M/S. J.K. Synthetics Ltd. vs M/S. Dynamic Cement Traders
2012 Latest Caselaw 5494 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                              CS(OS) No.782/1998

%                                                     13th September, 2012


M/S. J.K. SYNTHETICS LTD.                           ..... Plaintiff
                    Through:             Mr. S.K. Chachra, Advocate with
                                         Ms. Gaganpreet Chawla, Advocate.

                      versus


M/S. DYNAMIC CEMENT TRADERS                               ..... Defendant
                 Through: None.


CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    To be referred to the Reporter or not?     Yes.


VALMIKI J. MEHTA, J (ORAL)

1.

The subject suit for recovery of ` 45,30, 506.36/- has been filed

by the plaintiff-M/s. J.K. Synthetics Ltd against the defendant-M/s. Dynamic

Cement Traders. The plaintiff was the seller of cement and the defendant

was the buyer. As per para 3 of the plaint, the suit amount is the debit

balance which is due from the defendant as per the running account.

2. The defendant has contested the suit and pleaded that there was

no running account but payment was made bill-wise. The defendant has

referred to the fact that either each bill was cleared under a specific cheque

or there was a bunch of bills corresponding to the amount of that cheque

which was given for payment of those bills. The defendant claims that

relationship between the parties was terminated w.e.f. 31.3.1995 and

whereafter there was only a single transaction on 26.9.1995 and even that

was cleared by making the payment of specific bill amount by cheque dated

10.10.1995 of ` 76,960/-. The defendant has pleaded that the suit is barred

by limitation.

3. The following issues were framed on 16.3.2004:-

"1. Whether the suit is barred by limitation? OPD

2. Whether the suit has been filed by a duly authorized person?

3. Whether the plaintiff's company supplied the requisite quantity of cement to the defendants?

4. To what amount, if any, the plaintiff is entitled to recover from the defendant?

5. Whether the plaintiff is entitled to interest and if so at what rate and to what amount?

6. Relief."

Issue No.2

4. So far as issue No.2 is concerned, though the plaintiff has failed

to file any resolution of the Board of Directors of the plaintiff-company nor

was filed any power of attorney in favour of Sh. A. Pradhan who has filed

the suit, however, since Sh. A. Pradhan is the Deputy General Manager in

terms of the statement of Sh. Sanjeev Sharma, PW-1, and the fact that suit

has been pursued by the plaintiff to the hilt, in view of the judgment of the

Supreme Court in the case of United Bank of India Vs. Naresh Kumar &

Ors. AIR 1997 SC 3, it is held that suit is validly instituted. A principal

officer/Deputy General Manager is under Order 29 CPC authorized to

institute the suit. This issue is therefore decided in favour of the plaintiff.

Issue No.1

5. Issue No.1 pertains to limitation. In the peculiar facts of this

case and as stated below, this issue will have to be decided with issue Nos.3

and 4 as to what is the amount the plaintiff is entitled to recover.

6. The only averment in the plaint for claiming amount due is that

the amount claimed in the suit is an entry dated 31.3.1995 which is found in

the statement of account of the plaintiff. The statement of account of the

plaintiff has been proved and exhibited as Ex.PW1/50. This is a statement

of account from 1.4.1993 to December, 1997. Another document, which of

course, is not a statement of account but only some of the entries in the

statement of account is Ex.PW1/49. In view of Section 34 of Indian

Evidence Act, 1872, a mere entry in the statement of account is not

sufficient to fasten any liability and the entries in the statement of account

have to be proved by means of the documents/vouchers of the transaction.

Admittedly, the entry dated 31.3.1995 in Ex.PW1/50 for ` 69,36,240.36/-

has not been substantiated by means of any document showing as to how

and for what this amount of ` 69,36,240.36/- is due. The Supreme Court in

the judgment reported as Central Bureau of Investigation Vs. V.C. Shukla

& Ors. (1998) 3 SCC 410 has observed that Section 34 is in two parts. The

first part speaks of relevancy of the entries in evidence once the books of

accounts are shown to be regularly kept in the course of business and the

second aspect is that even if it is proved that the statements of accounts are

regularly kept in course of business, yet, the statement of account/entry

alone is not sufficient evidence to charge a person with liability. The object

of law is that mere entries should not be sufficient to fasten the monetary

liability unless documents of transaction (which would be invoices, challans

and receipts of supply of goods etc) are filed and exhibited in support of the

entries made. I therefore hold that mere entry of ` 69,36,240.36/- existing in

the statement of account in Ex.PW1/50 is not sufficient to charge the

defendant with liability as claimed by the plaintiff in the suit. Once this

entry is not proved, then, even if I take the payment of ` 2 lacs made by the

defendant on 21/22.4.1995 and as admitted by the defendant in his cross-

examination, will not in any manner help to prove the existence of debit

entry of ` 69,36,240.36/-. Even the plaint is totally silent as to because of

what reason this entry exists i.e for supply of goods or towards interest or

towards any other aspect, and if so what are such invoices/agreement qua the

supply or interest or other aspects. I therefore hold that the plaintiff has

failed to prove the entries dated 31.3.1995.

7. At this stage, I must state that the statement of account

Ex.PW1/50 can be taken as an open, mutual and current account only upto

the end of the financial year 1992-93 inasmuch as w.e.f. 1.4.1995 the

statement of account itself shows that the cheques which have been drawn

by defendant are with respect to either a specific bill or a specific bunch of

bills. In fact, the defendant has very meticulously in the evidence led on its

behalf shown each particular invoice of the plaintiff and each particular

cheque covering that particular invoice or bunch of invoices. In the affidavit

of Sh. Vinod Sharma, DW-1 from paras 9(i) to 9(xxxxviii) DW-1 has given

Ex.P-1, Ex.PW-1/2 to Ex.PW-1/48 as the bills and in each of the paragraphs

with respect to the bills, the specific cheque towards that amount has been

given. This aspect is not disputed in any manner in the cross-examination of

this witness. Therefore, for the financial year 1995-96, there would be no

mutuality as is known under Article 1 of the Schedule I of the Limitation

Act, 1963 inasmuch as mutuality requires shifting balances vide Hindustan

Forest Company v. Lal Chand and Others AIR 1959 SC 1349.

8. The net result of the above is that:-

(i) The entry of ` 69,36,240.36/- has not been proved. If this entry

is not proved, therefore, the suit amount of `45,30,506.36 and which is part

of this entry amount will also not stand proved. Once the principal due of `

45,30, 506.36/- is not proved nothing will come out for the purpose of

extending of limitation by payment of cheque of ` 2 lacs on 21/22.4.1995 by

the defendant and at best it will only amount to a reduction of the liability of

the defendant, assuming it was proved but which has not been done.

ii) If, however, the principal amount due was proved, the suit

would have been within limitation inasmuch as the suit was filed on

17.4.1998, and limitation once we take the cheque of ` 2 lacs into account,

would have expired by 21/22.4.1998.

9. The question is in spite of the above conclusions can the suit of

the plaintiff be decreed for any amount. On this aspect, the counsel for the

plaintiff has astutely cross-examined the witness DW-1 and in the cross-

examination DW-1 was forced to admit the documents Ex.DW1/D1 and

DW1/D2. These two documents are one page each of the balance sheets as

maintained by the defendant for the years ending 31.3.1995 and 31.3.1996.

As per the document DW1/D2, the amount due to the plaintiff is shown at `

22,70,973.89/-. It would be for this amount the suit has therefore to be

decreed inasmuch as this specific admission of liability is itself enough to

pass a money decree against a person vide Syndicate Bank Vs. R. Veeranna

& Ors. (2003) 2 SCC 15. As per the judgment of the Supreme Court in this

case, an unqualified acknowledgment of liability gives a fresh period of

limitation and also gives the plaintiff a cause of action to base his claim.

Accordingly, giving the plaintiff benefit of the judgment in the case of

Syndicate Bank, I hold that plaintiff will be entitled to a money decree of `

22,70,973.89/-. Of course, at this stage, I must also mention that counsel for

the plaintiff vainly tried to upgrade this amount of ` 22,70,973.89/- to the

suit amount, however, this argument is liable to be rejected inasmuch as

either the document is taken as a whole or rejected as a whole. The

document cannot be taken in bits and pieces to overlook one part and to

concentrate on the other part.

10. Issue Nos.1, 3 and 4 are decided by holding that the plaintiff

will be entitled to a money decree of ` 22,70,973.89/- and for which amount

the suit is within limitation.

Issue No.4

11. Issue No.4 is with respect to claim of the plaintiff to interest.

Since the transaction is a commercial transaction, considering all the facts

and circumstances of the present case, I hold that the plaintiff will be entitled

to interest @ 9% per annum simple from 1.4.1996 till the date of filing of

the suit. Plaintiff will also be entitled to interest at the same rate pendente

lite and future till payment.

Issue No.4 is decided accordingly.

Relief

12. The suit of the plaintiff is therefore decreed for a sum of `

22,70,973.89/- alongwith interest @ 9% per annum simple from 1.4.1996 till

the date of filing of the suit and which rate of interest will also be the interest

pendente lite and future till payment. Plaintiff will also be entitled to costs

in accordance with the Rules of this Court. Decree sheet be prepared.

VALMIKI J. MEHTA, J SEPTEMBER 13, 2012 Ne