.

29. The learned counsel for the plaintiff submitted that the plaintiff has filed CMP No. 1475/2001 under Order XLI Rule 27 of the C.P.C to receive the cheque dated 20.11.1996 as evidenced on the side of the plaintiff. Subsequently the plaintiff has filed I.A No. 800/2010 under the very same provision to receive four documents. The plaintiff has also filed another application (I.A No. 1176/2012) to amend the plaint under Order VI Rule 17 as to incorporate a fresh cause of action against the defendant. The learned counsel for the plaintiff further urged for a remand of the case back to trial court, so as to get an opportunity to adduce further evidence on these documents. Per contra, the learned counsel for the defendants opposed the above submission and submitted that documents sought to be brought up in evidence are irrelevant and will not cure the inherent defects in evidence noticed under Section 34 of the Indian Evidence Act. the decision laid down by this court in Govindan v. Raman (1993 (1) KLT SN 16).

30. Normal course of procedure of the Appellate Court is to decide the appeal on the basis of the evidence available on record. Certainly the Appellate Court has the power to remand the case under Section 107 and Order 41 Rules 23 & 23(A) of the C.P.C But merely on the reason that the party wants to produce additional evidence or produced evidence under Order 41 Rule 27 of the C.P.C, the appellate Court is not bound to remand the case as a matter of course. Firstly it is the incumbent upon the appellate court to decide question whether the application seeking production of additional evidence fulfils the requirements under Order 41 Rule 27(a)(aa) and (b) of the C.P.C If the application fulfils the above test, the Appellate Court is bound to consider the next question whether the document sought to be produced are prima facie relevant and admissible in evidence. Unless this question is considered at this stage, entire proceedings sometimes, may end as a futile exercise; after remand. If the documents produced are irrelevant and inadmissible and there is no possibility to tilt the balance of appreciation available on record, no purpose will be served by a remand. Third stage is the mode of taking additional evidence under Rule 28. If additional evidence is allowed to be produced, the Appellate Court may either take such evidence or direct the Court from whose decree the Appeal is preferred or any other court to take such evidence. Therefore, we are of the opinion that without resorting to these three stages, the Appellate Court cannot jump to the conclusion that the case requires remand in view of the application under Order 41 Rule 27 of the C.P.C If the documents do not require to be tested and proved in trial, the Appellate Court can take such documents in evidence, without a remand. Thus remand arises when such additional documents are relevant and require to be tested and proved through the process of trial.

31. In the light of the Scheme under Order 41 Rules 23 and 27 and the proposition we held above, we have examined the documents sought to be brought up in evidence and produced along with C.M.P No. 1475/2001 and I.A No. 800/2010. The documents sought to be brought up in evidence under I.A.800/2010 are audit report for the financial year 1997-98 to 2000-2001 prepared by the Chartered Accountant of the Plaintiff. Trial commenced in March 2000. So Audit report upto 1998-1999 could have been produced before the commencement of trial. The suit notice was issued on 25/5/1998. The first audit report for the financial year 1997-98 is seen prepared on 18/12/1998, six months after the issuance of suit notice, which virtually set the lis in motion. All other audit reports are documents prepared and submitted after the institution of the suit. So obviously no reliance can be placed on these documents which are incapable of corroborating entries either under Exts.A1 or A2 issued on 14/2/1996 and 20/4/1996. What is required and intended under Section 34 of the Evidence Act is corroborative evidence contemporaneously entered into records or spoken to by the witnesses. The Audit Reports sought to be produced are prepared on the basis of Exts.A1 and A2 after setting the lis in motion. Therefore, no sanctity can be attached to these documents. Come to I.A.1375/2001 and I.A.1176/2012, these are interlocutory applications intended to produce a dishonoured cheque dated 20/11/1996 allegedly issued in favour of the plaintiff by the defendants and an amendment application to substitute a fresh cause of action as on 20/11/1996 the day on which last payment was made by the above said cheque. Undoubtedly, this attempt to substitute a fresh cause of action at this stage by way of amendment after long lapse of 12 years is impermissible in view of the amendment to Order VI Rule 7 of the C.P.C which came into effect on 1/7/2002. Indisputably the cheque dated 20/11/1996 was a document which was being kept in the custody of the plaintiff before the institution of the suit, though allegedly it was untraceable and missing. Even if it was truly untraceable and missing, the dishonor of this particular cheque could have been pleaded in the plaint and brought up in evidence by producing other documents available in his Bank containing corresponding entries which spell out the dishonour of the cheque. Even after the institution of the suit, this dishonoured cheque could have been produced and amended the plaint before the commencement of trial. Additional evidence cannot be permitted at appellate stage in order to fill up or remove lacunae in evidence (Malayalam Plantations Ltd. v. State of Kerala (2010 (4) KLT 647). Thus the matter sought to be introduced by way of amendment is a matter which could have been raised in the plaint or incorporated by way of amendment before the commencement of trial. Therefore, the amendment sought to be made is impermissible under law in view of Order VI Rule 17 of the C.P.C Similarly the reason for delay blaming the counsel appeared for the plaintiff is absolutely untenable. We are not satisfied with the grounds alleged for condoning the delay.

32. At this juncture it is worthwhile to look into the very recent decision reported in 2012 (3) KLT SN73 (Case No. 79) SC (supra). “The Appellate Court should not, ordinarily allow new evidence to be adduced in order to enable a party to raise a new point in appeal. Similarly, where a party on whom the onus of proving a certain point lies fails to discharge the onus, he is not entitled to a fresh opportunity to produce evidence, as the Court can, in such a case, pronounce judgment against him and does not require any additional evidence to enable it to pronounce judgment.” In the instant case, the trial court could pronounce the judgment and this Court can pronounce the judgment without additional evidence. Therefore, we are inclined to dismiss all these interlocutory applications and we do so. Thus the purpose for which the appellant sought for remand also fails. Therefore, we are not inclined to allow the remand as prayed for by the appellant. At all points, the plaintiff failed to prove the claim against the defendants.

In the result, the judgment and decree passed by the court below is confirmed and consequently the appeal is dismissed.