Partly allowed

V.O.Thariyan v. St.Theresas Timber Industries

Kerala HC16 Jan 2017RSA/705/2013

Case brief

AI extract

What is this about?

The Court allowed the second appeal, modified the decree, and reduced the claimed amount. It held that entries in account books not prepared within the limitation period are admissible only as corroborative evidence, not as substantive proof, unless the maker is examined.

What did the court decide?

The Regular Second Appeal is allowed in part. The decree is modified to exclude amounts for disputed deliveries. Plaintiff to recover ₹21,488/- with interest at 12% per annum.

V.O.Thariyan Vs St.Theresas Timber Industries — Contract and Commercial Disputes | Kerala HC (2017)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE B.KEMAL PASHA

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MONDAY, THE 16TH DAY OF JANUARY 2017/26TH POUSHA, 1938

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RSA.No. 705 of 2013 () -----------------------

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AS 149/2010 of ADDITIONAL DISTRICT COURT, NORTH PARAVUR OS 146/2009 of SUBORDINATE JUDGE’S COURT, PERUMBAVOOR

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APPELLANT IN R.S.A/APPELLANT IN A.S/DEFENDANT IN SUIT: ------------------------------------------------------

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V.O.THARIYAN, AGED 48 YEARS, S/O.V.T.OUSEPH, VADASSERY HOUSE, ELINJIPRA, KALIKKAKUNNU.P.O., CHALAKKUDY, PIN-680 721.

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BY ADVS.SRI.S.V.BALAKRISHNA IYER (SR.) SRI.P.B.KRISHNAN SMT.GEETHA P.MENON SRI.N.AJITH SRI.P.M.NEELAKANDAN SRI.P.B.SUBRAMANYAN

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RESPONDENT IN R.S.A/RESPONDENT IN A.S/PLAINTIFF IN SUIT:

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ST.THERESAS TIMBER INDUSTRIES, OKKAL KARA, CHELAMATTOM VILLAGE, KUNNATHUNADU TALUK, REPRESENTED BY ITS PROPRIETOR JOSEPH, S/O.ANTHONY, AGED 54, EDATHALA HOUSE, OKKAL KARA, CHELAMATTOM VILLAGE, PIN-683 550.

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BY ADV. SRI.P.THOMAS GEEVERGHESE

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THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 16-01-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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DSV/18/1/17

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[CR]

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B. KEMAL PASHA, J.

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................................................................ R.S.A. No. 705 of 2013

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............................................................... Dated this the 16^th day of January, 2017

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J U D G M E N T

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This second appeal filed against the concurrent findings entered by the Subordinate Judge's Court, Perumbavoor in O.S.No.146/2009, followed by the judgment of the Additional District Court, North Paravur in A.S.No.149/2010 has been admitted on the following substantial questions of law as formulated in the memorandum of appeal:

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“(A) Have not the courts below erred

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substantially in relying on Exts.A8 to A11 account books produced 3 years after filing the plaint, ignoring the mandate contained in Order VII Rules 14, 17 and 18 of the Code of Civil Procedure?

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(C) Will the orders in I.A.No.2207 of 2004 whittle down the rigour of Order VII Rule 17 of the Code of Civil Procedure and its application?

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(E) Has not the lower appellate court gone wrong in relying on the entries in Ext.A8 day book as primary evidence substantiating delivery of the goods covered by Exts.A1 and A4?”

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2. The learned Senior Counsel for the appellant has

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pointed out that the question referred to in ground (A) comes under the question referred to in ground (C) and therefore, the question referred to in ground (A) need not separately be considered. It further follows that the question referred to in ground (D), which reads: “Were not the courts below bound to draw adverse inference for non-production

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of the best evidence – in the form of signed copies of the consignment notes in proof of delivery of the goods covered by Exts.A1 and A4 bills and the relative orders placed by the appellant for supply of goods – on the facts and in the circumstances of the case?” also follows the question referred in ground (C).

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On hearing either side, this Court is of the view that the following questions of law arose for consideration in this second appeal:

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(1) Whether the order in I.A.No.2207/2004 passed by the Subordinate Judge's Court, Perumbavoor whittle down the rigour of Order VII Rule 17 of the Code of Civil Procedure and its application?

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(2) Whether the non-production of the signed copies of consignments notes in proof of delivery of goods covered by Exts.A1 and A4 bills and the relevant orders placed by the appellant for supply of

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goods, has resulted in want of best evidence?

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(3) Has not the lower appellate court gone wrong in relying on the entries in Ext.A8 day book as primary evidence to substantiate delivery of the goods covered by Exts.A1 and A4?

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The plaintiff, who is the respondent herein, is a proprietary concern represented by its sole proprietor and evidently the suit is one filed under Order XIII Rule 10 of the Code of Civil Procedure. The case of the plaintiff is that he used to supply rubber planks to various suppliers including the appellant. According to the plaintiff, he supplied rubber planks to the appellant through Ext.A12 bill dated 03.10.1998, Ext.A13 bill dated 21.10.1998, Ext.A1 bill dated 29.10.1998, Ext.A4 bill dated 31.10.1998, Ext.A14 bill dated 16.11.1998, Ext.A15(a) bill dated 20.01.1999, and Ext.A16 (a) bill dated 18.03.1999, for a total amount of ₹2,31,828/-. The appellant used to make payments in instalments and

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through five instalments he paid a total amount of ₹1,45,000/- out of the total amount of ₹2,31,828/- and therefore, the respondent is entitled to recover the balance amount of ₹86,828/- with interest, from the appellant. Over and above it, it was also pleaded that due to the non filing of 'C' Form, unnecessarily a liability to the tune of ₹25,603/had to be incurred by the respondent and therefore, the appellant is bound to pay the said amount also to the respondent. At the relief portion of the plaint, the plaintiff has claimed interest at the rate of 18% per annum on the aforesaid total balance amount.

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The defendant contended that only 5 lorry loads of rubber planks were delivered to him and he has disputed the delivery of materials covered by Exts.A1 and A4 bills. He has admitted the delivery of materials covered by Exts.A12, A13, A14, A15(a) and A16(a) bills. Over and above it, he contended that there was short supply of 86 cubic feet of materials covered by Ext.A12 whereby he was

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not liable to pay an amount of ₹6,525/- for the said consignment. Similarly, there was short supply of 68 cubic feet in the delivery effected through Ext.A13, whereby he was not liable to pay an amount of ₹5,100/- for the said consignment. It has also been contended that in the supply through Exts.A14 and A15(a) there was a total short supply of 71.46 cubic feet, whereby he was not liable to pay an amount of ₹5,359.50/-. He claimed that through the said short supplies, he was entitled to deduct an amount of ₹16,984.50. He has also challenged the rate of interest claimed by the plaintiff.

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The trial court believed the versions of the plaintiff, who was examined as PW1 and has also relied on Exts.A1 to A3, A4 to A6 and A8 to A11. At the same time, the trial court has declined to grant a decree in respect of the amount claimed on account of the alleged non filing of 'C' Form. The trial court has decreed the suit by granting a decree for the said amount and other amounts including

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interest. The matter was taken up in appeal by the present appellant. The lower appellate court has concurred with the findings entered by the trial court and has dismissed the appeal.

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Heard the learned Senior Counsel for the appellant Sri.S.V. Balakrishna Iyer and the learned counsel for the respondent Sri. P. Thomas Geeverghese.

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The learned Senior Counsel for the appellant has argued that the trial court ought not to have granted leave to the plaintiff for the production of Exts.A8 to A11. The suit was filed on 06.09.2001, and subsequently I.A.No.2207 of 2004 was filed for getting Exts.A8 to A11 admitted, on 04.08.2004. The trial court granted leave as in the usual course. It has been argued that the trial court had gone wrong in granting leave without any provision enabling the trial court to do it at that stage, in a suit which is evidently one based on accounts. The learned Senior Counsel has pointed out that the first appellate court has erroneously

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held that when the trial court had granted leave, Exts.A8 to A11 bills are liable to be relied on. It has been further argued that in the absence of further proof with regard to the alleged transactions in question covered by Exts.A1 and A4, both the courts below ought not to have relied on the contents of Exts.A8 and A9 to endorse the correctness of Exts.A1 and A4. It has also been argued that the interest rate applied by the trial court, which has been concurred by the lower appellate court, is highly exorbitant.

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Per contra , the learned counsel for the respondent has argued that the suit is one based on bills and not on accounts and therefore, the rigours under Section 34 of the Evidence Act cannot strictly be applied in admitting Exts.A8 and A9 at a subsequent stage. It has also been argued that preponderance of probabilities clearly proves the case of the plaintiff and therefore, the impugned judgment and decree do not call for any interference at all. It has been further argued that the appellant has failed to

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produce documents to show that he has not received the consignment covered by Exts.A1 and A4. According to the respondent, even though the appellant has a contention that he has stopped his business in the year 2000, as per the mandates of law relating to taxes, he was duty bound to keep and maintain his books of accounts for three years.

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In fact, the matter involved is very simple. Here is a case wherein the plaintiff claims that seven consignments were sent and delivered to the defendant. On the contrary, the defendant admits that he had received delivery of 5 consignments only. He has specifically disputed the delivery of consignments covered by Exts.A1 and A4. When the delivery of 5 consignments has been admitted by the defendant, presently, the defendant cannot be heard to say anything about the short supply of such five consignments, especially in the absence of any evidence to that effect. The burden to prove such short supply is heavily on the defendant. The defendant has not discharged the said

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burden and therefore, the contention regarding the short supply forwarded by the defendant is not tenable.

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When the defendant has specifically denied the

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delivery of those two consignments covered by Exts.A1 and A4 specifically, much discussion is not required to conclude that the burden is heavily on the plaintiff to prove that the defendant has placed orders for the said two consignments and based on the said orders, the plaintiff had actually delivered the said two consignments to the defendant. Negative evidence on that aspect cannot be expected from the defendant. In order to prove the said two transactions, the plaintiff has heavily relied on Exts.A1 to A3, Exts.A4 to A6, as well as the entries in Ext.A8 day-book and Ext.A9 ledger.

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Exts.A1 to A3 and Exts.A4 to A6 do not reveal

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that the consignments covered by the same were actually delivered to the defendant. Any of the said documents does not contain any acknowledgment from the defendant or any

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of his employees. The vouchers produced along with Exts.A1 and A4 show that some materials were sent through lorries. At the same time, there is absolutely nothing to show that the said consignments covered by Exts.A1 and A4 were actually delivered to the defendant himself. The plaintiff has heavily relied on the entries in Ext.A8 day book and Ext.A9 ledger to prove the transactions covered by Exts.A1 and A4. Even though the learned counsel for the respondent has contended that the suit is not based on accounts, a perusal of the plaint as a whole and also the accounts appended with the plaint, clearly reveal that the suit is one based on accounts. This is not a case wherein a claim has been forwarded towards a single transaction by alleging non-payment; whereas, the plaintiff has pleaded seven different transactions and admitted that through instalments, repayments were being made, and an amount of ₹1,45,000/- only was paid. In such case, much discussion is not required to conclude that the suit is clearly

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based on accounts.

The learned Senior Counsel has pointed out that the plaintiff ought to have produced the originals of Exts.A8 and A9 along with its copies before the trial court along with the plaint as contemplated under Order VII Rule 17 of the Code of Civil Procedure, 1908, when it is on accounts. Order VII Rule 17 reads-

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“ 17. Production of shop-book - (1) Save in so far as is otherwise provided by the Bankers' 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.

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(2) Original entry to be marked and returned - The Court, or such officer as it appoints in this behalf, shall forthwith mark the document for the purpose of identification; and, after examining and comparing the copy with the original, shall, if it is found correct, certify it to be so and return the book to the plaintiff and cause the copy to be

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filed.”

Admittedly, the suit was filed on 06.09.2001. Without assigning any reason, even when it is a suit on accounts, the plaintiff had suppressed Exts.A8 and A9 till 04.08.2004. Finally, the said documents were produced on 04.08.2004 along with I.A. No.2207/2004. As rightly pointed out by the learned Senior Counsel, there is no identical provision as that of Order VII Rule 14(3) in Order VII Rule 17 of the CPC. Earlier, Order VII Rule 18 CPC was there. Subsequently, the said provision was amended in the year 1999 by removing the terms 'without the leave of the court' and subsequently, through the 2002 amendment, the entire provision contained in Order VII Rule 18 CPC was taken away. Being a procedure of law, in normal course, the said amendment has retrospective operation in the sense that the said amendment applies to pending suits also. Matters being so, it has to be considered that the trial court was not competent as per law to grant leave to produce Exts.A8 and

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A9 at a subsequent stage.

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Apart from the above, the learned Senior Counsel

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has pointed out that the courts below ought not to have placed heavy reliance on Exts.A8 and A9 to decree the suit for granting a decree for the amounts in respect of the consignments covered by Exts.A1 and A4. At the most, even if Exts.A8 and A9 are admitted in evidence, it could only be treated as corroborative piece of evidence and at any stretch of imagination, the same could not have been treated as substantive evidence. The attention of this Court has been invited to the decision in Chandradhar Goswami and others v. Gauhati Bank Ltd. [AIR 1967 SC1058] , wherein the Apex Court has made a threadbare examination of the provision contained in Section 34 of the Indian Evidence Act, 1872. Section 34 of the Indian Evidence Act, 1872 says-

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“ 34. Entries in books of account, including those maintained in an electronic

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form when relevant - Entries in books of account, 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.”

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In the decision in Chandradhar Goswami

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(supra) , it was held-

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“It is clear from a bare perusal of the section that no person can be charged with liability merely on the basis of entries in books of account, even where such books of account are kept in the regular course of business. There has to be further evidence to prove payment of the money which may appear in the books of account in order that a person may be charged with liability thereunder, except where the person to be charged accepts the correctness of the books of account and does not challenge them. In the present case, however, the appellants did not accept the correctness of the books of account.”

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It was further held in the decision in

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Chandradhar Goswami (supra) that, under Section 34 of the Evidence Act, original entries alone would not be sufficient to charge any person with liability, and as such copies produced under Section 4 of the Bankers' Books Evidence Act obviously cannot charge any person with liability. Even though it was a suit filed by a bank by producing the copies of the accounts as per the Bankers' Books Evidence Act, the Apex Court has held that the said entries alone are not sufficient to clothe the person with liability. It was held therein that in order to charge such a person with liability, the bank ought to have produced the evidence in support of the entries to show that the money was advanced as indicated therein and thereafter, the entries would be of use as corroborative evidence. It has become trite law that as per Section 34 of the Evidence Act, the entries in books of accounts alone shall not be sufficient evidence to clothe a person with liability and, therefore, some independent evidence has to be given to substantiate

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the claim.

A learned Single Judge of this Court had occasion to consider the said question in Shambhu Bhat v. Karnataka Vyavasaya Varthaka Sangha Ltd. [1987(1) KLT 768] . Relying on Section 34 of the Evidence Act, it was held therein that-

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“The finishing words of the section “shall not alone be sufficient evidence to charge any person with liability” certainly indicate that the evidence of the entries in books of account, though are relevant, cannot be treated as independent and substantial evidence. The evidentiary value of the entries in the account book must therefore be corroborative, supportive or confirmatory in nature. So, if an entry in the Books of Account regularly kept in the course of business, is proved, it is merely corroboration of the evidence given by witnesses who have spoken to the facts of the claim. This Section evidently makes an exemption to the doctrine that “a man cannot make evidence for himself”. Wigmore says “the principle of admissibility of parties' account books

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shows a recognition of the two traditional features of hearsay exceptions in general, namely, the Necessity Principle and the Circumstantial Guarantee of Trustworthiness.” To attract this section, it has to be proved that the accounts are written in a book and that book must be a book of account and that account must be one regularly kept in the course of business. To say that the account is regularly kept in the course of business, it requires that the accounts are kept according to a set of rules or a system.”

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His Lordship had relied on Sankaran

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Ezhuthachan v. Velayudhan Ezhuthachan [ILR 1978 (1) Kerala 619] , wherein it was held that-

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“.....law presumes that when accounts are maintained systematically, that is to say, following an established practice, or in the language of the statute, where they are kept 'regularly in the course of business', the regularity in or the systematic manner of maintaining such accounts would ensure their general accuracy and would prevent chances of misstatements and falsification. Therefore, if disputed, it has first to

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be ascertained whether the books of account have been regularly kept in the course of business. The enquiry here is not whether the particular entry is correct and true but as regards the regularity of keeping accounts or in other words the system or practice of maintaining them.”

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In Shambhu Bhat (supra) , it was further held that-

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“There is no case for the appellant that the entries in the books of account are not relevant for the matters to be decided in the case. But he contended that the books of account as a whole and certain particular entries have not been proved properly. He said that the books of account have been produced and marked in the case by examining not the person who has made the relevant entries in the book, but by the Inspector of the concerned depot of the plaintiff. The witness who proved the books of account has deposed that the person who has entered the relevant entries is not available for examination and that the witness is familiar with the handwriting of the person who has written the books of account and that the books of account

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are kept in the regular course of business. Mukherji, J. in Aktowli v. Tarak (17 CWN 744) has said that the proper procedure to follow in the matter of proving the account books is to call the clerk who has kept the accounts or some person competent to speak their genuineness to prove that the books have been regularly kept and they are generally accurate. For the above proposition, Mukherji, J. has relied on Dwaraka Dass v. Janki Dass (6 MIA 88).”

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In unequivocal terms, it was held that the person

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who made the entries ought to have been examined to prove the disputed entries in the said account books. Here, in this particular case, PW1 has admitted in crossexamination that the entries in Exts.A8 and A9 were made by his consultant named Ravi and he was still alive. Even then, the plaintiff has not cared to examine the said person in order to prove that the entries were contemporaneously made and the same were made in his handwriting, in the ordinary course of business.

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22. The above aspect under Section 34 was again

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came up for consideration before a Division Bench of this court in Manilal v. Johnson [2011 (1) KLT 321] . It was held therein that-

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“Going by the provisions contained in S.34 of the Evidence Act and the principles laid down in the aforesaid decisions, the books of accounts kept in the regular course of business are relevant. But, that statement, by itself, does not form substantive evidence. It needs corroboration. The section is clear to the effect that a person cannot obtain a decree by merely proving the existence of certain entries in the books of accounts kept in the regular course of his business. He will have to adduce independent evidence to show that the entries are genuine. Since an entry in the accounts book is an admission by the maker himself in his own favour, it can be accepted as evidence only if it has strictly complied with the requirements contained in Section 34 of the Act. The words 'books of accounts', 'business' and 'regularly' occurring in Section 34 of the Act came up for

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consideration in the decision reported in Central Bureau of Investigation v. V.C.Shukla (supra). It is not necessary to refer to those aspects in detail for they are not very relevant for the present purpose.”

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As to what amounts to independent evidence sufficient to corroborate any such document falling under Section 34 of the Evidence Act, depends upon the facts and circumstances of each case. What has to be considered is whether there is any other evidence, except the entries in the books of accounts being relied on, to justify the claim made by the person concerned in order to show that the entry is true and correct. In Manilal (supra) , it was held that the oral testimony of the person concerned and his witnesses, who support the document, is relevant under Section 34 of the Evidence Act and the same can be taken as corroborative piece of evidence. In that particular case, when the said entries were proved through DW1 and DW2, the Division Bench of this Court has accepted the entries in

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the said accounts as one clearly coming under Section 34 of the Evidence Act. In this particular case, the best evidence is lacking when the plaintiff has failed to examine the said person named Ravi, who was still alive, at the time of examination of PW1.

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The learned counsel for the respondent has relied on the contents of Exts.A1 to A3 and A4 to A6 and argued that the same constitute substantive evidence and, therefore, the entries contained in Exts.A8 and A9 regarding the same could be treated as corroborative piece of evidence. Exts.A1 and A4 could have been treated as substantive piece of evidence, had the same been admitted by the defendant. Otherwise, through the said document, the plaintiff ought to have proved any valid acknowledgment from the part of the defendant in the said documents to show the actual delivery of the said consignments. In the absence of any such evidence, Exts.A1 to A3 and A4 to A6 cannot be treated as substantive piece of evidence against

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the defendant.

Even though the learned counsel for the respondent has invited the attention of this Court to the decision of the Apex Court in R.V.E.Venkatachala Gounder v. Arulmigu Viswesaraswami and V.P.Temple and another [AIR 2003 SC 4548], the facts discussed therein are not identical to the facts of the present case. In that particular case, the Apex Court could rely on the said entries in the books of accounts made by the deceased father of the appellant therein, by accepting it under Section 32 clause (2) of the Indian Evidence Act. In that particular case, some entries in the books of accounts were made by the appellant therein and he had deposed to making of the entries and corroborated it by his own statement. Therefore, the decision in R.V.E.Venkatachala Gounder (supra) is not applicable to the facts and circumstances of the present case.

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From the discussions made above, it can safely

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be concluded that the plaintiff is not entitled to get a decree for the amounts covered by Exts.A1 and A4. At the same time, the respondent is entitled to get a decree for the balance amount due in respect of the supply of the consignments covered by Exts.A12, A13, A14, A15(a) and A16(a). Therefore, out of the total amount of ₹2,31,828/claimed by the plaintiff, the amounts covered by Exts.A1 and A4 have to be deducted. Further, the amount of ₹1,45,000/admittedly paid by the defendant has also to be deducted. The balance amount comes to ₹21,488/-. The plaintiff is entitled to get a decree for the said amount with interest.

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Regarding the rate of interest, this Court is of the view that in the absence of any particular contract to fix the interest at the rate of 18% per annum, interest at the rate of 12% per annum can be adopted. The plaintiff is entitled to recover the said amount of ₹21,488/- with interest at the rate of 12% per annum from the date of the suit till the date of realisation, from the defendant and all his movable and

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immovable properties.

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In the result, the Regular Second Appeal is allowed in

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part, by modifying the judgment and decree passed by the

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courts below as above.