In the High Court of Judicature at Madras Dated: 12.05.2010 Coram: The Honourable Mr.Justice M.VENUGOPAL A.S.No.777 OF 2002 1. Bob Tubes and Machineries Pvt. Limited. Proprietors of Bob Corportion., No.136, Sembudoss Street, Chennai-600 001. 2. Mrs. Vasuki Sivakumar 3. Mrs. Sujatha Rajkumar ... Appellants vs. 1. M/s.Wavin India Limited., Flat Nos. 65, 66, Amabattur, Industrial Estate, Chennai-600 058. 2.Mrs. Premila Sivakumar ... Respondents Appeal filed under Section 96 of C.P.C. against the Judgment and decree dated 17.2.1998 made in O.S.No.3991/96 by the IV Additional City Civil Judge at Chennai. For Appellant .... Mr.Perumbulavil, Radha Krishnan For R1 .... Mr.B.T.Seshadri Senior counsel for M/s.S.B.Banumathi For R2 .... Mr.V.Manoharan JUDGMENT
Being aggrieved the Appellants/Defendant Nos. 1, 4 and 5 have projected this appeal as against the Judgment dated 17.2.1998 passed in O.S.No.3991 of 1996 passed by the Learned IV Additional City Civil Court, Chennai.
2. The Trial Court in the suit filed by the First Respondent/Plaintiff had among other things held that the First Respondent/Plaintiff was entitled to claim the suit amount as prayed for in the plaint together with costs.
3. The Trial Court has framed in all six issues for consideration. On the side of the First Respondent/Plaintiff, P.W.1 was examined and Exs.A1 to A8 were marked. On the side of the Appellants/Defendant Nos. 1, 4 and 5, no witness was examined and no documents were marked.
4. The points that arise for rumination in this appeal are:
(i) Whether the suit is barred by limitation?
(ii) Whether the Appellants/Defendant Nos. 1, 4 and 5 are jointly or severally liable to pay a sum of Rs.1,49,935/- together with interest at 12% per annum.
(iii) Whether the Appellants/Defendant Nos. 1, 4 and 5 are jointly and severally liable to pay a sum of Rs.2,60,921/- with interest at the rate of 24% per annum to the First Respondent/Plaintiff?
(iv) Whether the Appellants/Defendant Nos. 1, 4 and 5 are jointly and severally liable to pay a sum of Rs.61,939/- along with interest at the rate of 24% per annum etc., to the First Respondent/Plaintiff?
5. Contentions, Discussions and Findings on Point Nos.2 to 4:
Learned counsel for Appellants/Defendant Nos. 1, 4 and 5 urges before this Court that the suit filed by the First Respondent/Claimant is barred by limitation inasmuch as the suit was instituted before the Trial court on 10.4.1987 when the transaction is of the year 1982. As a matter of fact, the Trial Court had not taken note of an important fact that the First Respondent/Plaintiff had not pleaded to the effect that the Appellants/Defendant Nos. 1, 4 and 5 where enjoying the properties of the First Defendant(First Appellant) and Third Defendant (Second Respondent) and also there was no evidence before the Trial Court in this regard.
6. It is the further contention on the side of the Appellants/Defendant Nos. 1, 4 and 5 that there was no contract for payment of rate of interest in the absence of any agreement between the parties and the First Respondent/Plaintiff had not discharged its burden to prove the same before the Trial Court.
7. That apart, the Trial Court had failed to note that Ex.A.2 dated 19.7.1985, the proceeding/settlement entered into between the parties was not proved independently and as such it could not be taken for granted with regard to admission of liability by the Appellants/Defendant Nos. 1, 4 and 5.
8. It is the contention on the side of the Appellants/Defendant Nos. 1, 4 and 5 that Ex.A.2, proceeding/settlement dated 19.7.1985 between the parties was not admissible in evidence since the same should have been properly stamped because of the fact that it was in the nature of an Agreement.
9. Lastly, a plea is put forward on the side of the Appellants/Defendant Nos. 1, 4 and 5 that the Trial Court came to the wrong conclusion that Ex.A.2, proceeding/settlement dated 19.7.1985, was a concluded contract without determining the fact as to whether the same was acted upon.
10. In effect, the Learned counsel for the Appellants/Defendant Nos. 1, 4 and 5 prays for allowing the Appeal in the interest of justice because of the fact that the Trial Court had not looked into the aforesaid contentions put forward on the side of the Appellants/Defendant Nos. 1, 4 and 5 which had resulted in miscarriage of justice.
11. In the present case, the evidence of P.W.1, plaintiff’s Assistant Manager(accounts) assumes significance. P.W.1 in his evidence has deposed that the First Appellant/First Defendant is a Private Limited Company and the Second Defendant is the Managing Director of the First Appellant and Defendant Nos. 3 to 5 are the Legal Representatives of the Second Defendant and that the First Defendant is a dealer in purchasing P.V.C pipes from the First Respondent/Plaintiff and sells the same and from the year 1982. In between the First Defendant (First Appellant) and First Respondent/Plaintiff, there is a income and expenditure account from the year 1982.
12. Further, the evidence of P.W.1 is to the effect that on 1.3.1982, the First Defendant (First Appellant) has been appointed as a consignment agent of the First Respondent/Plaintiff and at that time, an agreement was entered into and for the goods purchased hundi payments and cash payments have to be made and if there is a delay with regard to payment then interest will have to be paid and First Defendant (First Appellant) had agreed to pay interest at 24% per annum and the First Respondent/Plaintiff has to pay a sum of Rs.8,81,865/- in the year 1985 and for the said amount on 19.7.1985, a meeting was convened and with regard to the settlement arrived at between the parties.
13. Continuing further, it is the evidence of P.W.1 that Ex. A2 is the Minutes Copy and the Defendants have to pay a sum of Rs.2,23,000/- as balance, but when demanded the Defendants informed that the said amount will have to paid only by M/s. Senthil Agencies, and the said agency also to be consulted by attending the meeting and then only the problem will be solved and later M/s. Senthil Agencies was called for the meeting. The Defendants had not brought the said agency for the meeting and thereafter, did not speak about it and the Ex. A3 is the Minutes agreed to by the Appellants/Defendant Nos. 1, 4 and 5 and signed by them.
14. The stand of the First Respondent/Plaintiff is that, for the period from 13.7.1985 to 1.11.1985, the defendant paid Rs.3,70,775/- and they have to pay the balance of Rs.1,10,1000/- and they issued a cheque for Rs.1,00,000/-. But the cheque was returned by the bank for want of funds and the Defendants have to pay a sum or Rs.4,72,795/- which includes the interest.
15. In the cross examination, P.W.1 has categorically admitted that on 19.7.1985, the First Defendant has to pay a sum of Rs.4,42,549.23 which refers to one item and does not include other items and this amount represents the direct sales to be paid by First Appellant/First Defendant.
16. The contention of the First Respondent/Plaintiff is that the First Respondent/Plaintiff is a Public Limited Company manufacturing and marketing PVC pipes and that the First Appellant/First Defendant is a company carrying on consignment agency as well as dealership in PVC pipes and fittings and the second defendant (Since deceased) was the Managing Director of the First Appellant/First Defendant company and the First Appellant company was owned by the second defendant (deceased) and his family members. Further, the First Appellant/First Defendant and the deceased second defendant, Managing Director of the First Appellant company agreed to be jointly and severally liable to First Respondent/Plaintiff with regard to the discharge of obligation contained in the agreement dated 01.03.1982 along with the First Appellant/First Defendant company. Also, the Appellants/Defendant Nos. 1, 4 and 5 as distributors for Tamil Nadu were to pay the amounts due by them either by honouring the hundies or by effecting payment of the Appellants directly to the First Respondent/Plaintiff was to make the payment of the sums due together with interest at the rate of 24% per annum, in case of delayed payment. In the course of the said dealings between the parties, a sum of Rs.8,81,865,97 including the agreed rate of interest calculated at 24% per annum for the defaulted payment was the outstanding amount and the First Respondent/Plaintiff made the demand on the Appellants/Defendant Nos. 1, 4 and 5 to pay the aforesaid sum and to settle their accounts.
17. Later the differences between the First Respondent/Plaintiff and the deceased Second Defendant were settled by means of a proceeding/settlement dated 19.7.1985 which was minuted and as per this proceeding/settlement, the Appellants/Defendant Nos. 1, 4 and 5 will have to pay a sum of Rs.4,52,542.25 before the end of July 1985 etc., But the deceased Second Defendant had not signed in the proceeding dated 19.7.1985, but acknowledged the receipt of copy of the said proceeding/minutes by his letter dated 26.7.1985.
18. According to the learned counsel for the First Respondent/Plaintiff, the Appellants/Defendant Nos. 1, 4 and 5 are liable to pay apart from the amount of Rs.1,10,000/- with interest at 21% per annum. They owe a sum of Rs.1,61,713.28 as an outstanding amount against the consignment sales and also a sum of Rs.61,939.20 under the various debit notes issued by the First Respondent/Plaintiff, aggregating in all a sum of Rs.2,23,652.48. Moreover the Appellants/Defendant Nos. 1, 4 and 5 are to pay an agreed interest at the rate of 24% per annum on the consignment sales of Rs.1,61,713.28.
19. Learned counsel for the Appellants/Defendant Nos. 1, 4 and 5 cites the decision M/s.Bharat Aluminium Co. Ltd., Vs. M/s.Maharashtra Aluminium Corporation reported in CDJ 2009 DHC 074 wherein at para 20 to 23 it was observed as follows:
” 20. The plaintiff has filed this suit on the basis of statement of account maintained by it in the regular course of business. The entries contained in the statement of account filed along with the suit have been disputed by the defendant. The plaintiff has not proved its statement of account in its evidence. Section 34 of the Indian Evidence Act, 1872 is relevant and is extracted below:-
“34.[Entries in books of account including those maintained in an electronic form] when relevant:-
[Entries in the books of accounts including those maintained in an electronic form], regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability.”
21. Since the plaintiff has failed to prove its statement of account by leading any evidence much less cogent evidence in regard to the same, it cannot be said that the plaintiff has proved its claim against the defendant. However, the learned senior counsel appearing on behalf of the plaintiff has relied upon the admission of the defendant contained in letters Ex.P.-6 dated 15.4.1986 and Ex.P-7 dated 18.3.1986. The alleged admission by the defendant in these letters Ex.P.6 and Ex.P.7 is of no legal consequence because the present suit was filed by the plaintiff on 28.11.1988 after more than 2 = years of the alleged admission and it is not the case of the plaintiff that no dealings at all had taken place between the parties after these alleged admissions. In fact, the plaintiff was required to prove its statement of account before the defendant could be burdened with the liability for payment in this suit.
22. I am of the view that the pleadings contained in the plaint is no evidence, far less, proof. In terms of Section 102 of the Evidence Act, 1872 the initial onus to prove its claim was always on the plaintiff and if he discharges that onus and makes out a case which entitles him to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would dis-entitle the plaintiff to the same.
23. In the present case, the plaintiff has not led any evidence much less cogent evidence to substantiate its claim against the defendant. I, therefore, hold that the plaintiff is not entitled to any recovery from the defendant in the present suit. This issue is also decided against the plaintiff.
20. Ex.A.2 is the proceeding/settlement dated 19.7.1985 between the First Respondent/Plaintiff company and the First Respondent/First Defendant company represented by the deceased Second Defendant. In the said proceeding/ settlement dated 19.7.1985 it is interalia finally mentioned that the net amount payable by the First Appellant/First Defendant company to the First Respondent/Plaintiff in terms of the present settlement, which has been agreed to be paid by the party is Rs.4,42,549.23 and further as per the terms of settlement, the party has agreed to pay Rs.4.00 lacs immediately and clear the balance of Rs.42,549.23 before the end of July 1985, and also agreed to come forward with proposals for fresh terms of distributorship. Significantly in Ex.A.2, proceeding/settlement dated 19.7.1985, the deceased Second Defendant had not signed. However, the deceased Second Defendant had addressed a letter to First Respondent/Plaintiff to the Advisor, one Krishnan acknowledging the letter No.SEC.12/85/100 dt.25.7.1985 along with one copy of settlement statement. Even though in Ex.A.2 proceeding/settlement dated 19.7.1985, the deceased second defendant’s communication dated 26.7.1985 addressed to the First Respondent company, he had acknowledged the receipt of a letter along with the copy of the settlement statement and therefore, the proceeding/settlement Ex.A.2 dated 19.7.1985 arrived at between the First Respondent/Plaintiff and the deceased Second Defendant on behalf of the First Appellant/First Defendant company cannot be disputed by the other Defendants 3 to 5 ( Legal Representatives of the deceased Second Defendant) and also the First Appellant/First Defendant.
21. In the considered opinion of this Court, in fact when the deceased Second Defendant has accepted the receipt of the copy of the settlement statement of Ex.A.2, proceeding/settlement by means of his letter dated Ex.A.3 dated 26.7.1985 then, the Appellants/Defendant Nos. 1, 4 and 5 in law is estopped from disputing the Ex.A.2, proceeding/settlement in any manner whatsoever as opined by this Court.
22. At this stage this Court worth recalls the decision in Pulikkot Puthan Veetil Madhavan Nair and another Vs. Choorapra Unnitha reported in A.I.R. 1934 Madras 562(2) wherein it is laid down as follows:
” A decree must be against a person, and not merely against something which is not a person as eg., the estate of a “deceased person”. The phrase “out of the assets of the deceased” is merely a restrictive qualification. And though payment has to be made only out of the assets of the deceased, the decree is none the less a decree against the legal representative: 33 Mad 75 and 1932 Bom 522, Rel on.
In Sheik Allaudin V.Annibal Thamilarasi Jesintha reported in (2008) 1 MLJ P.349 at P.350, it is held that,
“Person having continuous association with the deceased tenant as a member of his family can be treated as his legal representative for the purpose of impleading them in eviction proceedings”
In Skankarlal and another V. Ganesh Singh and another reported in A.I.R. 1926 Nagpur 170 it is observed that,
“A suit against the legal representatives of a deceased debtor should not be dismissed on the mere ground that the defendants are not in possession of any portion of the estate left by the deceased: 2 N.W.P,H.C. R.449 and 13 Bom. 658, Foll.
In Laxmidhar Sahu Vs. Smt.Padmini Tripathy and others reported in A.I.R. 1991 Orissa P.9, it is held thus:
” Hindu widow being a statutory heir only, cannot be made personally liable for the liabilities of her husband. In case, the decree has made her personally liable allowing it to become final, she can make grievance in the executing Court that she is not personally liable. If the decree has made her personally liable and she has challenged the same in appeal, appellate Court will set aside that portion of the decree. Where the decree did not specifically make the Hindu widow personally liable and she had not assailed the same, there was no bar for her to contest in the execution proceeding to the extent that she could not be personally liable and attachment of her personal property could not be ordered.”
In the decision Sundar Sahu Vs. Jogeswar Das reported in A.I.R. 1975 Orissa 175, it is observed thus:
” In a partition suit by A against his brothers B and C a preliminary decree was passed whereunder A, B and C were held entitled to 1/3 share each. A died after the preliminary decree. Thereafter a creditor of A filed a money suit impleading B, C and X who was the son of B. In this suit X claimed to be the adopted son of A. This position was not disputed by B and C and the suit was decreed against X and dismissed against B and C and the property of deceased A only was made liable for the debt. In the final decree for partition the Court held that X was not the adopted son of A. A compromise final decree was, however, passed whereunder it was directed that A’s 1/3 share should devolve half and half on B and his sons as one unit and C and his sons as another unit. Thus X got 1/30 share in the entire property as representing the estate of A coming into the hands of B and C was liable to be proceeded against in execution of the money decree was answered in the affirmative. X as holder of some interests in A’s estate under the final decree for partition or as an inter-meddler in such estate was a legal representative of A and by the rule of representation of the estate, the estate of A was liable to be attached and sold in the hands of all the legal representatives, whoever they may be, even if they may or may not have been impleaded in the money suit. AIR 1966 SC 792, Rel on.”
In M.Ramachandra Gowda and others Vs. Gangadara Gowda and another reported in AIR 1989 NOC 104(Kant), it is held that,
“Plea based on Ss.57 and 52 that the Judgment debtors/Legal Representatives are not liable for more than share of deceased defendant is not open to them and they are liable to make good all income they derived and which fell to the share of plaintiff.”
In Rajah of Kalahasti Vs. Prayag Dossjee Varu reported in A.I.R. 1917 Madras 536, it is held as follows:
“Where a decree is passed against a party as the legal representative of a deceased person, it is for the decree-holder in the first instance to prove that some assets came to the legal representative, and the onus is then shifted on the latter to show how the assets were applied. Once it is admitted or proved that the legal representative sought to be made liable has come into possession of assets belonging to the estate of the deceased, it is for him to satisfy the Court as to the extent of the assets received and to account for them: 30 Mad, 454; 32 Mad 429 and 12 I.C.253, foll.
Mesne profits, whether accruing in the shape of rent or interest, are for this purpose assets just as much as the real estate:”
23.It is a well settled principle of the Company Law that a Private Company’s liability of its members is limited by the memorandum to such amount as the members respectively undertake by means of the memorandum to contribute to the assets of the Company in the event of its being wound up. The said members may or may not have a SHARE CAPITAL. In a Private Company having the share capital the memorandum shall specify that the liability of members is limited.
24.In Official Liquidator V. Maganlal Hirachand Shah 1980 Comp Cas 762 it is held as follows:
“The above observations (of Justice Beg, as he then was, speaking for the Supreme Court in Tendokar’s case (1973) 43 Comp Cas 382 goes to prove that if an action against legal representatives can at all be taken, the first thing that is to be proved is that there has been benefit to the estate of the deceased Director or other person as a consequence of the misfeasance alleged against him, before the legal representatives can be held liable at all.”
25.Further, this Court worth quotes the English decision in Phillips V. Homfray (1883) 24 Ch D 439 at page 453 wherein it is laid down as follows:
“The only cases in which, apart from questions of breach of contract expressed or implied, a remedy for a wrongful act can be pursued against the estate of a deceased person who has done the act, appear to us to be those in which property or the proceeds or value of property belonging to another have been appropriated by the deceased person and added to his own estate or moneys …. Where there is nothing among the assets of the deceased that in law or in equity belongs to the plaintiff, and the damages which have been done to him are unliquidated and uncertain Damages are nonetheless unliquidated because the plaintiff may be able to prove that the measure of his damage, is, in fact, an ascertained sum expended on the faith of the misrepresentation; Re Duncan Terry V. Sweeting, (1899) 1 Ch 387 the executors of a wrong-doer cannot be sued merely because it is worth the wrong-doer’s while to commit the act which is complained of, and an indirect benefit may have been reaped thereby …. The profits arising from a wrong done by a deceased man which can be followed against his estate are only such profits as take the shape of property, or the proceeds or value of property, withdrawn from the rightful owner and acquired by the wrong-doer.”
26. As far as the present case is concerned, it is candidly clear that Ex.A.2, proceeding/settlement dated 19.7.1985 is between the First Respondent/Plaintiff company and that of the First Appellant/First Defendant. Though the Second Defendant had not signed in the said document by means of Ex.A.3, letter dated 26.7.1985, the deceased Second Defendant has accepted the receipt of the copy of Ex.A.2, proceeding/settlement along with the letter mentioned therein. Therefore, it is not open to the Appellants/Defendant Nos. 1, 4 and 5 to dispute Ex.A2, proceeding/settlement dated 19.7.1985 since there was no agreement to pay interest for the amount mentioned in Ex.A.2 settlement dated 15.07.1985 the respondent/plaintiff is not entitled to claim the interest at 21. Although in the plaint, the First Respondent/Plaintiff has mentioned that the deceased, Second Defendant is the Managing Director of the First Defendant company which is practically a company owned by the Second Defendant and his family members, there is no acceptable qualitative and quantitative evidence in this regard from the side of the First Respondent/Plaintiff and in fact the evidence of P.W.1 is conspicuously silent. Since there was no agreement to pay interest for the amount mentioned in Ex.A.2-Settlement dated 19.7.1985 the Respondent/Plaintiff is not entitled to claim the interest at 21 & 24% per annum. However, this Court exercising its discretion grants interest at 6% per annum for the suit amounts from the date of plaint till the date of realisation to be paid by the First Appellant/First Plaintiff. Therefore, on a careful consideration of respective contentions and on consideration of available oral and documentary evidence on record, this Court comes to an inevitable conclusion that the First Appellant/First Defendant is liable to pay the suit amounts claimed by the First Respondent/Plaintiff with interest at 6% per annum from the date of plaint till the date of realisation. Though in paragraph 3 of the plaint, the First Respondent/Plaintiff had averred that the First Appellant/First Defendant Company was owned by Second Defendant (deceased) and by his family members, this Court is constrained to observe that there was no satisfactory proof shown before this Court (on the side of the First Respondent/Plaintiff) in regard to the extent of ownership of family members of the deceased Second Defendant in the First Appellant/First Defendant Company. Further this Court holds that whatever Estate that has passed on from the First Appellant/First Defendant company to the Deceased, Second Defendant, to that extent the Second and Third Appellants and the Second Respondent ( in Appeal) are liable to pay the suit amounts as Legal Representatives with interest at 6% per annum from the date of plaint till the date of realisation and in other respects the Appellants 2,3 and the Second Respondent are not PERSONALLY liable and the point Nos.2 to 4 are answered accordingly.
27. The First Respondent/plaintiff has filed the present suit before the Trial Court by placing reliance upon Ex.A.2, proceeding/settlement, dated 19.7.1985 in and by which the First Respondent/Plaintiff has made the suit claim against the defendants in the suit. But the suit has been laid on 10.4.1987 (filed in original side of the High Court) and later the same has since been transferred to the City Civil Court, Chennai on the point of jurisdiction. Since the suit has been filed within three years period from Ex.A.2, proceeding/settlement dated 19.7.1985, the suit is clearly filed well within the period of limitation and accordingly, the point No.1 is answered in favour of the First Respondent/Plaintiff.
28. Before parting with the case, this Court pertinently observes that the First Respondent/Plaintiff instead of resorting to the winding up proceedings as per the provisions of the Companies Act has opted to file the suit against the defendants.
29. In the result, the Appeal is allowed in part and that the First Appellant and the Appellants 2 and 3 and the Second Respondent as Legal Representatives of the deceased Second Defendant are liable to pay the suit amounts subject to whatever estate that has passed on to them from the First Appellant/First Defendant company and to that extent they are alone liable. Considering the facts and circumstances of the case, there shall be no order as to costs.
12.05.2010
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kua
To
The IV Additional City Civil Judge,
Chennai.
M.VENUGOPAL, J.,
kua/sgl
Judgment in
A.S.No.777 OF 2002
Dated: 12.05.2010