IN THE HIGH COURT OF KERALA AT ERNAKULAM
AS.No. 543 of 1995()
1. ZACHARIAH JAMES
... Petitioner
Vs
1. T.H.BHADERUDDIN
... Respondent
For Petitioner :SRI.P.R.VENKETESH
For Respondent :T.K.VENUGOPALAN,DINESH R.SHENOY
The Hon'ble MR. Justice A.K.BASHEER
The Hon'ble MR. Justice M.L.JOSEPH FRANCIS
Dated :20/01/2010
O R D E R
A.K.BASHEER & M.L.JOSEPH FRANCIS, JJ.
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A.S.No.543 OF 1995
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Dated this the 20th day of January 2010
JUDGMENT
Basheer, J.
Plaintiff in a “suit on accounts” is the appellant.
2. The court below dismissed the suit, holding not only that the court
had no territorial jurisdiction to try the suit, but also that the failure of the
plaintiff to produce the books of accounts along with the plaint was fatal to
his case. The court below also referred to some other so called
“discrepancies” in the accounts, which according to it were suggestive of the
fact that the accounts were not true or correct.
3. The averments in the plaint may be briefly noticed:
4. The plaintiff, the proprietor of an industrial unit engaged in the
manufacture of polythene films and other allied products, used to supply his
product to the defendant who was engaged in manufacture of polythene
bags, sheet, etc. Plaintiff alleged that there were reciprocal dealings
between him and the defendant and all such transactions were entered in
the account books being maintained by him. The account between the
parties was open, mutual and current. At the end of the accounting year of
1989, viz. on December 31, 1989 an amount of Rs.66,308.55 was found due
from the defendant to the plaintiff. In spite of several demands, the
defendant failed to discharge the liability. A lawyer notice issued to the
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defendant on January 21, 1992 was returned unserved, since the defendant
refused to accept the same. The plaintiff specifically alleged that the
transactions took place at Kavalam, where his industrial unit was situated
and within the jurisdiction of the Court at Alappuzha.
5. The suit was resisted by the defendant contending that there were
no reciprocal dealings between him and the plaintiff. But the plaintiff used
to bring plastic granules to his factory at Ernakulam for “converting” them
to polythene bags or sheets according to plaintiff’s requirement. The
defendant used to collect conversion charges from the plaintiff at the rate of
Rs.5 per Kg. The defendant asserted that no transaction took place at
Kavalam. However he admitted that certain quantity of raw material
(granules) brought by the plaintiff was “entangled” in his factory from
September 1988. The price of this material was paid by him to the
defendant through cash and cheque payments. Seven such payments, last of
which being on January 17, 1991 were referred to in the written statement.
He further contended that the accounts between him and the plaintiff had
never been mutual, open or current. He referred to certain ‘conversion jobs’
undertaken by him in July 1988 for which charges were collected by him
from the plaintiff. According to the defendant, no transaction between him
and the plaintiff took place on January 12, 1989 as alleged in the plaint,
since the employees of his factory were on strike. He was not able to
receive any goods in the factory since August 1988 because of “labour
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disturbance”. The factory was closed down during March 1989. The
defendant further alleged that the plaintiff had received some excess amount
from him and when a demand for returning the excess money was made, the
plaintiff did not return it and the suit was instituted as a counterblast.
Finally, it was further contended that the accounts were fabricated by the
plaintiff and the plaint claim was barred by limitation.
6. The court below framed the following issues:
1) Whether this court has territorial jurisdiction to try the suit?
2) Whether the account between the plaintiff and the defendant
was mutual, open and current?
3) Whether the accounts produced by the plaintiff is genuine?
4) Was there any transaction on 12-1-1989?
5) Whether the suit is barred by the Law of Limitation?
6) What is the amount, if any, to which the plaintiff is entitled?
7) What is the rate of interest, if any, to which the plaintiff is
entitled?
8) What is the order as to costs?
7. The plaintiff was examined as PW1. His accountant was examined
as PW2 and Exts.A1 to A12 were marked on his side. The defendant was
examined as DW1 and Exts.D1 to D5 were marked on his side.
8. As mentioned earlier, the court below held that the plaintiff was not
entitled to get a decree as claimed by him, since the court had no territorial
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jurisdiction to try the suit. Not only that, the court further held that the
account books produced by the plaintiff were not dependable not only for
the reason that there were some discrepancies in them but also since the
account books were not produced by the plaintiff at the time of institution of
the suit itself as mandated under Order 7 of Rule 17 of the Code of Civil
Procedure.
9. It may at once be noticed that the court below did not consider the
question of territorial jurisdiction at the threshold itself. The learned Judge
proceeded to consider issue No.1 relating to territorial jurisdiction along
with issue numbers 2 to 5.
10. Paragraph 21 of the impugned judgment deals with the issue
relating to territorial jurisdiction. In the course of the discussion of the
above issue, the learned Judge noticed that the plaintiff, while being cross
examined in court as PW1, had admitted that he had handed over an
invoice to the defendant in Ernakulam where the industrial unit of the
defendant was situated. It was further noticed by the learned Judge that
Ext.B1 letter, written by the plaintiff in 1986, proved that he took delivery of
the goods from the unit of the defendant at Ernakulam.
11. In this context, it may be noticed that the specific case of the
plaintiff was that the defendant used to purchase plastic granules from him
at Kavalam for the purpose of his industrial unit which was of course
situated at Ernakulam. The defendant had tacitly admitted that the plaintiff
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used to supply granules to him for conversion as plastic bags and sheets for
which conversion charges used to be collected by him from the plaintiff.
12. Significantly, the defendant never alleged or proved that no
transaction took place between him and the plaintiff at Kavalam at all. Even
assuming that on certain occasions the plaintiff used to take granules to the
industrial unit of the defendant for conversion as plastic bags and sheets, it
did not mean that the defendant never used to purchase plastic granules
from the plaintiff for the purpose of his industrial unit. The evidence clearly
indicated otherwise. Significantly, the defendant himself admitted in no
uncertain terms that there were several transactions between him and the
plaintiff spread over a long period of time. In fact the case of the defendant
himself was that he had paid amounts in excess to the plaintiff and that huge
amount was due from the plaintiff to him. But strangely in the course of his
examination he stated that he did not choose to take any steps for recovery
of the amount due from the plaintiff.
13. We have carefully perused Ext.B1 letter sent by the plaintiff to the
defendant. By the said communication, plaintiff had placed an order for
HM/HD tube rolls weighing 125 kg. The plaintiff requested the defendant to
deliver the same on the 12th of June 1986. One sentence in the said
communication which might have persuaded the learned Judge to decide the
question of territorial jurisdiction read thus: “In this connection we will visit
your office to take processed film on 12th afternoon”. We are afraid the
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learned Judge has egregiously erred in jumping to the conclusion that
Ext.B1 letter would conclude the issue of territorial jurisdiction against the
plaintiff.
14. On a careful evaluation of the oral and documentary evidence
adduced by the parties, we have no hesitation to hold that the case of the
plaintiff is more probable and believable. The evidence clearly shows that
the defendant had been purchasing goods from the plaintiff at his unit at
Kavalam within the territorial jurisdiction of the court at Alappuzha.
15. There is yet another vital flaw in the procedure adopted by the
court below while deciding the question of territorial jurisdiction. It is trite
that the question of territorial jurisdiction has to be decided at the earliest
point of time. It is true that the defendant had raised the question of
territorial jurisdiction in the written statement itself. The court below had
framed the relevant issue on the basis of the above contention. But
strangely the defendant had not taken any steps to see that the above issue
was considered by the court below at the earliest point of time. The court
also did not bother to decide that question as a preliminary issue. Stranger
still, the court below has considered the above issue along with the four
other issues as is discernible from the judgment. The learned Judge has
devoted a small paragraph for the said issue towards the end of the
judgment and that too after considering the other issues pertaining to the
nature and genuineness of the accounts, about the credibility of the
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accounts, etc. In view of the settled position on the point as laid down in
Bahrein Petroleum Co. V. P.J.Pappu [AIR 1966 SC 634],
C.M.Muhammed Ismayil V. M/S Malabar Engineering Co. [AIR 2005
Kerala 295] and Ayyappan Pillai V. State of Kerala [2009 (2) KLT
985] etc., we have no hesitation to hold that the court below has fallen in
grave error in non suiting the plaintiff on the ground that the court had no
territorial jurisdiction. Curiously the court below had not considered the
option to be given to the appellant/plaintiff to present the plaint before the
proper court by returning the same to him even assuming there was no
territorial jurisdiction for the court to try the suit.
16. It is vehemently contended by Sri.T.K.Venugopalan, learned
counsel for the appellant that even assuming this court holds that the court
below had territorial jurisdiction to try the suit, two other legal impediments
loom large. According to the learned counsel, the claim made by the
appellant/plaintiff was clearly barred by limitation. The other contention is
that the pleadings and evidence on record will not in any way show that the
account was mutual, open and current. It is further pointed out by the
learned counsel that the court below had not considered the question of bar
of limitation at all. It was held that the account was not open, mutual and
current.
17. In the preceding paragraph, we have already noticed that
admittedly, the plaintiff and defendant had had several transactions between
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them over a span of 8 to 10 years. According to the plaintiff, the last of the
transaction between him and the defendant, going by the books of account
was on March 31, 1989. This contention was vehemently challenged and
denied by the defendant. But it can be seen from Ext.A9, invoice book
(invoice No.1037) and Ext.A6, ledger that there was one transaction
between the plaintiff and the appellant on that day.
18. In this context, it may further be noticed that the defendant had
admitted that he had had several transactions with the plaintiff. He
conceded that he used to purchase granules from the plaintiff for the
purpose of his industry. On certain other occasions, plaintiff used to bring
granules for production of high density polythene bags. A perusal of
paragraphs 10 and 11 of the written statement will undoubtedly show that
several transactions had taken place between the plaintiff and defendant
during the relevant period.
19. However, according to the learned counsel for the defendant,
going by the averment in the plaint, the last transaction was on January 12,
1989. Suit was instituted only on December 19, 1992 after expiry of three
years from the day of the last transaction. Of course the above contention
will carry some weight, if it is found that the last transaction was on January
12, 1989.
20. In this context, learned counsel for the appellant has invited our
attention to Article 1 in the Schedule of the Limitation Act which provides
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that:
a suit for the balance due on a mutual, open and current
account where there has been reciprocal transaction between
the parties, has to be instituted “within a period of three years
from the close of the year in which the last item admitted or
proved is entered in the account.”
21. It came out in evidence particularly from the account books
(ledgers) and Invoice, Bill Book (Exts.A6 and A9 respectively) that the last
transaction between the plaintiff and defendant was in fact on March 31
1989 and that the account between the plaintiff and defendant was mutual,
open and current. The accounting year ended on December 31, 1989. If the
period of limitation is reckoned on the basis of the accounting year, the suit
was well within the period of limitation, as contended by learned counsel for
the appellant/plaintiff. The evidence of DW1 will clearly indicate that he
had had regular transactions with the plaintiff. According to the defendant,
large amounts were due from the plaintiff towards conversion charges; but
he did not choose to proceed against him, since he thought it may not be
easy for him to recover it from the plaintiff.
22. It is also pertinent to note that in paragraph 9 of the written
statement, the defendant admitted that he had issued two cheques in favour
of the appellant/plaintiff towards the price of the raw material supplied by
the latter. The first of the two cheques was admittedly encashed by the
plaintiff on January 10, 1992 and the second cheque a little later. But
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according to the defendant, the above raw material was “got entangled in
his factory because of labour problem, and he made the above payments
realising plaintiff’s difficulty”.
23. Still further, in paragraphs 10 and 11 of the written statement, the
defendant had referred to several payments (not less than ten) made by him
to the plaintiff. But according to him, all these payments were towards the
price of raw materials (granules) brought by the plaintiff for “the purpose of
conversion into sheets etc.” These raw materials, according to the
defendant, got “entangled” in his factory and therefore the plaintiff could
not take them back. All the payments made by him were only towards the
value of the raw materials left behind by the plaintiff.
24. Having carefully perused the oral testimony of the plaintiff and the
defendant and the documents produced by both sides, we have no hesitation
to hold that the account that was being maintained by the plaintiff was
mutual, open and current and therefore the plea of bar of limitation raised
by the defendant is without any merit especially in view of the admission
made by the defendant that he made a cheque payment to the plaintiff in
January 1992. We hold so.
25. As regards the question whether the plaintiff had succeeded in
proving his case on the basis of the documents produced by him before the
court below, it can be seen that the evidence of PW1 and PW2 clearly
revealed that the plaint claim was supported by the entries in the account
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books and other related documents produced by the plaintiffs. PW2, the
accountant, had explained all the transactions with specific reference to the
relevant entries made in relation to the claim in the suit.
26. As has been mentioned earlier, the defendant had no case that he
had never had any transaction with the plaintiff, on the contrary he tacitly
admitted that he had had transactions with the plaintiff. In fact the case of
the defendant was that the plaintiff owed some money to him. Still further
though the defendant had faintly alleged in the written statement that the
books of accounts were fabricated, no such allegation or suggestion was
made when the plaintiff was in the box. Having carefully perused the oral
and documentary evidence adduced by the parties, we are totally satisfied
that the court below was not justified in assuming that the books of accounts
were fabricated.
27. What persuaded the court below to assume that the books of
accounts might have been fabricated is the alleged failure of the plaintiff to
produce the books of accounts along with the plaint. The learned Judge
proceeded to hold that going by the provisions contained under Order 7 Rule
17 of the Code, plaintiff ought to have produced books of accounts along
with the plaint itself. But the plaintiff had explained before the court below
that the books of accounts were not produced along with the plaint, since
they were with his Chartered Accountant. He had produced those books
later after taking them back from the Chartered Accountant. PW2, the
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accountant, had spoken about the entries in the account books. In our view,
even assuming there was failure on the part of the plaintiff to produce books
of accounts along with the plaint, the court below was not justified in
jumping to a conclusion that the books of accounts were fabricated or not
genuine. Rule 17 does not enable the court to draw such a presumption. Of
course the court can assess the credibility and genuineness of the accounts
depending on the attendant facts and circumstances in each case. In the
case on hand, we are totally satisfied that the plaintiff had established his
case.
28. Therefore, the decree and judgment passed by the court below are
set aside. The suit is decreed in terms of the plaint claim for a sum of
Rs.89,918/- with 6% interest thereon from the date of suit till the date of
realisation from the defendant with cost throughout.
Appeal is allowed.
A.K.BASHEER, JUDGE
M.L.JOSEPH FRANCIS, JUDGE
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