British India Corporation Ltd. vs Firm Anand Parkash Om Parkash And ...
2002 Latest Caselaw 1233 Del

JUDGMENT

K.S. Gupta, J.

1. Plaintiff filed this suit alleging that it is a limited liability company and has one mill known as Cawnpore Woollen Mill at Kanpur and another mill known as New Egerton Woollen Mill at Dhariwal. P.C. Jain is authorised to sign and verify the plaint and institute suit on behalf of plaintiff-Corporation. Both the mills manufacture woollen goods, Defendant No. 1 had been a partnership firm having defendants 2 to 4, 8 to 10, Suresh Kumar Goyal and Om Prakash Goyal, deceased as its partners. Defendant No. 1 had been buying woollen goods from the said two mills. The plaintiff in the accounts maintained at Kanpur and Dhariwal of said two mills debited the price of woollen goods purchased by defendant No. 1 and other expenses including cost of samples and bank charges. Similarly, amounts paid by defendant No. 1 or any other credits granted to it on account of dealings between the parties, were credited in the Mid accounts. In the account books of plaintiff's Cawnpore Woollen Mills from 16th June, 1964 up to 31st December, 1964, Rs. 22,37,049.77 were debited. Aggregate amount credited in that account was Rs. 13,04,356.98 leaving a balance of Rs. 9,32,692.79 which was taken to the next years' account beginning from 1st January, 1965. Rs. 30,59,115.75 were debited to defendant No. 1-firm as the price of woollen goods supplied and other charges while a sum of Rs. 24,77,713.94 was credited on account of payments made or other credits granted to it, thus, leaving a balance of Rs. 5,81,401.81 as on 31st December, 1965, Thereafter, Rs. 46,63,754.01 were debited and Rs. 36,81,457.29 were credited leaving a debited balance of Rs. 9,82,296.72 as on 31st December, 1966. Including this balance, Rs. 43,29,020.69 were debited and Rs. 24,33,827.83 were credited leaving a debit balance of Rs. 18,95,192.86 as on 31st December, 1967. It is further alleged that Rs. 55,72,858.18 were debited towards the price of goods supplied and other charges while Rs. 33,00,189.12 were credited on account of payments made by defendant No. 1 and other credits granted to it, leaving a balance of Rs. 22,72,669.06 as on 31st December, 1968. Again Rs. 58,07,245.11 were debited and Rs. 47,56,424.92 were credited leaving a balance of Rs. 10,50,820.19 as on 31st December, 1969. Including this balance, Rs. 39,27,843.25 were debited and Rs. 21,39,410.32 were credited leaving a balance of Rs. 17,88,432.93 due to the plaintiff from defendant No. 1-firm as on 31st December, 1970. Rs. 37,83,434.02 were debited to the account of defendant No. 1-firm towards the price of woollen goods further supplied and other charges and Rs. 13,10,727.86 were credited on account of payments made by defendant No. 1 and other credits granted to it leaving a debit balance of Rs. 24,72,706.16 as on 31st December, 1971.

2. In the account books of plaintiff's New Egerton Woollen Mills from 16th June, 1964 to 31st December, 1964, Rs. 30,85,840.42 were debited to defendant No. 1-firm towards the price of woollen goods supplied and other charges. After allowing credit for Rs. 17,50,247.68 paid and the other rebates/discounts allowed, amount of Rs. 13,35,592.74 remained due to the plaintiff which was taken to the next year's account beginning from 1st January, 1965, Thereafter, Rs. 50,28,555.94 were debited and Rs. 37,18,989.34 were credited, leaving a balance of Rs. 13,09,566,60 as on 31st December, 1965. Thereafter, Rs. 1,00,31,541.24 were debited and Rs. 76,45,821.99 were credited leaving a balance of Rs. 23,85,719.25 due to the plaintiff from defendant No. 1-firm as on 31st December, 1966. Again, Rs. 65,63,597.86 were debited and Rs. 40,88,044.87 were credited leaving a balance of Rs. 24,75,552.99 as on 31st December, 1967. It is alleged that including this balance, Rs. 66,60,212.92 were debited and Rs. 58,45,539.82 were credited, leaving abalance of Rs. 8,14,673.10 due to the plaintiff from defendant No. 1-firm as on31st December, 1968. Thereafter, Rs. 70,19,858.53 were debited and Rs. 55,93,379.44 were credited, leaving a balance of Rs. 14,26,479.09 due as on 31st December, 1969. Again, Rs. 54,15,814.82 were debited and Rs. 36,53,955.66 were credited, leaving a debit balance of Rs. 17,61,859.16 as on 31st December, 1970. Including this balance, Rs. 38,60,073.06 were debited to the account of defendant No. 1 firm towards the price of woollen goods supplied and other charges and Rs. 19,03,116.77 were credited on account of payments made and other credits granted to it, thus, leaving a balance of Rs. 19,56,956.29 due to the plaintiff from defendant No. 1 firm as on 31st December, 1971.

3. It is further pleaded that on 18th April, 1972, defendant No. 1-firm through its aforesaid partners understood the accounts of said two mills maintained by the plaintiff-Corporation in its account books and acknowledged that a sum of Rs. 45,75,303.47 was due to the plaintiff-Corporation from defendant No. 1-firm and its partners. Defendants also agreed to pay interest on the said amount @ 9-3/4% per annum or at such rate as would be charged by the State Bank of India on advances given to the plaintiff-Corporation from time to time. On 19th April, 1972, aforesaid partners of defendant No. 1-firm further executed document(s) in favor of plaintiff acknowledging the liability for the said amount. It is stated that said Om Prakash Goyal died in or about May, 1972 and defendants 8 to 13 are his legal representatives. Suresh Kumar Goyal, another partner of defendant No. 1-firm died in an air crash in the year 1972 and defendants 5 to 7 are his legal representatives. It is claimed that defendant No. 14-firm gave letters dated 2nd May, 1969, 1st June, 1970 and 9th July, 1971 to the plaintiff-Corporation guaranteeing payment of all the amounts due to the plaintiff on account of sales of woollen goods made to defendant No. 1-firm in case it failed to honour the D.A. bills drawnby the plaintiff-Corporation: Defendants 15, 16, and 17, 2, 3, 9 and deceased Suresh Kumar Goyal and Om Prakash Goyal are the partners of defendant No. 14-firm who gave the guarantee. In the letters dated 22nd November, 1972, 27th November, 1972, 13th August, 1973 and 17th February, 1975, the defendant No. 1 and its partners admitted their liability to pay the amount due to the plaintiff. They also made payments through cheque Nos. 162376 to 162382 and VB. 71/CD-A/604819 drawn on Vijaya Bank, Chandni Chowk Branch, Delhi. Said letters and the payments extended the limitation. Plaintiff-Corporation started charging interest from 1966 on the outstanding amount. ON 31st July, 1972, a collection account was opened by the plaintiff-corporation in the account books of mills at Kanpur and amounts paid by said defendants were credited and interest debited in that account. As on 31st December, 1972, a sum of Rs. 46,61,555.79 remained debited in defendant No. 1's account. Amount of Rs. 4,20,000/- paid was credited in that account. These debit and credit amounts were taken to the next year's account. Rs. 50,000/- were further credited to the account on 31st December, 1973. Rs. 1 lac were further credited on 31st December, 1973. One another credit for Rs. 3,356/- was further given. After allowing adjustment for said credits, a sum of Rs. 57,52,127.80 was due to the plaintiff-Corporation from the defendants as on 17th April, 1975. It was prayed that a decree for said amount with costs and interest pendente lite and future @ 15% per annum may be passed against the defendants.

4. Defendants 1 to 4 and 14 contested the suit by filing joint written statement. It is denied that plaint is signed and verified and suit instituted by a duly authorised person on behalf of plaintiff-Corporation. It is admitted that defendants 2, 3, 4, 8, 9, 10, Suresh Kumar Goyal and Om Prakash Goyal were the partners in defendant No. 1-firm. Om Prakash Goyal died on 13th May, 1972 while Suresh Kumar Goyal on 11th August, 1972. Defendant No. 1, thus, stood dissolved on the death of both these partners. Om Prakash Goyal left behind three daughters, namely, Smt. Sunita Khandelwal, Ms. Lalita Goyal and Smt. Sudhira besides defendants 8 to 13 as legal representatives. Suresh Kumar Goyal left behind Smt. Sundri Devi, mother besides defendants 5 to 7 as his legal representatives. It is admitted that defendant No. 1 had been purchasing woollen goods from the two mills of the plaintiff-Corporation. It is denied that books of account were correctly maintained by two mills. Amounts mentioned in paras 10 to 16 of the plaint relating to Cawnpore Woollen Mill and in paras 17 to 24 pertaining to New Egerton Woollen Mill are not admitted to be correct. Though, execution of Pronote for Rs. 45,75,303.47 on 18th April, 1972 is admitted but it is alleged that plaintiff called the partners of defendant No. 1-firm for settlement of outstandings at Kanpur. It held separate discussions with two groups of partners -- one represented by Anand Prakash Goyal, defendant No. 2 and the other by Om Prakash Goyal. B.L. Bajoria, P.C. Jain and T.N. Sharma participated on behalf of the plaintiff-Corporation in the discussions. It was understood that any agreement arrived at would be tentative subject to arrival of final figure taking note of some of the amounts paid by defendant No. 1 which were not entered in the books of account of plaintiff-Corporation; allowing credits for certain expenses incurred by defendant No. 1 on behalf of plaintiff-Corporation; permitting claims for the woollen goods short supplied; goods supplied which were defective; special discount on account of yearly purchases, deletion of interest; compensation of woollen goods supplied without orders; goods supplied after the expiry of delivery period; goods supplied in cut-pieces when ordered for full length; goods sent on consignment basis and interest paid by defendant No. 1 to the bankers on account of goods consigned to it. It is further alleged that on 19th April, 1972, the plaintiff-Corporation agreed to bifurcate the liability between the two groups --one headed by defendant No. 2 and the other headed by Om Prakash Goyal. Document drafted in that behalf on 19th April, 1972 was got signed from various partners on different dates. It is denied that liability for full amount of Rs. 45,75,303.47 was accepted by the answering defendants, as alleged. It is denied that on 2nd May, 1969, 1st June, 1970 and 19th July, 1971, the defendant No. 14 executed letters of guarantee in favor of plaintiff. Those letters of guarantee are inadmissible in evidence being unstamped. Moreover, these letters stood discharged on execution of said pronote and writing. It is also alleged that by the guarantee letters dated 2nd May, 1969, 1st June, 1970 and 9th July, 1971, defendant No. 14 requested the two mills to extend facility to a number of dealers only for the goods supplied under 60 days D.A. Liability to pay suit amount is denied. It is denied that letters/payments referred to in the plaint extended the limitation under Section 18 of the Limitation Act.

5. Defendants 1, 8 to 10 and 14 their joint written statement have adopted the written statement filed by defendants 1 to 4 and 14.

6. Pleas taken in the joint written statement by defendants 5, 6 and 7 need not be referred to as they arrived at a settlement with the plaintiff which has been recorded in IA No. 3584/2002.

7. Settlement reached in between the plaintiff and defendants 17(i), (ii) and (iii), LRs. of defendant No. 17 who died during the pendency of suit, has been recorded in IA No. 5562/2002.

8. In the written statement filed by defendant No. 15 for self and on behalf of defendant No. 14-firm, it is alleged that the guarantee letters dated 2nd May, 1969, 1st June, 1970 and 9th July, 1971 on the letter-head of re-constituted firm M/s. R.S. Madho Ram and Sons were unauthorised and not binding on answering defendants. Further, alleged dealings and/or liabilities were not covered by said guarantee letters. It is claimed that suit was barred by time and had not been instituted by a competent person.

9. In their joint written statements, defendants 11 to 13 who are legal heirs of Om Prakash Goyal deceased, have pleaded that their liability could not extend to more than the net estate of the deceased which might have come to their hands as heirs.

10. On the pleadings of parties, following issues were framed on 1st April, 1981:

" (1) Whether the plaint is signed and verified and suit instituted by a person duly authorised?

 (2)    Whether the suit is within time?  
 

 (3)    Whether the pronote dated April 18, 1972 is not properly stamped? If so, its effect? 
 

 (4)    Whether defendants 14 to 17 are not liable as guarantors? 
 

 (5)    Whether defendants 8 to 16 are entitled to adjust any amount by way of commission against the amount claimed by the plaintiff? If so, the extent? 
 

 (6)    To what rate of in interest is the plaintiff entitled?  
 

 (7)    To what amount is plaintiff entitled and against whom?  
 

 (8)    Whether defendants 14 to 17 are entitled to special costs? If so, how much?  
 

 (9)    Whether the pronote dated April 18, 1972 was executed subject to reduction and verification of the claims of defendants as mentioned in para 25 of the written statement of defendants 1 to 4 and 14.  

 

 (10) Whether the plaintiff agreed to bifurcate the liability of two groups of partners of defendant No. 1, as stated in para 28 of the written statement of defendants 1-4 and 14.  
 

 (11) Whether defendants 1 to 4 have paid their share of the liability? If so, its effect? 
 

 (12) Whether defendants agreed to take goods on consignment basis to help the plaintiff to get over financial difficulties?  
 

 (13) Whether defendant No. 14 stands discharged of its guarantee, as alleged in para 31 of the written statement of defendants 1-4 and 14?"   
 

 ISSUE No. 1.  
 

11. Plaint is alleged to have been signed and verified and suit instituted by P.C. Jain on behalf of plaintiff-Corporation. Evidence adduced by the plaintiff need to be referred before adverting to the submissions advanced by Sh. A.K. Mata appearing for defendant Nos, 8(a) to 8(c) and Sh. Shiv Charan Singh for defendants 1, 4 and 14. Sarwan Kumar Dixit who had been working with plaintiff since October, 1963, as PW1 stated that plaint was signed and verified by P.C. Jain who at the relevant time was the Secretary of plaintiff. Ex. PW 1/1 is the original general power of attorney given by the plaintiff in favor of P.C. Jain. This power of attorney was signed by Rameshwar Tantia and B.L. Bajoria, the then directors of plaintiff. Same was attested by Bank Behari Lal, Advocate-Notary at Kanpur. Ex. PW 1/1 was revoked after P.C. Jain superannuated in September/1987. In cross-examination on behalf of defendants 1 and 4, he stated that a Resolution dated 10th April, 1975 for filing the suit was passed not by circulation but in Board meeting; agenda for the meeting was circulated before the meeting was held. He denied the suggestion that plaintiff never authorised the filing of suit against the LRs of deceased Suresh Kumar Goyal and Om Prakash Goyal, partners. R.P. Mishra working as Accounts Officer with the, plaintiff as PW4 stated that suit was filed by P.C. Jain, the then Secretary of plaintiff-Corporation, On 10th April, 1975, a Resolution was passed by the Board of Directors authorising the filing of suit and he had brought the original Minutes Book of the Corporation for the period commencing from 18th January, 1975 to 23rd November, 1976. Photostat copy of the minutes is Ex. PW 4/1. In cross-examination on behalf of defendants 1 and 4, he stated that he could not have been present in the meeting held on 10th April, 1975. He did not know when the agenda of said meeting was settled or Resolution passed either by circulation or by actually holding the meeting. Minutes of said meeting are not written by him. Writing of minutes was the work of Secretarial department. When cross-examined on behalf of defendants 8(a) to (c), he stated that he never worked under P.C. Jain nor did he see him signing. P.N. Mathur, B.P. Bajoria, Mrs. Nirmal Bajoria, N.S. Bhatt, K.N. Mukerjee, S.K. Sehgal, M.C. Sareen and T.N. Sharma were the directors of plaintiff and he did not work directly under any of them nor did he see any of them signing.

12. At this stage, it will be profitable to refer the contents of said Ex. PW 4/1 which read thus:

"In the light of the discussions held at the meeting in connection with the amounts one from the various firms named below and the necessity to file law suits for the recovery of the outstanding dues, the Board RESOLVED that Shri P.C. Jain, Secretary, and Shri S.P. Agarwal, Treasurer and Shri A.P. Jain, Manager (Finance and Administration), and Shri P.K. Jain, Delhi Representative of the Corporation, be and are hereby authorised to take jointly and severally all steps necessary for the recovery of various amounts due to the Corporation from the following firms and their partners; including signing and verification of all pleadings and applications, engaging lawyers and taking such further action as may be advisable or necessary for filing suits at Delhi or Kanpur:

(1) M/s. Anand Prakash Om Prakash, Delhi.

(2) M/s. Om Prakash and Sons, Delhi and Dehra Dun.

(3) M/s. Om Sons Durga Prasad, Delhi.

(4) M/s. R.S. Madhoram and Sons, Delhi and Dehra Dun."

13. Obviously, aforesaid power of attorney, Ex. PW1/1 dated 22nd April, 1970 and Resolution Ex. PW 4/1 are the documents relied on for power to institute suit and sign and verify the plaint by P.C. Jain. Main thrust of argument advanced on behalf of defendants 1 and 4 was that the power of attorney, Ex. PW 1/1 is bad in law as it conferred power on P.C. Jain to take decision against whom the suits are to be filed. Such a power solely vests in the Board of Company. To be noticed that in terms of said Ex. PW 1/1, P.C. Jain was appointed as attorney of the plaintiff for doing the acts noted therein on its behalf including suing for moneys due to plaintiff from any person, society, corporation, association or company, prosecuting and defending suits etc. and also appointing Counsel to conduct cases. In my view, authority given by Ex. PW 1/1 to sue even if it involved taking decisionby P.C. Jain, could have been legally delegated and Ex. PW 1/1 cannot be said to be bad in law as contended. This brings me to yet another submission advanced on behalf of defendants 8(a) to 8(c) that neither the said Resolution dated 10th April, 1975 (copy Ex. PW 4/1) had been proved nor did it reflect the decision of the Board to file suit against the defendants including the LRs. of deceased partners; that the proceedings of said meeting as recorded in Minutes Book was only secondary evidence as the minutes actually recorded by Company Secretary was placed on a separate file which was not produced before the Court. Having considered the contents of the aforesaid Ex. PW 4/1 as a whole, it would appear that there was decision of the Board authorising jointly and severally P.C. Jain and three others to file suits against defendants 1 and 14/firms which will include its surviving and LRs. of deceased partners. To be only noticed that under Order XXX, CPC, a suit against partnership firm without impleading its partners can be legally maintained. Further, submission referred to above about proceedings of the meeting dated 10th April, 1975 being secondary evidence, it may be mentioned that this submission is based on the evidence recorded in another suit being No. 287/75 and for that reason alone, it cannot be gone into in this suit. As regards said objection regarding proof, it may be noticed that the same was not raised at the time copy Ex. PW 4/1 of the said Resolution was exhibited, in the statement of R.P. Mishra, PW 4. Assuming for the sake of argument that Ex. PW 4/1 was not proved as per law, the suit had been instituted and plaint signed and verified validly by said P.C. Jain on the strength of power of attorney, Ex. PW 1/1. Issue is decided in favor of the plaintiff.

ISSUE NOS. 3, 5, 6, 7 AND 9.

14. These issues are inter-connected and can be conveniently taken up together for discussion. In para No. 16 of the plaint, it is alleged that in the account books of plaintiff in respect of Cawnpore Woollen Mill, a sum of Rs. 24,72,706.16 was due from defendant No. 1 firm as on 31st December, 1971. In para No. 24, it is further alleged that in plaintiff's account books pertaining to New Egerton Woollen Mills a sum of Rs. 19,56,956.29 was due from defendant No. 1 firm as on 31st December, 1971. In para No. 25, it is further pleaded that defendant No. 1 firm through its partners -- defendants 2, 3, 4, 8, 9, 10 and Suresh Kumar Goyal and Om Prakash Goyal understood the accounts maintained by plaintiff of both the said mills and thereafter acknowledged liability for payment of Rs. 45,75,303.47 agreeing to pay interest thereon @ 9-3/4% per annum or at such rate as was to be charged by SBI on the advances made to plaintiff-Corporation from time to time. Admittedly, Ex. PW 1/2 is the pronote executed by the said partners of defendant No. 1-firm on 18th April, 1972. In paras 42,43,44,45 and 46 of the plaint, it is further stated that on 31st July, 1972, a new collection account was opened and the amounts paid by defendant No. 1 were credited therein and after allowing adjustments for the credits a sum of Rs. 51,82,127.80 was due to the plaintiff from defendants as on 17th April, 1975. After examining 4 PWs., the plaintiff closed its evidence in affirmative on 22nd February, 1995. On 23rd February, 1995, statements were made by the respective Counsel appearing for defendants 1 and 4, defendants 5 to 7, defendants 8(a) to 8(c), defendant 9 and defendants 14 and 15 that they do not want to lead any evidence. During the course of arguments, it was not pointed out as to how the said pronote was not properly stamped. Onus to prove issue Nos. 5 and 9 was on the defendants. In the absence of evidence, defendants 8 to 16 have failed to prove that they are entitled to adjustment of any amount towards commission or that the aforesaid pronote was executed by the partners of defendant No. 1 firm subject to verification of claims as alleged in para No. 25 of the written statement filed by defendants 1 to 4 and 14.

15. Amount of Rs. 45,75,303.47 of the pronote included interest barring for three months in respect of New Egerton Woollen Mills up to 31st March, 1972. Interest claimed for the period thereafter by the plaintiff is at a rate higher than 9-3/4% per annum. Plaintiff has not examined any witness from SBI, Kanpur where it was having account, to show the rate(s) of interest charged on the advances made to it from time to time. During the course of arguments, I asked Sh, S.R. Khandelwal appearing for plaintiff to file statement calculating interest @ 9-3 /4% per annum. As per calculations filed by him, copy whereof was supplied to the Counsel for defendants, total amount of interest calculated at the said rate as on 17th April, 1975 would be Rs. 9,14,167.13 against amount of Rs. 10,93,398,07. It being a commercial transaction and as agreed to, the plaintiff-Corporation is entitled to said amount by way of interest in addition to Rs. 40,88,729.73 being the principal amount, totalling Rs. 50,02,896.86. Issues are answered accordingly.

ISSUE NO. 2.

16. Taking the date of pronote of 18th April, 1972, suit filed on 18th April, 1975, was within limitation.

ISSUE NOS. 4 AND 13.

17. Both these issues are inter-related. In para No. 31 or the plaint, it is alleged that defendant No. 14 gave letters dated 2nd May, 1969, 1st June, 1970 and 9th July, 1971 to the plaintiff guaranteeing payment of the amount due on account of supplies of woollen goods made to defendant No. 1-firm in case it failed to honour the D.A. Bills. List of dealers Ex. PW 15 sent Along with letter dated 1st June, 1970, Ex. P14 includes the name of defendant No. 1-firm. Admittedly, this letter was issued by defendant No. 10 as partner of defendant No. 14/firm but he has chosen not to enter the witness box. Since defendant No. 14 was to get commission on the supplies made to defendant No. 1-firm, so, the act in issuing said guarantee litters will be taken to have been done by defendant No. 10 in carrying, in usual way, the business of defendant No. 14/firm. Plaintiff had largely adhered to the condition of other than 60 days D.A. by drawing Hundies Exs. PW1/15 to 97 which were dishonoured. Moreover, the defendants have not pointed out which is that amount which was contrary to the said condition. Most of the partners of defendant No. 1 were also the partners in defendant No. 14-firm. Defendant No. 14-firm and its partners, thus, cannot wriggle out of the said guarantee. As regards plea of discharge, on execution of said pronote the amount due from defendant No. 1-firm was finalised/ consolidated and such a finalisation/consolidation could not wipe out the liability of defendant No. 14-firm and its partners for the amount due from defendant No. 1-firm. Issues are answered accordingly.

ISSUE NOS. 8, 20, 11 AND 12.

18. Onus of these issues was on the defendants. In the absence of evidence of defendants, issues are answered against them.

19. Defendants 2, 8, 12, 13 and 17 died during the pendency of suit. In the amended memo of parties filed by the plaintiff on 11th July, 1996, the names of their LRs. have been mentioned.

20. In view of findings on aforesaid issues, suit is decreed for Rs. 50,02,846.86 with proportionate costs and interest pendente lite and future @ 9-3/4% per annum thereon against defendants 1, 2(i) to 2(x), 3, 4, 8(i) to 8(iii), 9 to 11, 12(i) to 12(ix), 13(i) to 13(viii) and 14 to 16. However, liability of defendants 2(i) to 2(x), 8(i) to 8(iii), 12(i) to 12(ix) and 13(i) to 13(viii) if not a defendant partner(s) will be only to the extent of properties of the deceased which may have come to their hands.