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Gujarat High Court
A. A. DAVE
Sajjanraj Swarupchand - Appellant
Versus
Mehta Commercial - Respondent
Second Appeal No. 722 of 1966
Decided On : 04/28/1972
Civil Procedure Code, 1908 - Order 30 - Rule 1 - Indian Partnership Act - Section 77 - Appeal - Technical defence – Partnership firm - Defendant firm was dissolved institution suit summons was served who admittedly was a partner defendant firm and therefore whatever decree is passed would be binding - On merits he urged that even though defendant was given inspection books of account plaintiff he did not specifically challenge several items books of account and vaguely books of account were not properly maintained plaintiff - He urged that defendant wanted to that books of account were not properly maintained plaintiff he should have specifically shown as to which items were wrong and were not supported evidence on record - Held, mere entries in the books of account were not sufficient for fastening liability on the defendant, in the interest of justice, the suit should be remanded to the trial Court in order to give the plaintiff an opportunity to lead necessary evidence in support of his case. Mr. Nanavaty who appeared on behalf of the defendant fairly conceded this position. In my opinion, there is great force in the submission made by Mr. Oza. As already observed, both the courts below have gone on the assumption that mere entries in the books of account supported by the sworn testimony of the plaintiff will be sufficient to pass a decree in his favour - Under the circumstances, it would not be proper to dismiss the suit in toto - It would be just and proper if the judgments and decrees of both the courts are set aside and the suit is remanded to the trial Court for proceeding further - Appeal allowed
Certainly. Based on the provided legal document, here are the key points summarized with appropriate references:
The suit was filed against a partnership firm which was alleged to have mutual dealings with the plaintiff, including transactions involving sale of grass and account settlements (!) .
The defendant contended that the firm was dissolved prior to the filing of the suit, and the books of account were taken away by a partner, making it difficult to challenge specific items in the account books (!) (!) .
The courts below relied heavily on entries in the books of account, supported by sworn testimony, to determine liability and pass a decree in favor of the plaintiff (!) .
It was emphasized that entries in the books of account, even if regularly maintained, cannot alone establish liability unless their correctness is admitted or supported by independent evidence such as vouchers, bills, or correspondence (!) (!) (!) .
The evidence suggested that the defendant did not produce his own books of account, and there was no conclusive proof that the books of the plaintiff were correctly maintained or that the entries were genuine, especially when the defendant challenged their accuracy (!) (!) .
The court highlighted that the mere failure of the defendant to produce books of account does not automatically lead to adverse inference unless it is shown that the books were deliberately suppressed with ulterior motives (!) .
The court pointed out that the initial suit was filed against the firm, but if the cause of action arose after the firm’s dissolution, the suit might be technically not maintainable in the firm’s name, and the proper parties should be the individual partners (!) (!) .
Despite this, the courts below had accepted the suit against the firm based on service on a partner and the assumption that the decree would be binding on all partners, even if the firm was dissolved before the suit (!) .
It was noted that the cause of action, based on the evidence, appeared to have arisen after the dissolution of the firm, raising questions about the suit's maintainability against a dissolved entity (!) .
The courts also considered whether the defendant had admitted liability previously through correspondence, but found that the letter relied upon was not conclusive evidence of an admission specific to the suit transaction (!) .
The court recognized that both lower courts had relied on assumptions and incomplete evidence, particularly regarding the authenticity and correctness of the account books and the transactions recorded therein (!) (!) .
Given the legal principles and the evidence, the court found that the findings of fact by the lower courts were based on misconceptions or assumptions, and therefore, their judgments should be reconsidered (!) (!) .
The court decided that the suit should be remanded to the trial court for further proceedings, including the opportunity for the plaintiff to amend the plaint, produce additional evidence, and properly implead the partners of the dissolved firm if necessary (!) (!) .
The appeal was allowed, and the judgments and decrees of the lower courts were set aside, with directions for the trial court to proceed further in accordance with law (!) .
Please let me know if you need any further analysis or specific legal advice regarding this case.
This is an appeal against the judgment and decree of the learned District Judge, Bulsar at Navsari confirming the judgment and decree of the learned Civil Judge, Junior Division, Umbergaon in civil suit No. 47 of 1962 with certain modifications as per the particulars mentioned in the judgment.
2. The facts giving rise to this appeal in a nut-shell are as under :-
The present respondent Mehta Commercial Company a firm registered under the Indian Partnership Act having its principal office of business at Umbergaon, had six partners in all. One of them was one Madanchand Kishanchand. The present appellant who was the defendant in the trial Court is also a partnership firm which started its business at Bhilad from Samvat year 2012, having two partners Sajjanraj and Swarupchand. This Swarupchand is the son of the plaintiff's partner Madanchand. It has come out in evidence that the mother of Sajjanraj and the mother of Madanchand are sisters. Thus, the partners of the plaintiff-firm and those of the defendant-firm, were inter-related. According to the plaintiff, both the plaintiff and defendant-firms had mutual dealings. The plaintiff firm had sold to the defendant firm from time to time various quantities of grass and both these firms had paid and received various items from each other. It was alleged by the plaintiff that for all these transactions, an account was opened in the books of account in the plaintiff-firm in the name of defendant in Samvat year 2012 and all the amounts paid on behalf of defendant firm were debited in their account and the amount received from the defendant firm were credited from time to time. The accounts between them were often settled. These dealings went upto Sambat year 2016. According to the plaintiff, at the end of Samvat year 2016, on Aso Vad Amas, an amount of Rupees 9146-70 paise remained due from the defendant firm as principal including the interest. As the defendant failed to pay the said amount, the plaintiff served him with a notice and in spite of the demand, when the defendant failed to pay the said amount, the suit was filed to recover Rs. 10,000/- consisting of Rs. 9,146-70 paise as principal and Rs. 853-30 paise as interest. According to the plaintiff, as there was mutual, open and current account between the parties, the suit was in time.
3. On behalf of the defendant, Sajjanraj Mukundchand who was served with the summons as a partner of the defendant firm contested the suit and filed his written statement at Ex. 25. He contended that the firm of the defendant was dissolved on Fagan Vad Amas of Samvat year 2016 and the second partner Swarupchand who is the son of the plaintiff's partner Madanchand had taken away all the books of account of the firm and hence, he was not in a position to challenge any specific items out of the items detailed in the plaintiff's books of account. While, therefore not admitting any of the items either on the credit or debit side, the defendant put the plaintiff to the strict proof of its case. Sajjanraj denied that the plaintiff had purchased any grass from the defendant firm. According to him, the plaintiff firm had contracts with Aarey Colony Bombay for the supply of grass. As the grass could not be sent from Umbergaon, the plaintiff firm had contracted with the defendant firm under which the defendant firm had to send grass to Aarey Colony, Bombay. According to the defendant, the Bombay Grass Selling company were the agents of the plaintiff firm at Bombay and they received the cheque from Aarey colony which was credited in the plaintiff's account. According to the defendant, the accounts between them were never settled in his presence and were not binding on him. He alleged that the second partner Swarupchand may have been present and in collusion with the plaintiff, settlement may have been made but the said settlement cannot be binding on him. He also alleged that the account books of the plaintiff firm are not reliable and they are not pr
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