T.K. Malhotra vs Bharat Bhushan Arora
2011 Latest Caselaw 3615 Del

                                     UNREPORTED
*   IN THE HIGH COURT OF DELHI AT NEW DELHI

+            RFA 293/2002

T.K. MALHOTRA                               ..... Appellant
                            Through:   Mr. Atul Nigam, Advocate.

                   versus

BHARAT BHUSHAN ARORA                        ..... Respondent
                Through:               Mr. Anoop Kumar Srivastava,
                                       Advocate.

                   AND

+            RFA 436/2002

BHARAT BHUSHAN ARORA                        ..... Appellant
                Through:               Mr. Anoop Kumar Srivastava,
                                       Advocate.
                   versus

T.K. MALHOTRA                               ..... Respondent
                            Through:   Mr. Atul Nigam, Advocate.

%                           Date of Decision : July 29, 2011

CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL

1. Whether reporters of local papers may be allowed
   to see the judgment?
2. To be referred to the Reporter or not?
3. Whether judgment should be reported in Digest?



RFA No.293/2002 and RFA No.436/2002                   Page 1 of 33
                            JUDGMENT

: REVA KHETRAPAL, J.

1. By this common judgment, it is proposed to decide two appeals

being RFA No. 293/2002 and RFA No. 436/2002, the former

instituted by the defendant in Suit No. 552/93 (Old Suit No.

1273 of 1986) titled Sh. Bharat Bhushan Arora Vs. T.K.

Malhotra, and the latter by the plaintiff in the said suit.

2. In the first appeal, the appellant seeks to assail the judgment

and decree dated 24.01.2002 passed by the learned Additional

District Judge in the aforesaid Suit being in the sum of

` 1,38,308.53 (Rupees one lakh thirty eight thousand three

hundred eight and paise fifty three only) with pendente lite and

future interest thereon at the rate of 6% per annum from the

date of the institution of the suit till the date of realization. It is

proposed to deal first with this appeal.

3. The case of the plaintiff, who is the respondent in the present

appeal, as delineated in the plaint is that the plaintiff had

supplied fabric to the defendant - appellant against various

orders placed on various dates vide credit memos as well as

challans. In this process, goods/fabric amounting to `

1,38,308.53 (Rupees one lakh thirty eight thousand three

hundred eight and paise fifty three only) was supplied to the

appellant. Certain payments were made by the appellant on

various dates which were duly reflected by the respondent in

the statement of accounts. However, the appellant did not

make the entire payment and as a result of this a sum of `

1,38,308.53 (Rupees one lakh thirty eight thousand three

hundred eight and paise fifty three only) became due from the

appellant. A cheque of ` 28,071.75 (Rupees twenty eight

thousand seventy one and paise seventy five only) bearing

cheque No. 403207 drawn on State Bank of India, Kasturba

Gandhi Marg, New Delhi was issued by the appellant to the

respondent towards the payment of the aforesaid sum of

money. The said cheque was dishonoured by the bankers of

the appellant with the remark "Payment Stopped by the

Drawer". Another cheque in the sum of ` 15,000/- (Rupees

fifteen thousand only), issued by the appellant was also

dishonoured by his bankers. The said cheques were returned

by the respondent to the appellant, who issued a pay order for `

15,000/- (Rupees fifteen thousand only) through his wife by

letter dated 26.12.1981. Allegedly, the said pay order was also

dishonoured. The respondent thereupon wrote a number of

letters to the appellant demanding the payment of the amount

due to him and finally on 15.03.1984 sent a legal notice. The

said legal notice was duly received by the appellant but he

failed to send any response or to make any payment. As such,

the respondent on the last day of limitation, filed a suit for the

recovery of ` 2,25,988.53 (Rupees two lakhs twenty five

thousand nine hundred eighty eight and paise fifty three only)

as an indigent person praying for a decree in the aforesaid sum

of money alongwith pendente lite and future interest at the rate

of 18% per annum.

4. The aforesaid suit instituted by the respondent was contested

by the appellant by filing a written statement. In the written

statement filed by him, the appellant took the plea that the suit

of the respondent was barred by limitation. It was further

pleaded that the bills raised by the appellant were not correct,

and that the fabric supplied by the respondent was defective

and not according to the size, specification and design due to

which the appellant had to suffer huge loss. It was also pleaded

that time was the essence of the contract and it was clearly

undertaken by the respondent that in case he failed to supply

the goods by the stipulated date of delivery, he would

compensate the appellant by paying 100% of the contract

amount. The respondent did not intentionally adhere to the

delivery schedule by shifting supply to other exporters, hence

the appellant suffered huge loss and was unable to keep his

export commitment with foreign buyers. Ultimately, the

respondent agreed to pay compensation and a debit note was

accordingly raised by the appellant. The suit had been filed by

the respondent as a counter blast to the claim of the appellant in

the said debit note. There was never any agreement regarding

payment of interest. The suit was also not properly valued for

the purpose of court fees and jurisdiction. Regarding the

cheque issued by him, the appellant in his written statement

took the plea that the cheque in question related to invoice No.

163 dated 16.11.1981, which was issued subject to the

undertaking that the goods supplied by the respondent as per

the relevant challans of the same date would be according to

specifications and correct measurement. The respondent had

cleverly played a fraud by submitting the bills alongwith the

goods with short measurement, which fact came to the notice

of the appellant on inspection and verification. The payment of

the cheque in question had, therefore, to be stopped under the

circumstances. Regarding the issue of pay order for ` 15,000/-

(Rupees fifteen thousand only), it was pleaded that the

respondent be put to strict proof by producing the copy of the

pay order stated to have been dishonoured by the bankers. The

appellant prayed for dismissal of the suit.

5. In the replication filed by the respondent, the averments made

in the written statement contrary to the plaint were denied and

those made in the plaint were reiterated.

6. On the pleadings of the parties, the following issues were

framed by the learned Additional District Judge on 16.11.1994:

"(1) Whether plaintiff is entitled to the decree as prayed? OPP (2) Whether the material supplied to the defendant by the plaintiff was defective and not as per specification? If so, to what effect? OPD (3) Whether the suit is time barred? OPD (4) Whether the plaint is not properly valued for the purpose of Court fee? OPD (5) Whether time was the essence of the contract?

(6) Relief."

7. It is proposed to advert first to issue No. 3 and issue No.4 as these

issues pertain to legal objections taken by the appellant, and

thereafter to issue No.5, issue No. 2 and issue No.1 in that order.

Whether the suit is time barred? OPD

8. As regards this issue, it is submitted by Sh. Atul Nigam, the

learned counsel for the appellants, that the statement of

accounts proved on record by the respondent (Exhibit PW1/D3)

shows that the last transaction between the parties had taken

place on 20.11.81. The suit was filed on 14.12.84, that is,

beyond the period of three years from the date of the last

transaction. Hence, on the face of it, the suit was barred by

time. According to Mr. Nigam, the case of the plaintiff was

covered under Article 14 of the Limitation Act, 1963 and as per

Article 14, the limitation for filing a suit for recovery of the

price of goods supplied was three years from the date of the

delivery of the goods where no fixed period of credit was

agreed upon. In the aforesaid context, Mr. Nigam relied upon

the following judgments:-

(i) Atmaram Vinayak Kirtikar vs. Lalji Lakhamsi,

AIR 1940 Bombay 158;

(ii) Raghunath Shaw vs. Kanai Lal Das & Ors., AIR

1962 Calcutta 97;

(iii) Attadi Venketi vs. M/s. Bharatam Ramulu and

Sons, AIR 1984 Orissa 226; and

(iv) Cherunni vs. Purushothama Iyer, AIR 1973

Kerala 174.

He contended that there was no fixed period of credit agreed

upon in the present case and the present case having been filed

after a period of more than three years from the date of

delivery, the same was barred by limitation. He further

contended that there was no mutual running and current

account so as to cover the case of the respondent under Article

1 of the Limitation Act.

9. Mr. Anoop Kumar Srivastava, the learned counsel for the

respondent - plaintiff on the other hand contended that the

starting point of limitation would be the last cheque, which had

admittedly been issued by the appellant in favour of the

respondent on 16.12.1981, and which was Exhibit PW1/83.

This cheque bearing No. 403207 drawn on the State Bank of

India, Kasturba Gandhi Marg, New Delhi was in the sum of `

28,071.75 (Rupees twenty eight thousand seventy one and

paise seventy five only). Another cheque issued in the sum of

` 15,000/- (Rupees fifteen thousand only) by the appellant was

also dishonoured and returned by the respondent to the

appellant. Thereupon a pay order for ` 15,000/- (Rupees

fifteen thousand only) was issued by the appellant through Mrs.

Chandra, the wife of the appellant vide letter dated 26.12.1981

(Exhibit PW1/84), which is on the letter-head of the appellant.

The said letter is an admitted document and reads as under:-

"The Manager, State Bank of India, K.G. Marg, New Delhi, the 26th Dec., 1981.

Dear Madam,

To the debit our account, please issue a Pay Order/Bankers cheque in favour of Messrs. K.B. Export Fabrics, New Delhi for an amount of Rs. 15,000-00 (Rupees Fifteen thousand only). Thanking you,

Yours faithfully, for Impex Chemicals and Agencies Pvt. Ltd.,

Sd/-

(Mrs) (Chandra)"

10.Mr. Srivastava further contended that the pay order in the sum

of ` 15,000/- (Rupees fifteen thousand only) issued by the

bankers of the appellant pursuant to the aforesaid letter was

also dishonoured. The respondent then demanded the amount

from the appellant through various letters and finally through a

legal notice dated 15.03.1984 (Exhibit PW1/85). No response

to the said legal notice was received and accordingly the

respondent was compelled to file the instant suit for the

recovery of the amount due to him on 14.12.84.

11.In the present case, I find that the undisputed factual position is

that the appellant had been receiving goods on credit from the

respondent from time to time. The case of the respondent is

that the goods worth ` 1,38,308.53 (Rupees one lakh thirty

eight thousand three hundred eight and paise fifty three only),

which were supplied to the appellant have not been paid for by

the appellant. In order to substantiate this, the plaintiff/

respondent has placed on record a statement of account Exhibit

PW1/D3. This statement of account (Exhibit PW1/D3) shows

that the last supply of goods was made by the respondent to the

appellant on 20.11.81. Subsequently, on 8.12.81 under the

head "By sales return" credit of ` 19,686.32 (Rupees nineteen

thousand six hundred eighty-six and paise thirty two only) was

given to the appellant. This is also borne out by document

Exhibit PW1/87, which is a debit note dated 8.12.1981, in the

sum of ` 19,686.32 (Rupees nineteen thousand six hundred

eighty six and paise thirty two only), sent by the appellant to

the respondent for defective fabric returned by him as well as

excess fabric issued but not returned by him. This document,

thus, tallies with the entry in the statement of account (Exhibit

PW1/D3) dated December 8, 1981. The next entry in

document Exhibit PW1/D3 is dated 30.12.1981 and shows cash

payment of ` 1,000/- (Rupees one thousand only) to the

appellant. This entry is followed by an entry dated 4.2.1982

whereby credit of ` 1006.50 (Rupees one thousand six and

paise fifty only) has been given to the appellant on account of

"Sales Return" against bill No. 82 dated 23.02.1981. There is

yet another entry dated 4.2.1982 for goods returned on

19.02.1981 in the sum of ` 15,490.10 (which admittedly should

be ` 15,410.90). Both the entries dated 4.2.1982 relate to

document Exhibit PW1/88, which admittedly is a debit note

issued by the appellant to the respondent communicating his

decision to debit the account of the respondent as per challan

Nos. 522, 521, 886 and 523 in the sum of ` 16, 417.40 less Bill

No. 82 dated 23.02.1981 in the sum of ` 1006.50, totaling `

15,410.90 (Rupees fifteen thousand four hundred ten and paise

ninety only).

12. For the sake of ready reference, the statement of account

Exhibit PW1/D3 is reproduced hereunder:

"K.B. Export Fabrics STOCKISTS OF ALL EXPORT FABRICS VARIETIES

Statement of Account upto B-1/82, Lajpat Nagar-I, 31.3.82 with M/s. IMPEX Opp. Burmah Sheil INTERCRAFT Petrol Pump, New Delhi-110024 Tel.P.P.: 615335

1st April 1981 Balance upto 31.3.81 55,520.10

April 22nd ‟81 By cheque 10,000.00 April 30th ‟81 To sales Bill No.126 550.00

July 11th ‟81 -do- No.134 720.00 th July 14 ‟81 By cheque 720.00 July 28th ‟81 -do- 15,000.00

Aug. 19th ‟81 To sales Bill No.137 16,000.00 Aug. 19th ‟81 -do- No.138 17,483.25 st Aug. 31 ‟81 -do- No.140 41,517.80

Sep. 4th ‟81 -do- No.141 8,900.95 Sep. 12th ‟81 -do- No.142 12,141.75 Sep. 19th ‟81 -do- No.143 5,982.50 Sep. 22nd ‟81 -do- No.144 11,576.75 Sep. 23rd ‟81 -do- No.146 8,817.15 Sep. 26th ‟81 -do- No.148 16,370.15 Sep. 26th ‟81 -do- No.149 15,667.95

Oct. 1st ‟81 By cash 1,000.00 Oct. 7th ‟81 By cash 1,000.00 Oct. 14th ‟81 To sales Bill No.153 6,688.20 Oct. 15th ‟81 By cash 500.00 Oct. 21st ‟81 -do- 500.00 Oct. 22nd ‟81 By Draft 70,000.00 Oct. 23rd ‟81 To sales Bill No.154 9,137.00 Oct. 23rd ‟81 -do- No.156 11,043.20 Oct. 29th ‟81 -do- No.158 4,514.90

Nov. 16th ‟81 -do- No.163 28,071.75 Nov. 16th ‟81 -do- No.164 2,508.05 Nov. 20th ‟81 -do- No.165 1,000.00

Dec. 8th ‟81 By sales return 19,686.32 Dec. 30th ‟81 By cash 1,000.00

Feb. 4th 1982 By sales return against Bill No.82 of dated 23.2.81 1,006.50 th Feb. 4 „82 By goods return on 19.2.81 15,490.10 2,74,211.45 1,35,902.92

BALANCE Rs.1,38,308.53"

13.On the basis of the aforesaid statement of account, the learned

trial court concluded that a running account was being

maintained by the plaintiff/respondent in respect of the goods

supplied to the defendant/appellant and that the appellant had

been making cash payments also from time to time apart from

issuance of cheque dated 16.12.1981. The learned trial Judge

thus held that considered from whatever angle, it stands proved

that the case of the plaintiff was within limitation.

14.It may be noted at this juncture that the learned Trial Court then

proceeded to observe as follows:-

"The parties were having mutual running account is clear from the fact that the goods supplied on 19.2.81 and 23.2.81 were returned almost after a period of one year on 4.2.82 by the defendant to the plaintiff of which due credit has been given to the defendant in the statement of account. Hence the suit of the plaintiff is within limitation."

15. On a review petition filed by the appellant seeking review of

the judgment dated 24.01.2002, which was dismissed by the

learned Trial Court by its order dated 17.04.2002, the learned

trial court, however, observed that there was only one error

which had crept into the judgment, inasmuch as although on

page 7 of the judgment, the date of return of goods had been

rightly mentioned as 19.2.81 and 23.2.81, on the next page

(page 8 of the judgment), the date of sending of debit note

4.2.82 should have been mentioned. Instead, it had been stated

that the goods had been returned after a period of more than

one year on 4.2.82.

16.Be that as it may, there is no denying the fact that the statement

of account Exhibit PW1/D3 shows that the cash payment of `

1,000/- (Rupees one thousand only) was made on 30.12.81.

There is also no denying the fact that cheque No. 403207 in the

sum of ` 28,071.75 (Rupees twenty eight thousand seventy one

and paise seventy five only) was issued by the appellant to the

respondent in part payment of the goods supplied by the

respondent to the appellant on 16.12.81. Though subsequently

this cheque was dishonoured, the issuance of the cheque on

16.12.81 by virtue of the provisions of Section 19 of the

Limitation Act, 1963, in my view, certainly brings the suit filed

on 14.12.84 within the period of limitation.

17. The relevant part of Section 19 of the Limitation Act, 1963

reads as under:-

"WHERE payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorized in this behalf, a fresh period of limitation shall be computed from the time when the payment was made."

18. I am fortified in coming to the aforesaid conclusion from the

decision rendered by a learned Single Judge of this Court

[Hon‟ble Mr. Justice R.C. Lahoti (as His Lordship then was)]

in the case of Rajesh Kumari Vs. Prem Chand Jain, 1997 III

AD(Delhi) 609. It was held in the said case that a payment by

cheque satisfies the requirement of Section 19 of the Limitation

Act, inasmuch as the acknowledgement of payment appears in

the handwriting of or in a writing signed by the person making

the payment in the form of a cheque. Significantly in the said

case, as in the present case, the cheque issued was subsequently

dishonoured. It was nevertheless held by the Court to be an

effective payment for the purpose of Section 19 of the

Limitation Act. The following apposite observations were

made:-

"In the case at hand, the cheque was accepted as a payment by the plaintiff. He had no reason to believe or apprehend that the cheque will be dishonoured when presented for payment. The payment by cheque having been accepted and the plaintiff having earned the advantage of extension in period of limitation, that advantage cannot be wiped out or undone by the tortuous act of the defendant withholding the payment of the cheque."

19. In the instant case, keeping in view the fact that the appellant

had admittedly issued a cheque bearing No.403207 dated

16.12.81, the present suit must be held to be covered by Section

19 of the Limitation Act, 1963 as it was filed within three years

of the date of the issue of the said cheque. The institution of

the suit is, therefore, held to be within limitation. In this view

of the matter, the contention of the learned counsel for the

appellant with regard to Article 14 being the relevant Article of

the Limitation Act in the instant case, even assuming the same

to be correct, need not be gone into. Resultantly, it is held that

this issue has been rightly decided by the learned trial court in

favour of the respondent - plaintiff albeit for different reasons.

Whether the plaint is not properly valued for the purpose of Court fee? OPD.

20. The onus of proving that the suit of the respondent was not

valued properly for the purpose of court fees and jurisdiction

was upon the appellant. The learned Trial Court has held, and I

think rightly so, that the appellant has miserably failed to

discharge the said onus. Since no arguments were addressed in

respect of this issue, I do not propose to dwell any longer on

the same. It is accordingly affirmed that the suit of the plaintiff

is properly valued for the purpose of court fees and jurisdiction.

ISSUE NO.5

Whether time was the essence of the contract?

21. Adverting first to the pleadings relating to this issue, the

appellant in the written statement filed by him had taken the

plea that the time was the essence of the contract and it was

clearly undertaken by the respondent that in case he failed to

supply the goods within the stipulated delivery period, he

would compensate the appellant by paying 100% of the

contract amount. The respondent did not intentionally adhere

to the delivery schedule resulting in huge losses to the

appellant. The respondent ultimately agreed to pay

compensation for the said losses incurred by the appellant and a

debit note was accordingly raised by the appellant. The suit

was filed by the respondent as a counter blast to the claim of

the defendant.

22. The respondent/plaintiff in the replication filed by it

categorically denied that time was the essence of the contract

and that it was clearly undertaken by him that in case he failed

to supply the goods within the stipulated delivery period, he

would compensate the appellant by paying 100% of the

contract amount. According to the respondent, no such term as

stated by the appellant was agreed to between the parties,

except in one order bearing reference No.II/EH/LPV/81 dated

27.07.1981 wherein this factor of time was specifically

mentioned, and it was made clear in the said order itself that

the said term was only agreeable for that order and would not

apply for previous or future orders so placed by the appellant

on the respondent.

23. In the course of evidence, the respondent/plaintiff, Bharat

Bhushan Arora, who appeared in the witness box as PW1,

categorically affirmed in his cross-examination that there was

only one written contract between the parties viz., Order

bearing reference No. II/EH/LPV/81, which had no concern

with the present suit. The said written contract had been

completed and he had received the payment under the said

contract. No other written contract was entered into between

the parties and the dealings between the parties were verbal.

He used to supply the goods against challans and the appellant

used to make the payment on account. Thus, time was not the

essence of any of the orders placed by the appellant, except

Order No.II/EH/LPV/81 dated 27.07.1981.

24.The appellant, T.K. Malhotra, who appeared in the witness box

as RW-1, in his examination-in-chief stated that the respondent

used to supply goods to him as per orders and most of the time

the goods supplied by the respondent were found to be either

short in measurement or defective. He further testified that on

27.07.1981, he had placed a written order on the respondent

giving details of his requirement regarding the size of the cloth

and the respondent was requested to supply the goods within

the specified time because he (the appellant) had received an

export order. He further testified that the respondent accepted

the said order and undertook to supply the goods under the said

order within the said period. The respondent also undertook to

pay the penalty of 100%, in case the goods were not supplied

within the specified period. The original Order dated

27.07.1981 signed by both the parties was proved by the

appellant as Exhibit DW1/1.

25.DW1 Sh. T.K. Malhotra further testified that the respondent

did not supply the goods in time. He tendered goods under the

said Order which were not according to specifications and the

goods were also tendered after the expiry of specified time. He

did not accept the goods and raised a debit note for a sum of `

90,000/- (Rupees ninety thousand only), copy whereof was

Exhibit P1/D1. He, however, unequivocally admitted that the

plaintiff had filed the present suit in respect of supplies made

by him in the past and not with regard to Order Exhibit DW1/1.

26. In view of the aforesaid categorical admission of the appellant,

the inevitable conclusion is that the appellant had been

receiving fabric from the respondent from time to time against

various challans and all the orders, with the exception of Order

Exhibit DW1/1 (also Exhibited as PW1/D1) with which we are

not concerned in the present suit, were placed verbally with no

stipulation of payment or penalty. In other words, time was the

essence of the contract only qua Order Exhibit PW1/D1. The

present claim of the respondent/plaintiff does not pertain to any

supply made under Exhibit PW1/D1 and regarding the

remaining supplies, it stands proved on record from documents

Exhibit PW1/1 to Exhibit PW1/80 that the appellant had

always been receiving the goods by writing on the challan

„Subject to verification‟ and whenever any defect was found,

the appellant used to return the goods and the respondent used

to give credit of the same to the appellant. Thus, merely

because time was the essence of the contract in Order Exhibit

PW1/D1, it does not stand proved that the time was the essence

of the contract in respect of the earlier supplies also.

27.Accordingly, it is held that issue No.5 has been correctly

decided by the learned trial court by holding that Order Exhibit

PW-1/D1 does not prove that the time was the essence of the

contract throughout between the parties. Rather, it proves that

time was the essence of the contract only for this particular

order alone, which is not the subject-matter of the Suit between

the parties.

ISSUE NO.2

Whether the material supplied to the defendant by the plaintiff was defective and not as per specification? If so, to what effect? OPD

28 This leaves me with the question whether the material supplied

to the appellant by the respondent was defective and not as per

specifications and if so what is the effect thereof.

29 In the above context, the appellant himself in his cross-

examination has admitted the bills sent by the respondent

(Exhibit PW1/1 to Exhibit PW1/31) and stated that as and

when goods were received in his office, his staff used to

mention that the goods were received „Subject to verification‟

of length, quality of the fabric and that this was also mentioned

in the challans Exhibit PW1/38 to Exhibit PW1/42. He stated

that whenever the goods were found defective, the respondent

was asked to take them back. He admitted that debit notes

Exhibit PW-1/87 and PW-1/88 were issued by his firm for the

goods returned to the respondent and further admitted that the

said debit notes issued by his firm had been duly shown in the

statement of account of the respondent and that he had received

the statement of account sent by the respondent alongwith

notice dated 15.3.84.

30 Thus, it stands proved from the evidence on record that the

appellant was receiving goods from the respondent „Subject to

verification‟ and if found defective, the goods were returned by

the appellant to the respondent for which debit notes were

issued, which have been duly reflected in the statement of

account Exhibit PW1/D3. The appellant has failed to prove on

record that any goods returned by him as defective were not

shown by the respondent in the statement of account of the

respondent (Exhibit PW1/D3) or that his debit notes in respect

of the returned goods were not credited by the respondent in his

account. The necessary conclusion, therefore, is that in the

absence of any evidence led by the appellant to this effect, it

must be held that the material for which the present suit has

been filed was as per specification and not defective.

31 The findings of the learned Trial Court in respect of this issue

are also affirmed.

ISSUE NO.1

Whether plaintiff is entitled to the decree as prayed? OPP

32 As regards this issue, it has clearly emerged on record that

fabric was being supplied by the respondent to the appellant

vide invoices and challans, carbon copies of which are from

Exhibit PW1/1 to Exhibit PW1/80. The aforesaid documents

were signed by the appellant and the originals of these were

received by the respondent. It also stands proved on record that

the respondent was maintaining a running account of the

appellant, which is proved on record by documents Exhibit

PW1/D3, as per which a sum of ` 1,38,308.53 (Rupees one

lakh thirty eight thousand three hundred eight and paise fifty

three only) was due from the appellant towards principal. The

case of the respondent that the appellant had issued two

cheques towards this payment and both the cheques were

dishonoured stands proved by documents Exhibit PW1/83 and

Exhibit PW1/84, which are a copy of the dishonoured cheque

and the letter for issuance of pay order for ` 15,000/- (Rupees

fifteen thousand only) which have been duly proved in

evidence. It also stands established on record that the

respondent had served the appellant with a demand notice

dated 15.03.1984 by registered post, copy of which is Exhibit

PW1/85 and postal receipt whereof is Exhibit PW1/86. The

case of the respondent that the appellant used to return the

defective goods or the excess goods supplied by him through

debit notes is also proved on record through the debit notes

Exhibit PW1/87 and Exhibit PW1/88, which are duly reflected

in the statement of account maintained by the respondent.

33 All the aforesaid facts could not be dispelled by the appellant

and emerged unscathed after the recording of the evidence. As

a matter of fact the appellant unequivocally admitted that the

respondent had filed the present suit in respect of supplies

made by him in the past and not regarding the written Order

Exhibit DW1/1, and that such supplies had been made against

challans sent by the respondent prior to Order Exhibit DW1/1.

He, however, stated that challan Nos. 137, 138, 140 and 142

pertained to Order Exhibit DW1/1 and the statement of account

filed by the respondent was to that extent not correct. In cross-

examination, however, he admitted that he was maintaining

accounts and his account books carried all the entries

pertaining to dealings between him and the respondent. He,

however, deposed that all the account books of his said firm

and other related documents had been destroyed after ten years

of the closure of the firm including the documents relating to

this case. On a specific query put to him in cross-examination,

he admitted that he had not filed the documents relating to this

case when the case was pending. He admitted copies of the

bills Exhibit PW1/1 to PW1/31, challans Exhibit PW1/38 to

PW1/42, debit notes Exhibit PW1/87 and PW1/88 and the fact

that these debit notes were reflected in the respondent‟s

statement of accounts. He admitted that he had issued cheque

Exhibit PW1/83, but subsequently stopped payment by the

bankers, and that letter Exhibit PW1/84 had been written by his

wife requesting the Bank to issue a pay order in the sum of `

15,000/- (Rupees fifteen thousand only) to the respondent. He

also admitted that he had received the statement of accounts

signed by the respondent along with notice dated 15.03.1984,

but again added that statement of accounts was received with

letter dated 11.02.1984.

34 So far as statement of accounts Exhibit PW1/D3 is concerned,

the contention of the learned counsel for the appellant is that

the debit note Exhibit P1/D1 dated 10.11.81 is not reflected in

the same, which is sufficient to show that the statement of

accounts Exhibit PW1/D3 is not correct. The aforesaid

contention has been rightly rejected by the learned Trial Court

in view of the fact that there is no dispute between the parties

that Order Exhibit DW1/1 dated 27.07.1981 to which this debit

note pertains was an independent transaction between the

parties. Not only this, both parties had mutually agreed that

this transaction would have no link with other supplies made by

the respondent to the appellant.

35 Even otherwise, in my view, adverse inference is liable to be

drawn against the appellant for the failure on the part of the

appellant to produce the account books. No justification is

forthcoming on the record for destruction of the account books,

more so, when the appellant knew about the present litigation

and it was for him to have filed the relevant records before the

court. Thus, I hold that from the evidence on record, it stands

proved that the appellant is liable to pay a sum of `

1,38,308.53 (Rupees one lakh thirty eight thousand three

hundred eight and paise fifty three only) as per the statement of

accounts, Exhibit PW1/D3 for the goods supplied to the

appellant.

R.F.A. NO. 436/2002

36 Adverting to the claim of the appellant (respondent in RFA

No.293/2002) for interest at the rate of 18%, which has been

rejected by the learned Trial Court and in respect of which the

appellant has filed the afore-mentioned appeal, I am inclined to

agree with the learned Trial Court that the appellant is not

entitled to any amount towards interest. Indisputably, in all the

bills, there is a clause that interest will be charged for overdue

days at the rate of 18% per annum, but below this condition

there is a space for „Party‟s Signature‟ and it is not in dispute

that the respondent (appellant in RFA No.293/2002) had not

signed any of the bills at the said place. In these circumstances,

it cannot be said that the respondent agreed to pay interest at

the rate of 18% per annum for overdue days.

37 I am fortified in coming to the aforesaid conclusion from the

fact that in none of the bills any date or time had been specified

for making the payment and thus, it cannot be said from which

date the overdue days are to be calculated. As a matter of fact,

there is no date of delivery mentioned at all in the bills in

question. Further, nowhere in the statement of accounts filed

by the appellant himself, there is any entry of charging the

appellant with interest after a particular period. Thus, the claim

of the appellant for ` 87,680/- (Rupees eighty seven thousand

six hundred eighty only) towards interest must be held to have

been rightly rejected by the learned trial court.

CONCLUSION

38 In view of the aforesaid, the judgment and the decree dated

24.01.2002 passed by the learned Additional District Judge in

Suit No.552/93 (Old Suit No.1273/1986) titled Sh. Bharat

Bhushan Arora Vs. T.K. Malhotra for the sum of `

1,38,308.53 (Rupees one lakh thirty eight thousand three

hundred eight and paise fifty three only) with pendente lite and

future interest at the rate of 6% per annum is affirmed.

39 Both the appeals are dismissed as without being merit.

REVA KHETRAPAL (JUDGE) July 29, 2011 sk