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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: M/s.CHATURBHAI M. PATEL & CO. AND VICE VERSA

DATE OF JUDGMENT09/12/1975

BENCH: FAZALALI, SYED MURTAZA BENCH: FAZALALI, SYED MURTAZA MATHEW, KUTTYIL KURIEN

CITATION:  1976 AIR  712            1976 SCR  (2) 902  1976 SCC  (1) 747

ACT:      Fraud-must be  established beyond reasonable doubt-Mere suspicion- If proof of fraud.

HEADNOTE:      The resondent  filed a  suit against the Union of India alleging  that   due  to   negligence  of   the  railways  a consignment  of  tobacco  despatched  by  him  to  Gaya  was substituted in  transit  and  that  in  its  place  inferior tobacco was  delivered at  Gaya. The  railways on  the other hand alleged  fraud and collusion between the respondent and his father, also a bidi tobacco merchant in Gujarat, because by  deliberate   manipulation,  the   respondent   consigned inferior goods to Gaya and superior goods to Gujarat.      The trial  court dismissed  the respondent’s  suit. The High Court  allowed the  suit for damages but refused refund of excise duty said to have been paid by the respondent.      Dismissing the appeal to this Court, ^      HELD: (1) The appellant had not been able to make out a case of  fraud. The  High Court  was justified in negativing the plea of fraud and in decreeing the suit. [904-FG]      (2) Fraud,  like any  other charge of criminal offence, whether made  in  civil  or  criminal  proceedings  must  be established beyond  reasonable doubt. However suspicious may be the  circumstances, however  strange the coincidences and however grave the doubts, suspicion alone can never take the place of proof. [904-FG]      A. L.  N. Narayanan Chettyar v. Official Assignee, High Court Rangoon, A.I.R. 1941 P.C. 93, referred to.      In the  instant case there is absolutely no evidence to show any  prior meeting  of the minds between the respondent and his  father before  the consignment  was sent  either to Gujarat or  Gaya so  as to raise an inference that these two persons had  hatched up a conspiracy in order to defraud the appellant. [904-EF]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeals Nos. 972- 973 of 1968.

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    From the  Judgment and  Decree dated  the 1st  December 1961, of the Allahabad High Court in First Appeal No. 285 of 1958.      Gobind Das and S. P. Nayar for the appellants in Appeal 972 and for Respondents in C.A. 973/68.      S. M.  Jain, J.  P. Goyal, S. K. Jain and Shripal Singh for Respondent  in Appeal  972 and for the Appellant in C.A. 973/68.      The Judgment of the Court was delivered by      FAZAL  ALI   J.  This   is  a   defendant’s  appeal  by certificate granted  by the  High Court  of Allahabad  under Art. 133(1)  of the  Constitution of  India.  The  plaintiff which is a registered partnership firm at Banaras dealing in Bidi tobacco  filed the present suit for damages against the defendant Union of India on the allegation that it had 903 despatched a  consignment containing  tobacco at Banaras for Gaya in Bihar for delivery to the firm Chaturbhai M. Patel & Co. at  Gaya. This  consignment was booked under Invoice No. 107 Railway  Receipt No.  89551  dated  July  9,  1954.  The plaintiff’s allegation  was that  due to  negligence of  the Railway the  identical goods despatched by the plaintiff did not reach  the consignee  at Gaya  but the  goods containing inferior type  of tobacco reached there which caused serious loss to the plaintiff. The suit was filed after notice under s. 80  of  the  Code  of  Civil  Procedure  was  given.  The plaintiff also  claimed refund  of the excise duty which was paid  by  the  plaintiff.  The  suit  was  resisted  by  the defendant mainly  on  the  ground  that  due  to  fraud  and collusion between  the plaintiff in Banaras and his father’s firm in Gujarat, the consignment at Benaras was interchanged by manipulation  and deliberation so that the inferior goods were sent  to Gaya  and the  superior  goods  were  sent  to Gujarat which  were sold  by the  firm at  Gujarat and  huge profit was earned by the aforesaid firm.      The Trial  Court framed a number of issues and accepted the  defence   and  accordingly   dismissed  the  suit.  The plaintiff  then  filed  an  appeal  in  the  High  Court  of Allahabad which  reversed the  judgment and  decree  of  the Trial Court and decreed the plaintiff’s suit for damages but refused to  pass a decree regarding the amount of the excise duty said to have been paid by the plaintiff.      Mr. Gobind  Das appearing  for the  appellant submitted that there  were number  of suspicious  circumstances  which clearly went  to show  that some  amount of  fraud had  been played on  the defendant  by the  collusion of the plaintiff with his  father at  Gujarat whose  firm was known as Mangal Bhai Prabhu  Das. In support of his contention he has relied on  three  or  four  circumstances  which  have  been  fully discussed by the High Court.      On a  perusal of the judgment of the High Court we find that the  case is concluded by findings of fact and normally the appellant  could not  have been  granted the certificate for leave  to appeal  but for  the fact that the judgment of the High  Court was one of reversal and the valuation of the suit was  over Rs. 20,000/-. Nevertheless the High Court has discussed the  suspicious circumstances  relied upon  by the defendant/appellant  and   has  held   that  there   was  no conclusive or  reliable  evidence  to  prove  the  fraud  or collusion  as   alleged  by   the  defendant.   One  of  the circumstances was  that on June 9, 1954 a consignment of 191 bags of  tobacco was  booked by  Mangal Bhai  Prabhu Das the father of  the  plaintiff  from  Railway  Station  Vasad  in Gujarat to Indian Zarada Factory, Banaras which was owned by the plaintiff. This consignment was taken delivery of by one

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Mohanlal an  agent of  the Indian  Zarada Factory at Benaras and was re-warehoused in the bonded warehouse of the Factory at Benaras. On the same day the consignment of the plaintiff was  also   warehoused  at  the  same  place.  Thereafter  a forwarding note was presented at Benaras on June 24, 1954 on behalf of the Indian Zarada Factory for despatch of 174 bags of tobacco  to his  father Mangal  Bhai Prabhu  Das Patel in Gujarat on  the ground  that the  goods were  of an inferior quality. It  is said that the goods of inferior quality were deliberately despatched to Gaya, 904 Whereas  the  other  consignment  was  sent  to  Gujarat  by changing the marks on the bags. The High Court, however, has pointed out  that there  was absolutely  no evidence to show that such  a manipulation  or changing  the marks  was  done either by the plaintiff or his agent at Benaras.      Similarly reliance was placed on the fact that although the consignment  reached Gaya  on  July  17,  1954  yet  the delivery of  the aforesaid  consignment  was  taken  by  the plaintiff cousin  at Gaya  more than a month thereafter i.e. on  August   25,  1954   and  that  too  after  the  Railway authorities at  Gaya wrote  a letter  to  the  consignee  on August 23,  1954. The  High Court has pointed out that there is no  evidence to show that the consignee at Gaya knew that the goods  had arrived there on July 17, 1954 and the letter which was  sent to  the uncle  of the  plaintiff at Gaya was received by  him after  a long  time. There is no doubt that there was  some amount  of negligence  on the  part  of  the Railway authorities  because they  wrote  a  letter  to  the consignee at  Gaya more  than a  month after  the goods were received and  if they  had sent the letter immediately after receipt of  the consignment,  and if  in spite of that there was delay  in taking  delivery, something  could be said for the plaintiff.      Lastly it was urged by Mr. Gobind Das for the appellant that the  plaintiff who  was the  owner of the Indian Zarada Factory at  Benaras and  his father who was the owner of the firm in  Gujarat appear to have entered into a conspiracy to defraud the  defendant in  view of their close relationship. The High Court has rightly pointed out that the plaintiff is a separated  son and  has nothing in common with his father, except the  business in  tobacco which  is carried on at two different places.  It has  also been pointed out by the High Court that  the father  has married  a second  wife and that shows that  there is no close affinity between the plaintiff and  his  father.  Further  more,  there  is  absolutely  no evidence to  show any  prior meeting  of minds  between  the plaintiff and  his father  before the  consignment was  sent either to  Gujarat or  Gaya so as to raise an inference that these two  persons had  hatched up  a conspiracy in order to defraud the  defendant. This  argument,  therefore,  has  no force and must be overruled.      The High  Court has  carefully considered  the  various circumstances relied upon by the appellant and has held that they are  not at  all conclusive to prove the case of fraud. It is  well settled  that fraud  like any  other charge of a criminal  offence   whether  made   in  civil   or  criminal proceedings, must  be established  beyond reasonable  doubt; per Lord  Atkin in  A. L.  N. Narayanan Chettyar v. Official Assignee, High  Court Rangoon. However suspicious may be the circumstances, however strange the coincidences, and however grave the  doubts, suspicion  alone can never take the place of proof.  In our  normal life  we are  sometimes faced with unexplainable phenomenon  and strange  coincidences, for, as it is  said,  truth  is  stronger  than  fiction.  In  these

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circumstances, therefore,  after going  through the judgment of the  High Court  we are  satisfied that the appellant has not been  able to  make out  a case of fraud as found by the High Court. As such the High Court 905      was fully justified in negativing the plea of fraud and in decreeing the suit of the plaintiff.      Cross   objections    have   been    filed    by    the plaintiff/respondent for  disallowing the  amount of  excise duty paid  by the  plaintiff. After persuing the judgment of the High  Court, we  find absolutely no merit in these cross objections.      The result  is that the appeal and the cross objections are dismissed,  but in the circumstances of the case without any order as to costs. P.B.R.                                    Appeals dismissed. 906