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PETITIONER: HIRALAL AND OTHERS

       Vs.

RESPONDENT: BADKULAL AND OTHERS.

DATE OF JUDGMENT: 12/03/1953

BENCH: MAHAJAN, MEHR CHAND BENCH: MAHAJAN, MEHR CHAND BHAGWATI, NATWARLAL H.

CITATION:  1953 AIR  225            1953 SCR  758  CITATOR INFO :  R          1961 SC1316  (7)

ACT: Acknowledgment- Whether gives fresh cause of action-Practice -Party in possession of documentary evidence-Duty produce.

HEADNOTE:     Where   the  defendants  who  had  dealings   with   the plaintiffs  for several years signed the following entry  in the plaintiffs’ account book underneath the earlier entries:    "After  adjusting the accounts Rs. 34,000  found  correct payable    Held, that this amounted to an unqualified acknowledgment of  liability to pay and implied a promise to pay and  could be made the basis of the suit and gave rise to a fresh cause of action.   Maniram  v. Seth Rup Chand (33 I.A. 165), Fateh  Chand  v. Ganga Singh (I.L.R. 10 Lah. 745) and Kahan Chand Dularam  v. Dayalal  Amritlal  (I.L.R. 10 Lah. 748) relied  on.   Ghulam Murtuza v.     Fasihunnissa (I.L.R. 57 All. 434) overruled.    It  is  not a sound practice for those desiring  to  rely upon  a  certain state of facts to withhold from  the  court written  evidence which is in their possession  which  could throw light upon the issues in controversy and to rely  upon the mere doctrine of onus of proof.    Murugesam  Pillai v. Manickavasaka Pandara (44  I.A.  99) referred to. 759

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 168 of 1952.  Appeal  from a Judgment and Decree dated 23rd July,  1951, of the Court of the Judicial Commissioner, Vindhya  Pradesh, in  Civil  First Appeal No. 26 of 1951 arising  out  of  the Judgment and Decree dated 14th March, 1951, of the Court  of the District Judge, Umaria, in Case No. 32 of 1951.   N.     S.  Bindra  (S.  L. Chhibber, with  him)  for  the appellants.  S. P.   Sinha   (K.   B.  Asthana,  with  him)   for   the respondents.

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1953.  March 12.  The Judgment of the Court was  delivered by   MAHAJAN J.-The suit out of which this appeal  arises  was instituted by the plaintiff-respondents in the court of  the district  judge  of  Umaria,  for  recovery  of  Rs.  34,000 principal,  and  Rs. 2,626 interest, due on foot  of  mutual dealings.  The suit was dismissed by the district judge  but was  decreed  on  appeal by  the  Judicial  Commissioner  of Vindhya Pradesh.  A certificate for leave to appeal to  this Court  was granted as the case fulfilled all the  conditions and requirements in force relating to appeals to the Supreme Court.  The defendants did not admit the claim and it was  pleaded that no accounts were explained to them when the  signatures of  Bhaiyalal and Hiralal were obtained in  the  plaintiffs’ ledger on 3rd September, 1949, acknowledging the suit amount as due from them.  It was further pleaded that no suit could be based merely on an acknowledgment of the debt.  In  para- graph  4  of the written statement it was alleged  that  the plaintiff  No. 2 Dipchand having threatened to bring a  suit against defendants I and 2 whose financial position was  bad and  having represented that plaintiff No. 1 Badkulal  would be  angry and abuse plaintiff No. 2, and having  assured  on oath by placing his hand on a deity in a temple that no suit shall be 760 brought, and that amount of interest would be reduced asked defendants  1 and 2 to sign the khata, who signed  the  same without  going through the accounts, on the faith  of  these statements made by Dipchand and that the defendants were not bound  by these signatures.  In paragraph 9 of  the  written statement  it was alleged that in fact Rs. 15,000 or  16,000 as principal sum were due to plaintiffs from defendants  but the  suit  had been filed for a much larger  sum  than  due. Issue I framed by the district judge was in these terms :  " Did  the  defendants Hiralal and Bhaiyala I sign  on  Bhadon Sudi  11 Samvat 2006 in the capacity of manager and head  of the   family,  on  the  khata  of,  the   plaintiffs   after understanding  the debit and credit accounts  and  accepting Rs. 34,000 as the correct balance due to the plaintiffs." It  would have been more correct had a separate  issue  been framed  on  the  two points compositely  mentioned  in  this issue.   Be that as it may, the form in which the issue  was framed  is  not  material for the decision  of  the  appeal. Issue 7 was in these terms :  "  Did  the  plaintiff Dipchand obtain  the  signature  of defendants  1  and  2, in their bahi  under  the  threat  of instituting  a  suit and giving the assurance  of  the  suit being not filed and leaving the interest which is  incorrect and very much exaggerated, by saying that Badkulal shall  be very angry with him...".  The  frame  of the issue shows that the learned  judge  at this  stage  made no effort to ascertain  or  apprehend  the nature of the plea taken in the written statement.  He seems to  have acted more as an automaton than as a judge  in  the discharge  of  his responsible duties.   Before  framing  an issue  like this it was his duty to examine the parties  and to  find out the precise nature of the plea involved  within these facts ; in other words, whether the defendants  wished to  plead in defence fraud, coercion, undue influence  or  a mistake of fact entitling them to reopen the accounts.   Mr. Bindra for the appellants was unable to tell us 761 what  real plea was involved in the facts stated under  this issue.

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The  manner  in which the learned judge  dealt  with  this issue  lends  support  to our view that he did  not  at  all apprehend  what  he  had to decide.  It was  held  that  the defendants  did  not  sign the  entry  after  understanding, settling, and adjusting of the accounts, but that  plaintiff Dipchand  obtained their signatures without  explaining  the accounts to them.  The fact that the entry was signed by both the  defendants who  represented  their  family was  not  denied.   Hiralal, defendant,  in the witness box admitted that the  defendants deal  in gold, silver and kirana and maintain regular  books of account.  It was also admitted that two or three  muneems are  in  their employ for maintaining regular books  of  the business dealings.  Hiralal was questioned " How much  money was  due  from  the defendants-firm to  the  plaintiffs"  He couldn’t firm?".  The answer was evasive, viz., say how much was  due".  When questioned about his accounts,  he  replied that  he  had  not filed them as he  was  ill.   He  further deposed that he had looked into his accounts and Rs.  10,000 to  Rs.  15,000 as principal and interest were  due  but  he could  not  say  what was the correct  amount.   When  asked whether on the date of signing the acknowledgment he  looked into  the  books to see what amount was due  from  him,  his answer was in the negative.  He further said that even after receiving  notice he did not look into his own  accounts  to check  as  to  what  the correct  balance  was.   A  leading question  was  put to him Whether on Bhadon Sudi  11  Samvat 2006  there  Was an entry of Rs. 34,000 in  the  defendants’ khata as being the balance due from them to the  plaintiffs. The  answer  was again evasive.  He said " I could  not  say whether  there  was any such entry in his books."  In  these circumstances  there was no justification for  throwing  out the  plaintiffs’ suit on the ground that the  accounts  were not  explained  to the defendants by  the  plaintiffs.   The defendants had written the accounts in their own books  from which the true balance could 762 be ascertained.  An inference from the statement of  Hiralal can  easily be raised that the balance entry of  Rs.  34,000 also existed in his own books.  Mr. Bindra tried to get  out of  this  situation  by urging that it was no  part  of  the defendants’  duty  to  produce the books  unless  they  were called  upon to do so and the onus rested on the  plaintiffs to  prove their case.  This argument has to be negatived  in view  of  the observations of their Lordships of  the  Privy Council  in  Murugesam Pillai v.  Manickavasaka  Pandara(1), which  appositely apply here.  This is what their  Lordships observed:  "A  practice has grown up in Indian procedure of those  in possession  of important documents or information lying  by, trusting to the abstract doctrine of the onus of proof,  and failing,  accordingly,  to furnish to the  courts  the  best material  for  its decision.  With regard to  third  parties this may be right enough they have no responsibility for the conduct  of the suit; but with regard to the parties to  the suit  it  is, in their Lordships’ opinion, an  inversion  of sound  practice  for those desiring to rely upon  a  certain state  of  facts  to withhold from  the  court  the  written evidence  in their possession which would throw  light  upon the proposition."  This rule was again reiterated in Rameshwar Singh v. Rajit Lal Pathak(2).  On  the  evidence  of the parties it is  clear  that  both parties are businessmen and each party has been  maintaining accounts  of  their  mutual dealings, and they  met  on  3rd

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September and in the plaintiffs’ book the defendants  signed an entry on page 58 of the ledger which runs thus: - ‘‘  Rs. 34,000 balance due to be received up to Bhadon  Sudi 11  Samvat 2006 made by check and understanding of  accounts with Hiralalji’s books."  This  acknowledgment  was made below a number  of  entries made  in  this khats, on the credit and debit side  and  the mutual dealings had continued since (1) (1917) 44 I-A. 99.   (2) A.I.R. 1929 P.C. 95, 763 several years.  The acknowledgment is signed by Hiralal  and Bhaiyalal, with the following endorsement:   "After  adjusting the accounts Rs. 34,000  found  correct payable." In  these  circumstances we are not able to  understand  the view  of the district judge that it was not proved that  the accounts  were explained to the defendants by Dipchand.   It was  unnecessary to do so because the defendants  themselves were  keeping  accounts and they would not have  signed  the balance  for  Rs. 34,000 with the endorsement  above  cited, without  reference  to  their own books  or  in  the  manner suggested  in the written statement.  Plaintiff Dipchand  in the  witness box supported the plaintiffs’ case as  laid  in the  plaint.  He deposed that " This accounting was done  by my    muneem   Puranlal   and   Ram   Prasad,   muneem    of Hiralal............  Muneems  explained and  Hiralal  signed after  understanding it." In cross-examination he said  that muneems were checking the accounts and when both the muneems said  that so much was the balance, Hiralal then signed  and that  Hiralal  and Bhaiyalal themselves did  not  check  any account.    The  learned  district  judge  and  Mr.   Bindra criticized  the  evidence of this witness and it  was  urged that he had made false and highly improbable statements with regard  to the manner and circumstances in which  the  entry was  signed.  The discrepancies in the statement  relate  to matters  of  no consequence.  In our opinion,  his  evidence along with the entry was sufficient to hold the  plaintiffs’ case  proved  when the best evidence of their own  books  to disprove  the  plaintiffs’  case had been  withheld  by  the defendants.  No satisfactory explanation had been given  for the  non-production  of  the  defendants’  books,  and   the evidence given by Hiralal does not do much credit to him. Mr.  Bindra  contended that it should have  been  held  that Bhaiyalal  did not sign at the same time when the entry  was written  but  he  signed later on.  On  this  point  Hiralal deposed that when be signed Bhaiyalal 99 764 was  not  present,  that he signed  afterwards,  that  Kulai muneem came with, the bahi saying that Badkulal and Dipchand had  quarrelled among themselves that there should  also  be the signature of Bhaiyalal, that Bhaiyalal questioned him as to why the witness had signed, that he replied that Dipchand had  told  him after pointing his hand towards God  that  he would  take  no action so long as he lived, so  he  did  not check, nor any one explained him the accounts, that on  this he asked Bhaiyalal to sign and on his asking he signed.   It was for Bhaiyalal to explain his signature by going into the witness  box  but he did not give evidence in the  case  and there is no explanation why he did not do so.  Mr.  Bindra’s contention  therefore that it should be held that  Bhaiyalal was not present when the acknowledgment was signed cannot be sustained. The defendants tried to support their case by the statements of  Kulai  Prasad,  muneem, and the other  two  muneems  Ram

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Prasad  and Puranlal.  So far as Kulai Prasad is  concerned, he  was  in  the plaintiffs’ service and  was  dismissed  by Badkulal,  plaintiff,  on 31st March, 1950.   Much  reliance cannot  be  placed  on  the statement  of  a  dismissed  and disgruntled  employee.  He stated that Hiralal was not  made to understand any accounts and Dipchand assured him on  oath that  he  would raise no trouble during his life  and  asked Hiralal  to  sign and that Bhaiyalal signed on  a  different date.   This  evidence  is of a partisan  character  and  no reliance can be placed on it. Rain Prasad stated that he did not check the accounts of the plaintiffs from Bhadon Samvat 2006 and that Hiralal did  not sign in his presence.  In cross-examination he admitted that there  were  mutual dealings between the  parties  and  that Hiralal  might  have signed after accounting was  done.   He pretended ignorance of what happened on Bhadon Samvat 2006. As  regards Puranlal, he stated that after looking into  the accounts and after mutual talk, Exhibit P-1 765 was written on Dip Chand’s asking, that accounts might  have been told by Dipchand on the basis of the statement which he had  with him, that no accounts were explained.  He  further stated  that  Hiralal said to Dipchand "Please see  me",  on which  Dipchand replied after raising his hand  towards  the temple " I shall not do anything unfair in my lifetime."  In cross-examination he admitted that the words " signed Bhurey Naik Raghunandan Prasad Bakalam Hira Lal ", and the words  " after  adjusting  the accounts Rs.  34,000  found  correctly payable  signed Hiralal " were written by  Hiralal  himself. It  was  further  elicited  in  cross-examination  that  the witness had forged a receipt and for forging that receipt he was sentenced to one year’s imprisonment in a criminal  case started  by Badkulal, plaintiffs This evidence therefore  is not of much consequence in this case.  In these circumstances we are satisfied that the  district judge  not only approached the decision of the case from  an erroneous point of view but he also incorrectly  appreciated the   material   on  the  record.   The   learned   Judicial Commissioner was therefore perfectly justified in  reversing his  decision and. in holding that on 3rd  September,  1949, there  was  an adjustment of accounts actually done  by  the muneems  and  accepted by the principals and  the  story  of coercion and misrepresentation was false.  Mr.  Bindra  next urged that the plaintiff’s  suit  should have  been  dismissed  because it could  not  be  maintained merely on the basis of an acknowledgment of liability,  that such an acknowledgment could only save limitation but  could not  furnish  a  cause of action on which a  suit  could  be maintained.  The Judicial Commissioner took the view that an unqualified acknowledgment like the one in the suit, and the statement  of  the account under which the  entry  had  been made,  were sufficient to furnish a cause of action  to  the plaintiffs  for  maintaining  the  present  suit.   We   are satisfied that no exception can be taken to this conclusion. It was held by the Privy Council in 766 Maniram   v.   Seth  Rupchand(1),  that   an   unconditional acknowledgment implies a promise to ’pay because that is the natural inference if nothing is said to the contrary.  It is what  every honest man would mean to do. In Fateh  Chand  v. Ganga Singh(2) the same view was taken.  It was held that  a suit on the basis of a balance was competent.  In Kahanchand Dularam  v. Dayaram Amritlal(3) the same view was  expressed and it Was observed that the three expressions "balance  due ", " account adjusted " and "balance struck" must mean  that

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the  parties  had been through the account.   The  defendant there  accepted  the statement of account contained  in  the plaintiff’s account book, and made it his own by signing  it and it thus amounted to an " accounts stated between them  " in  the language of article 64 of the Limitation  Act.   The same happened in the present case.  The acknowledgment which forms  the basis of the suit was made in the ledger  of  the plaintiffs in which earlier mutual accounts had been entered and  truly speaking, the suit was not based merely  on  this acknowledgment but was based on the mutual dealings and  the accounts   stated   between  them  and  was   thus   clearly maintainable. Mr. Bindra drew our attention to a decision of the Allahabad High Court in Ghulam Murtuza v. Fasihunnissa(4) , wherein it was held that even if an acknowledgment implies a promise to pay  it  cannot  be made the basis of suit  and  treated  as giving  rise to a fresh cause of action.  We  have  examined the decision and we are satisfied that it does not lay  down good law.  For the reasons stated above this appeal has no merits and we accordingly dismiss it with costs.                                      Appeal dismissed’. Agent for the appellants: Govind Saran Singh., Agent for the respondents : A. D. Mathur. CO 2,0.3 (i)  (1906) 33 I.A. 165. (2)  (1929) I.L.R. Io Lab- 748. (3) (1929) I.L.R. to Lah. 745. (4) (1935) I.L.R. 57 All- 434. 767