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Thursday, January 10, 2013

whether the plaintiffs could be said to have established its case, particularly when the defendant had denied the factum of borrowing any sum and the signatures on the cash book and no evidence including document/finger print expert was led by the plaintiffs to establish the signatures of the defendant in the account books; “One more principle needs to be kept in mind. Accounts regularly maintained in the course of business are to be taken as correct unless there are strong and sufficient reasons to indicate that they are unreliable.” 29. Applying the said principle to the pleadings and the evidence on record, we find no reason that the books of accounts maintained by the plaintiff firm in the regular course of business should have been rejected without any kind of rebuttal or discarded without any reason. 30. In view of the aforesaid analysis, we conclude and hold that the High Court has erroneously recorded that the findings returned by the courts below are perverse and warranted interference and, therefore, the judgment rendered by it is legally unsustainable and, accordingly, we allow the appeal, set aside the judgment of the High Court and restore that of the courts below. In the facts and circumstances of the case, there shall be no order as to costs.


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 130  OF 2013
                (Arising out of S.L.P. (C) No. 13950 of 2009)


M/s. Gian Chand & Brothers and Another  ... Appellants

                                   Versus

Rattan Lal @ Rattan Singh                      ...Respondent






                               J U D G M E N T


Dipak Misra, J.



      Leave granted.
   2. In this appeal, the assail is to the legal soundness of  the  judgment
      and decree dated 26.2.2009 in R.S.A. No. 1570 of 2008  passed  by  the
      learned single Judge of the  High  Court  of  Punjab  and  Haryana  at
      Chandigarh  whereby  it  overturned  the  decision  of   the   learned
      Additional District Judge, Kurukshetra in Civil Appeal No. 96 of  2006
      dated 12.03.2008 wherein the  judgment  and  decree  dated  20.07.2006
      passed by the learned Additional Civil Judge  (Sr.  Division),  Pehowa
      was partially modified.

   3. The facts which are necessary to be stated are  that
the  plaintiffs-
      appellants (hereinafter referred to as “plaintiffs”) had  initiated  a
      civil action forming the subject matter of CS No. 337 of 2004  in  the
      court of Additional Civil Judge (Sr. Division), Pehowa for recovery of
      a total sum of Rs.10,45,620/- along  with  pendente  lite  and  future
      interest at @18% per annum.  
It was the case of  the  plaintiffs  that
      plaintiff No. 1 is a registered partnership firm carrying the business
      of commission agent for sale and purchase of food grains in  Shop  No.
      69, New Green Market at Anaj Mandi in Pehowa and plaintiff  No.  2  is
      the partner of the said partnership firm.  
The plaintiff firm advances
      money to the agriculturists and charges commission on the  sale  price
      of  the  agricultural  produce  sold  as  determined  by  the   market
      committee.  
For the aforesaid purpose, it  has  been  maintaining  the
      books of accounts in the regular course of business.  
The  respondent-
      defendant (hereinafter  referred  to  as  “the  defendant”)  had  been
      maintaining  regular  and  long  standing  current  account  with  the
      plaintiffs.
The defendant had taken advance from time  to  time  from
      the plaintiffs which he had promised to return  at  the  shop  of  the
      plaintiffs.
All the transactions between the parties  were entered in the books of accounts which reflected that as on 30.4.2002, a  sum  of Rs.5,80,000/- stood in the name of the defendant  towards  outstanding balance and he had acknowledged the same under his  signature  in  the corresponding account entry in the account books  of  the  plaintiffs.
     
The defendant neither returned the money nor brought any  agricultural
      produce for sale to the shop of the plaintiffs  till  27.5.2003.
 The
      plaintiffs served a legal notice on 26.2.2004 on the defendant to make
      good the payment and also made repeated requests requiring him to  pay
      the dues, but all requests and demands went in vain and eventually, on
      18.8.2004, he refused to comply with the request.
Being put in such a
      situation, the plaintiffs were compelled  to  institute  the  suit  on
      19.8.2004 wherein they claimed Rs.9,72,670/- which included the  total
      amount lent to the defendant at various times and Rs.72,950/-  towards
      interest till the date of filing  of  the  suit  and  further  claimed
      pendente lite and future interest @ 18% per annum.
Be it  noted,  the
      borrowings for  the  financial  years  2002-2003  and  2003-2004  were
      reflected in the “rokar bahi”.

   4. A written statement was filed by the defendant which consisted of  two
      parts, namely, preliminary objections and reply  on  merits.
 In  the
      preliminary  objections,  it  was  stated  that  the  suit   was   not
      maintainable;
that the father of the defendant was a customer  of  the
      plaintiffs’ firm  but  the  defendant  had  nothing  to  do  with  the
      plaintiffs;
that if there was any liability, it was of  Kewal  Krishan
      and not of the defendant;
that the plaintiffs had no locus  standi  to
      file the suit and it was defective for  non-joinder  of  parties;  and
      that no cause of action arose against the defendant.
As  far  as  the
      merits are concerned, reference was made to  every  paragraph  of  the
      plaint and in oppugnation, it was stated that some  of  the  averments
      were false.
As  far  as  the  other  averments  were  concerned,  the
      defendant denied them due to lack of knowledge.

   5. The learned trial Judge, on the basis of the  pleadings,  framed  five
      issues.  The principal issues that were really  addressed  on  contest
      were
whether the plaintiff  was  entitled  to  recover  an  amount  of
      Rs.10,45,620/- along with interest pendente lite and future interest @
      18% per annum;  
that  whether  the  suit  of  the  plaintiff  was  not
      maintainable in the present form; 
that whether the  plaintiff  had  no
      locus standi and cause of action to file and maintain  the  suit;  and
      
that whether the suit of the plaintiff  was  bad  for  non-joinder  of
      necessary parties.

   6. Be it noted, on behalf of the plaintiffs including the partner of  the
      plaintiffs’ firm, three witnesses  were  examined  and  13  documents,
      namely, copy of ledger, bahi, copy of ledger of S.T./C.S.T.,  copy  of
      Form-A, Form-C, copy of resolution dated 31.10.1993 and  copy  of  the
      certificate dated 28.07.2005 were brought in the evidence  and  marked
      as exhibits.  The defendant examined  himself  as  DW-1  and  did  not
      produce any documentary evidence.

   7. The learned trial Judge, considering the evidence on record,  came  to
      hold that the  plaintiffs had been able to establish
 that the firm was
      engaged in the business of a commission agent which lends money to the
      agriculturists;
that the business transaction  with  the   plaintiff’s
      firm had not been denied by the defendant;
 that the bahi  entries  had
      been produced on record by the  plaintiffs to show that the amount was advanced to the defendant and the  said  entries  had  the  stamp  and signatures of the  defendant;
that the  plea of the defendant that his
      signatures on the bahi entries were fraudulently obtained had not been
      substantiated; that the transactions  in  dispute  were  numerous  and
      extended over a number of years and there was no reason  not  to  lend
      credence to the  genuineness  of  the  books  of  accounts;
that  the
      plaintiffs had the locus standi to file the  suit  and  the  cause  of
      action had arisen to initiate a civil action and
that  the  plea  that
      the suit was defective for non-joinder of parties had really not  been
      pressed.
Being of this view, the learned trial Judge opined that  the
      plaintiffs were entitled to recover the amount of Rs.10,45,620/- along
      with  pendente  lite  and  future  interest  @  6%  per   annum   and,
      accordingly, decreed the suit.

   8. Grieved by the aforesaid judgment and decree, 
the  defendant preferred
      a Civil Appeal wherein it was contended that 
when  the  signatures  in
      the books of accounts were denied, it was obligatory on  the  part  of
      the plaintiffs to get the same examined by a handwriting expert;  that
      the signatures in the  books  of  accounts  had  been  forged  by  the
      plaintiffs; that certain entries did not bear the  signatures  of  the
      defendant; that the plaintiffs had failed to  show  why  such  a  huge
      amount had been advanced to the  defendant; and that the learned trial
      Judge had fallen into error by decreeing the suit of the plaintiffs.

   9. The first appellate court, considering the contentions  raised  before
      it,
came to hold that the plaintiffs had placed reliance on the ledger
      entries which were maintained in the regular course of business;
 that
      from Exhibit P-2, it was vivid that a sum of Rs.5,80,000/-  was  taken
      in cash by the defendant and it had his signatures and
that the aspect
      of forgery has not been pleaded and, in any case, had not been  proven
      at all; and
 that except two entries,  namely, Exh. P-4  and  P-9,  the
      defendant had signed in all the entries which were maintained  in  the
      regular course of business;
 that the written statement was  absolutely
      evasive and no plea of forgery being taken,  the  challenge  that  the
      signatures were obtained fraudulently or by any other method or  undue
      relationship did not warrant consideration and, in any case, the  onus
      did lie on the defendant which was not discharged.

  10. On the aforesaid base, it opined that the plaintiffs were entitled  to
      recover the amount excluding the sums covered under those two  entries
      along with proportionate interest and, accordingly, partly allowed the
      appeal and modified the judgment  and  decree  of  the  learned  trial
      Judge.

  11. Being dissatisfied, the defendant  preferred  second  appeal  and  the
      learned single Judge framed four substantial questions of law, namely,
     
(i) whether a suit for recovery could be decreed  when  the  pleadings
      and evidence led by the plaintiffs were at substantial variance;  

(ii) whether the plaintiffs could be said to  have  established  its  case,
      particularly when the defendant had denied the factum of borrowing any
      sum and the signatures on the cash  book  and  no  evidence  including
      document/finger print expert was led by the  plaintiffs  to  establish
      the signatures of the defendant in the account books;
 (iii) whether it was obligatory on the part of  the  plaintiff  to  prove  the  alleged
      signatures of the defendant in  the  cash  book  when  they  had  been
      disputed; and 
(iv) whether the admission of  the  defendant  could  be
      assumed in the absence of clear and unambiguous admission of the party
      to the litigation.

  12. The High Court referred to paragraphs  6  and  7  of  the  plaint  and
      Exhibits P-1, P-2, P-3, P-7, P-9 and P-10 and noticed the variance  of
      the amounts  mentioned  therein  and  further  opined  that  when  the
      signatures had been denied, the onus was on the plaintiffs to  examine
      a handwriting expert to establish the veracity of  the  signatures  to
      bring home the plea set up by the plaintiffs in the plaint.   It  also
      ruled that the courts below had fallen into error in holding that  the
      onus to prove  the  falsity  was  on  the  defendant.   Analyzing  the
      documents and evidence, the learned single Judge came to hold that the
      averments as pleaded in the plaint and the evidence in support thereof
      were at variance with each other and the evidence did not substantiate
      the claim and the onus to prove the accounts and rokar bahi having not
      been discharged, the judgments of the fora below  were  unsustainable.
      Hence, the present appeal.
  13. We have heard Mr. Gautam Narayan, learned counsel for the  appellants.
      Despite service of notice, there has been no appearance on  behalf  of
      the respondent.

  14. On a careful reading of the judgment, it is noticeable that  the  High
      Court has observed that the findings returned by the courts below  are
      perverse and, accordingly, jurisdiction under Section 100 of the  Code
      of Civil Procedure  could  be  exercised.   The  perversity  has  been
      noticed on two counts,  namely,  incorrect  placing  of  onus  on  the
      defendant to prove that the signatures had been forged  more  so  when
      there was denial of the same and second, the variance in the pleadings
      and  the  evidence  as  regards  the  amounts  in  question  were  not
      appositely taken note of.  Thus, we are required to  see  whether  the
      approach of the learned single Judge in annulling the judgments of the
      courts below is correct on the aforesaid grounds which,  according  to
      him, reflect perversity of approach.

  15. First, we shall deal with the onus to  prove  in  such  a  case.   The
      plaintiffs, in paragraphs 4 and 5 of the  plaint,  have  categorically
      asseverated that the defendant used to avail advance  money  from  the
      plaintiffs with the promise to bring his agriculture produce for  sale
      at their shop and the said amount had been duly entered in  the  books
      of accounts which the defendant had acknowledged under his  signatures
      in the corresponding entries.  The Accountant of the firm,  PW-1,  has
      proved various entries and they have been marked as  exhibits.   There
      had been no objection when the signatures were stated to  be  that  of
      the defendant.  It is admitted by him that Exh. P-9 did not  bear  the
      signature of the defendant.  It is worthy to  note  that  nothing  has
      been put to him in the cross-examination about  the  signatures.   The
      partner of the  firm,  PW-2,  has  testified  the  signatures  in  the
      entries.  He has clearly stated that  he  was  able  to  identify  the
      signatures.  The defendant had examined himself as DW-1 and  had  only
      stated that he had no dealings with the plaintiffs but his father  was
      a customer of the firm.  He had disputed to have signed  any  entries.
      In the cross-examination,  he  has  admitted  his  signatures  on  the
      written statement and stated that he did not remember whether  at  the
      time of purchase, his signatures were taken or not.
  16. As noticed earlier, the High  Court  has  held  that  the  fora  below
      erroneously  placed  the  onus  on  the  defendant  to  disprove   his
      signatures.  On a careful scrutiny of the  evidence,  it  is  manifest
      that the signatures are proven by the witnesses  and  they  have  been
      marked as exhibits without any objection.  It is interesting  to  note
      that in paragraphs 6 and 7 of the plaint,  it  was  averred  that  the
      defendant had given the acknowledgement of amount under his  signature
      in the corresponding entry in the books of accounts.   While  replying
      to the same, the defendant has said that the arguments in  para  6  of
      the plaint are wrong and denied in view of the preliminary objections.
       It is apt to note that the preliminary objections pertained  to  bald
      denial of liability, lack of locus  standi  to  file  the  suit,  non-
      joinder of parties and lack of cause of action.  Thus,  there  was  no
      plea whatsoever as regards the denial of  signature  or  any  kind  of
      forgery or fraud.  The High Court, as we find, has observed  that  the
      plaintiffs should have examined a handwriting expert.  The  plaintiffs
      had asserted that there was an acknowledgement under the signatures of
      the defendant.  There  was  no  denial  by  the  defendant  about  the
      signatures; and further, the acknowledgements had been proven  without
      objection.   Only  in  the  examination-in-chief,  the  defendant  had
      disputed the signature and in the cross-examination he has mercurially
      deposed that he does not remember to have signed at the  time  of  any
      purchase.

  17. It is well settled principle of  law  that  a  person  who  asserts  a
      particular fact is required to affirmatively establish  it.   In  Anil
      Rishi v. Gurbaksh Singh[1], it  has  been  held  that  the  burden  of
      proving the facts rests on the party  who  substantially  asserts  the
      affirmative issues and not the  party  who  denies  it  and  the  said
      principle may not be universal in its application and there may be  an
      exception thereto.  The purpose of referring to the same  is  that  if
      the  plaintiff  asserts  that  the  defendant  had  acknowledged   the
      signature, it is obligatory on his part to substantiate the same.  But
      the question would be what would be the  consequence  in  a  situation
      where the signatures are proven and there is an evasive reply  in  the
      written statement and what should be construed as  substantiating  the
      assertion made by the plaintiff.

  18. In Krishna Mohan Kul v. Pratima Maity and others[2], it has been ruled
      thus: -
           “When fraud, misrepresentation or undue influence is alleged  by
           a party in a suit, normally, the burden is on him to prove  such
           fraud, undue influence or misrepresentation.”


  19. In Shashi Kumar Banerjee and others v. Subodh  Kumar  Bannerjee  since
      deceased and after him his  legal  representatives  and  others[3],  a
      Constitution Bench of this Court, while dealing with a mode  of  proof
      of a will under the Indian Succession Act,  observed  that  where  the
      caveator alleges undue influence, fraud and coercion, the onus  is  on
      him to prove the same.

  20. In A. Raghavamma and another v. A. Chenchamma  and  another[4],  while
      making a distinction between burden of proof  and  onus  of  proof,  a
      three-Judge Bench opined thus: -
           “There is an essential distinction between burden of  proof  and
           onus of proof : burden of proof lies upon the person who has  to
           prove a fact and it never shifts, but the onus of proof  shifts.
           The burden of proof in the present case  undoubtedly  lies  upon
           the plaintiff to establish the factum of adoption  and  that  of
           partition.  The said circumstances do not alter the incidence of
           the burden of proof.  Such considerations, having regard to  the
           circumstances of a particular case, may shift the onus of proof.
            Such a  shifting  of  onus  is  a  continuous  process  in  the
           evaluation of evidence.”


  21. The present case is not one such case where the plaintiffs have chosen
      not to adduce any evidence.   They  have  examined  witnesses,  proven
      entries in the books of accounts and also proven the  acknowledgements
      duly signed by the defendant.  The defendant, on the contrary,  except
      making a bald denial of the averments, had not stated  anything  else.
      That apart, nothing was put to the witnesses in the  cross-examination
      when the documents were exhibited.  He only came with a spacious  plea
      in his evidence which was not pleaded.  Thus, we have no hesitation in
      holding that the High Court has fallen into error in holding  that  it
      was  obligatory  on  the  part  of  the  plaintiffs  to  examine   the
      handwriting expert to prove the  signatures.   The  finding  that  the
      plaintiffs  had  failed  to  discharge  the   burden   is   absolutely
      misconceived in the facts of the case.

  22. The said aspect can be looked from another angle.  Rules 3, 4 and 5 of
      Order VIII form an integral code dealing  with  the  manner  in  which
      allegations of fact in the plaint should be traversed  and  the  legal
      consequences flowing from its non-compliance.  It is obligatory on the
      part of the defendant to specifically deal with each allegation in the
      plaint and when the defendant denies any such fact, he must not do  so
      evasively but answer the point of substance.  It is clearly postulated
      therein that it shall not  be  sufficient  for  a  defendant  to  deny
      generally the grounds  alleged  by  the  plaintiffs  but  he  must  be
      specific with each allegation of fact (see Badat and  Co.,  Bombay  v.
      East India Trading Co.[5]).

  23. Rule 4 stipulates that a defendant must not evasively answer the point
      of substance.  It is alleged that if he  receives  a  certain  sum  of
      money, it shall not be  sufficient  to  deny  that  he  received  that
      particular amount, but he must deny that he received that sum  or  any
      part thereof, or else set out how much he received,  and  that  if  an
      allegation is  made  with  diverse  circumstances,  it  shall  not  be
      sufficient to deny it along with those circumstances.   Rule  5  deals
      with specific denial and clearly lays down that  every  allegation  of
      fact in the  plaint,  if  not  denied  specifically  or  by  necessary
      implication, or stated to be not  admitted  in  the  pleading  of  the
      defendant, shall be taken to be admitted against him.

  24. We have referred to the aforesaid Rules of pleading only to  highlight
      that in the written statement, there was  absolutely  evasive  denial.
      We are not proceeding to state whether there was admission or not, but
      where there is total evasive denial and an attempt has  been  made  to
      make out a case in adducing the evidence that he was not aware whether
      the signatures were taken or not, it  is  not  permissible.   In  this
      context, we may profitably refer to  a  two-Judge  Bench  decision  in
      Sushil Kumar v.  Rakesh  Kumar[6]  wherein,  while  dealing  with  the
      pleadings of election case, this Court has held thus: -

           “73.  In our opinion, the approach of the  High  Court  was  not
           correct.  It failed to apply the legal principles  as  contained
           in Order 8 Rule 3 and 5 of the Code  of  Civil  Procedure.   The
           High Court had also not analysed the evidence adduced on  behalf
           of the appellant in this behalf in detail  but  merely  rejected
           the same summarily stating that vague statements had  been  made
           by some witnesses.  Once it is held that the statements made  in
           paragraph 18 of the election petition have not been specifically
           denied or disputed in the  written  statement,  the  allegations
           made therein would be deemed to have been admitted,  and,  thus,
           no evidence contrary thereto  or  inconsistent  therewith  could
           have been permitted to be laid.”




  25. We may state with profit that in the said case, reliance was placed on
      Badat and Co. v. East India Trading Co. (supra).

  26. Scrutinized thus,  the  irresistible  conclusion  would  be  that  the
      defendants could not have been permitted to  lead  any  evidence  when
      nothing was stated in the pleadings.  The courts below  had  correctly
      rested the burden of proof on the defendant but the High Court, in  an
      erroneous impression, has overturned the said finding.

  27. Another aspect which impressed the High Court was the variance in  the
      pleadings in the plaint and the evidence adduced  by  the  plaintiffs.
      To appreciate the said conclusion, we have keenly perused paragraphs 6
      and 7 of the plaint  and  the  evidence  brought  on  record.   It  is
      noticeable that there is some variance but, as we  perceive,  we  find
      that the variance is absolutely very little.  In fact,  there  is  one
      variation, i.e., at one time, it is mentioned as  Rs.6,64,670  whereas
      in the pleading, it has been stated as Rs.6,24,670 and there  is  some
      difference with regard to the date.  In our considered  view,  such  a
      variance does not remotely cause prejudice  to  the  defendant.   That
      apart, it does not take him by any kind of surprise.  In Celina Coelho
      Pereira (Ms) and others v. Ulhas Mahabaleshwar Kholkar and  others[7],
      the High Court had non-suited the landlord on the ground that  he  had
      not pleaded that the  business  of  the  firm  was  conducted  by  its
      partners, but by two other persons and that the tenant had parted with
      the premises by sub-letting them to the said  two  persons  under  the
      garb of deed of partnership by constituting a bogus firm.  This  Court
      observed that there is substantial pleading to that effect.  The  true
      test, the two-Judge Bench observed, was whether  the  other  side  has
      been taken by surprise or prejudice has been caused to  him.   In  all
      circumstances, it cannot be said  that  because  of  variance  between
      pleading and proof, the rule of secundum allegata et probate would  be
      strictly applicable.  In the present case, we  are  inclined  to  hold
      that it cannot be said that the evidence  is  not  in  line  with  the
      pleading  and  in  total  variance  with  it  or  there   is   virtual
      contradiction.  Thus, the finding returned by the High Court  on  this
      score is unacceptable.

  28. The next aspect which requires to be addressed is whether the books of
      accounts could have been rejected by the High Court on the ground that
      the entries had not been proven due to dispute of signatures solely on
      the foundation that the plaintiff had  not  examined  the  handwriting
      expert when there was a denial of  the  signature.   We  have  already
      dealt with the factum of signature, the pleading and the substance  in
      the evidence.  The plaintiff No. 2, his accountant and  other  witness
      have categorically  stated  that  the  books  of  accounts  have  been
      maintained in the regular course of business.  The same has  not  been
      disputed by the defendant.  In such a circumstance, we may  profitably
      reproduce a few lines  from
Commissioner  of  Income  Tax,  Delhi  v.
      Woodward Governor India Private Limited[8]: -

           “One  more  principle  needs  to  be  kept  in  mind.   Accounts
           regularly maintained in the course of business are to  be  taken
           as correct unless there are strong  and  sufficient  reasons  to
           indicate that they are unreliable.”




  29. Applying the said principle to  the  pleadings  and  the  evidence  on
      record, we find no reason that the books of accounts maintained by the
      plaintiff firm in the regular course  of  business  should  have  been
      rejected without any kind of rebuttal or discarded without any reason.

  30. In view of the aforesaid analysis, we conclude and hold that the  High
      Court has erroneously recorded  that  the  findings  returned  by  the
      courts below are perverse and warranted interference  and,  therefore,
      the judgment rendered by it is legally unsustainable and, accordingly,
      we allow the appeal, set aside the judgment  of  the  High  Court  and
      restore that of the courts below.  In the facts and  circumstances  of
      the case, there shall be no order as to costs.



                                                             ……………………………….J.
                            [K. S. Radhakrishnan]



                                                             ……………………………….J.
                                                     [Dipak Misra]

New Delhi;
January 08, 2013


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[1]    (2006) 5 SCC 558
[2]    (2004) 9 SCC 468
[3]    AIR 1964 SC 529
[4]    AIR 1964 SC 136
[5]    AIR 1964 SC 538
[6]    (2003) 8 SCC 673
[7]    (2010) 1 SCC 217
[8]    (2009) 13 SCC 1

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