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High Court Of Delhi
ESCORTS LIMITED - Appellant
Versus
SAI AUTOS - Respondent
Suit 2043 of 1987
Decided On : 07/20/1990
ESCORTS LTD. V. SAI AUTOS - COMPANIES ACT, 1956 - SECTION 85, 194 - EVIDENCE ACT, 1872 - SECTION 34 - POWER OF ATTORNEY - EXECUTION - PRESUMPTION - RESOLUTION OF BOARD OF DIRECTORS - PROOF - LIABILITY ON ACCOUNTS - PROOF - DISHONOURED CHEQUES - ADMISSION OF INDEBTEDNESS - INTEREST ON UNPAID AMOUNT - AGENCY AGREEMENT.
Fact of the Case:
Escorts Ltd., the plaintiff, filed a suit against four defendants, including Sai Autos, for the recovery of Rs. 3,38,916.00. The plaintiff claimed that Sai Autos, a dealer for Ford Tractors, purchased a tractor on credit and failed to pay the price to the plaintiff. The plaintiff also claimed that defendant No. 4, who had paid the price to Sai Autos, was liable for the payment of the tractor's price.
Finding of the Court:
The court found that the plaintiff had proved the sale of the tractor to defendant No. 4 and that defendant No. 4 had paid the price to defendants 1 to 3. However, the court also found that the plaintiff had not proved the power of attorney relied upon to institute the suit in accordance with the provisions of Section 85 of the Indian Evidence Act. The court further found that the plaintiff had not proved the entries in the books of account in accordance with the provisions of Section 34 of the Evidence Act.
Issues: 1. Whether the plaintiff had proved the power of attorney relied upon to institute the suit in accordance with the provisions of Section 85 of the Indian Evidence Act? 2. Whether the plaintiff had proved the entries in the books of account in accordance with the provisions of Section 34 of the Evidence Act? 3. Whether defendant No. 4 was liable for the payment of the tractor's price?
Ratio Decidendi: 1. The court held that the power of attorney relied upon by the plaintiff was not executed in accordance with the provisions of Section 85 of the Indian Evidence Act and, therefore, no presumption could arise with respect to its due execution. 2. The court held that the entries in the books of account were not alone sufficient evidence to charge any person with liability and that the plaintiff had not led evidence in the shape of vouchers, bills, etc. to prove the entries in the books of account. 3. The court held that defendant No. 4 was not liable for the payment of the tractor's price as he had already paid the price to defendants 1 to 3.
Final Decision: The court dismissed the claim against defendant No. 4 and passed a decree in favor of the plaintiff and against defendants No. 1 to 3 jointly and severally for a sum of Rs. 1,06,000.00 with interest at the rate of 18% per annum from the date of supply of the tractor to defendant No. 4.
( 1 ) THE plaintiff, a company incorporated under the Companies Act, having its registered office at H-2, Connaught Circus New Delhi, has filed this suit for recovery of Rs. 3,38,916. 00 against four defendants.
( 2 ) DEFENDANT No. 1 is M/s. Sai Autos; defendant No. 2 is Mr. K. Neela Mohan Rao, partner and proprietor of M/s. Sai Autos. Defendant No 3 Sri Y. Venkateswar Rao is also partner and proprietor of M/s. Sai Autos and defendant No. 4 is Mr. Bollam Venkatramaiah.
( 3 ) M/s. Sai Auto are stated to have been dealers at Karim Nagar (Andhra Pradesh) for the sale of Ford Tractors made by the plaintiff company.
( 4 ) IT is the case of the plaintiff company that Mr. Charanjit Singh who has signed and verified the plaint, is the Principal Officer as also the Vice-President arid Secretary of the plaitiff company, and. is authorised to sign verify the plaint and file the. present suit and to prosecute the same on behalf of the plaintiff company in terms of the General Power of Attorney dated 28th January, 1966 granted to him by the plaintiff company, and registered in the books and records of the Sub Registrar New Delhi at No. 164 in Additional Book No. 4, Volume No 238 on pages to 101 on 31st January 1966.
( 5 ) IT is asserted in the plaint that a Ford Tractor, manufactured by the plaintiff, was purchased by defendant No. 4. The plaintiff says that this was sale on credit.
( 6 ) THE plaintiff has filed affidavit-evidence of its Officers, by which the said transaction of sale of the tractor, to the defendant No. 4, stands proved.
( 7 ) IT is stated in the affidavit that defendant No. 4 actually paid the money to the defendants I to 3 vide his cheque dated 31st July. 1986. It is stated that this cheque was collected by defendants 1 to 3 illegally and unauthorisedly. Defendants 1 to 3 instead of paying the money realised to the plaintiff company, kept the money themselves. It is also asserted in the affidavit that as the defendant No. 4 was bound to pay the money directly to the plaintiff he was liable to pay the price of the tractor purchased by him to the plaintiff company, which he had failed to do.
( 8 ) DURING the course of arguments it was stressed that defendant No. 4 was liable for the price of the tractor, which amount he had wrongly paid to the defendants 1 to 3. In the plaint it is clearly asserted that the decree for payment of the suit amount may be passed against defendants 1 to 3, and only in the alternative the decree may be passed against defendant No. 4. During the course of arguments I had told the counsel for the plaintiff that it would be a travesty of justice if the defendant was to be made to pay again for the tractor which he had admitted paid for to defendant 1 to 3, by passing a decree against him. The counsel for the plaintiff, very fairly, gave up this claim made against defendant No. 4. The claim against defendant No. 4, in this suit, is therefore, dismissed.
( 9 ) IN asmuch as the power of attorney which is relied upon by the the plaintiff company, executed on the 28th day of January, 1966 by Mrs. Raj s Nanda and Sodhi Kartar Singh and execution whereof was admitted before the Registrar of Assurance, it was asserted that power to institute suit stands proved.
( 10 ) DURING the course of arguments, which were heard ex-parte, I pointed out to counsel that the presumption as to due execution of power of attorney was available only to those Power of Attorneys which were executed in accordance with the provisions of Section 85 of the Indian Evidence Act and as Power of Attorney dated 28. 1. 66 was not in accordance with the provisions of that Section, no presumption can arise with respect thereto.
( 11 ) SECTION 85 of the Evidence Act provides that "the Court shall presume that every document purporting to be a power-of-attorney, and to have been executed before and authenticated by a Notary Public or any Court Judge, Magistrate, (Indian) Consul or Vice-Consul or representative of the (
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